Part of owning a business and making money is also spending money. Keeping good track of your business expenses will allow you to responsibly manage and maintain your profits. This will not only improve the success and organization of your business but also make things much easier for yourself come tax season.
Some basic expenses you might already know about are things like utility bills, legal fees, wages paid to employees and other costs of supplies. Consider what kind of business phone system you will be using and how much money you will be investing in the software and technology needed to run your office. Things like printers, computers and security systems vary greatly in price and all directly impact your business expenses. A lot of these bills and expenses are completely deductible.
In order to manage your finances and calculate profits or quarterly reports, it is important to keep track of costs regarding inventory, the cost of products and storage. Organize your finances into direct and indirect costs. Indirect costs include things like marketing and other general expenses. All of this, along with interest expenses, will need to show on your income statement. This statement is used to determine how much your business owes in taxes at the end of the year.
A professional business accountant can help you organize these expenses and potential deductions. Certain personal expenses can also be deducted if you are operating your own business from home. For example, a car used for personal and business could potentially write off mileage used for business trips. Your accountant will help with the details when it comes to filing your taxes.
Stay organized and responsible when it comes to recording your finances. Make more well-informed business decisions by using a consistent and well-organized system for your financial records.