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4 Ways to Better Manage Your Business Expenses

Whether you are an entrepreneur for only a few weeks or many years, you likely already know the importance of having your finances in order. Besides helping you make better financial decisions, your accountant will find it easier to deal with your files. Let us give you a few tips to manage your business expenses more effectively. <h3>What is a business expense?</h3> According to the<a href="https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/business-income-tax-reporting/business-expenses.html" target="_blank"> Canada Revenue Agency website</a>, a business expense is something you pay intending to help you have business revenue. In other words, all the costs allow you to help your company work. Several criteria must be respected to ensure a purchase is considered a business expense. First, proof of this expense, whether an invoice, receipt, or contract, is essential. Moreover, this expense cannot be used for anything other than your business. Your workspace, consultation fees, and office supplies are among the most common expenses that can be deducted. <h3>How can you manage your business expenses better?</h3> You will likely need to purchase many things related to your business over a year. When it comes to tax season, do you spend much time searching for everything your accountant needs? If this is the case, please read the following tips. Understand what is considered a business expense If you want to manage your business expenses more effectively, the first step would be to learn and understand what is considered one. Business expenses must be addressed since they can be deductible. But what do they include? Most of the time, business related to the workplace, communications, office supplies, professional services, training courses, and transportation are accepted. Do not hesitate to check what applies to your situation and meet with an accountant to help you if needed. Keep your receipts and invoices! Take care of your expenses right away Whether you are managing your business invoices or expenses, a good habit is to take care of all paperwork as soon as possible. Do not wait; there is a great chance you will forget about it. You might also have to deal with dozens of receipts during tax season, which you likely want to avoid. Thus, as you proceed with your purchase, note it in your spreadsheet or accounting software. Add all the relevant information and keep notes explaining why you need this product or service. Consider using expense categories Another way to ease your expense management is to use categories. This way, you can gather all your purchases according to their nature, easing your accountant's work. Please note that the deductions may differ from one type of expense to another. The clearer your entries are, the quicker it will be to check and optimize. For example, your meal fees can sometimes be deducted at 50%. Using a commercial office can be 100% deducted (hello,<a href="https://www.momenteo.com/blog/9-benefits-of-working-from-a-coworking-space" target="_blank"> coworking spaces</a>!), while a percent can be applied to your rent and electricity when you work from home. Keep your receipts by digitalizing them Finally, since it can be easy to feel overwhelmed by all the papers you need to keep, why not take advantage of this opportunity to digitalize your receipts? Whether you already use Momenteo or a dedicated computer file, consider keeping a digital version of your expenses if someone like the government needs to consult them. Classifying them by category or date will make them easier to manage than a pile of papers. How long do you need to keep your accounting documents? Most of the time, Canadian businesses are required to keep their financial records and invoices for six years. It can be a lot of paperwork with time. <h3>How to add an expense in Momenteo?</h3> If you are looking for a tool to manage your business expenses more effectively, Momenteo can likely meet your needs. Our intuitive system works as a calendar where you can track your work time, business travels, and expenses. There are two ways to add a business expense to our invoicing software. First, you only need to click on a date on the calendar and choose to enter an expense. You can then add the amount you paid, currency, tip, and taxes, add a receipt, select an expense category, a supplier, a client, add a description, repeat the expense, etc. It is also possible to add an expense using the Expenses tab on the menu's left. If you want to access all your business expenses during a precise period, check your reports to consult your expense report. Besides downloading your document, you can filter the available data according to dates, clients, categories, and suppliers. In conclusion, do not underestimate the importance of managing your business expenses. It would be a shame not to use them as deductions because you lost receipts or did not take the time to note them in your software. Consequently, the first step is to know what is considered an accepted expense and take care of it as soon as possible. Next, consider classifying your expenses and digitalizing the receipts to save time at the end of the year. If you are looking for other tips on being more effective, check out our tips on<a href="https://www.momenteo.com/blog/6-tips-to-better-manage-your-billing" target="_blank"> better managing your invoicing</a>.

Ariane