Well, that’s too late as you no longer have any control over the budget once the month is over. Most of the people wait until month end to record expenses and see how they performed vs. In order for your money and budget to work for you, it is essential to track daily expenses. How disheartening would it be if you initially budgeted for visiting your parents but realized that you’ve blown through your budget and don’t have money to visit them?
How would you feel if you had to pass on buying that coffee table that you’ve been eyeing for months… once again? So, no matter how much you stress about your budget not working for you, it just won’t help! You are not tracking your expenses daily.Your budget is either not created the right way OR.You see, most budgets do not work primarily because of a couple of reasons: Taking the time to set up a good system and then just dedicating just a few minutes a day can go a long way to making your expenses much easier to manage.Ever wondered why so many people struggle with budgets? Are you one of them? Well, if you are reading this article, my guess is you need help to track daily expenses. Try printing out a cheat sheet for any expenses that you might not remember where they go, and keep it handy when you're processing expenses. For example, if you put your car park ticket charge into "travel" one month and "motor expenses" the next, it's much harder to see whether your car parking costs are mounting up higher than you want them to be and if it's time to switch to travelling by train, bus or bike. It's harder to make informed business decisions if you don't post your costs consistently into the same category in your accounts. It's also important because sometimes you have to report these figures differently for tax, for example if you are the director of a limited company and you need to make sure the company doesn’t pay you back more than you’ve spent on its costs. If you’ve put costs in the wrong place, these figures won't match. This may sound like extra hassle that you don't need, but it is important because if your records are ever inspected by HMRC, the first thing they will look for is whether what your accounts say is in the bank matches what actually is in the bank. It's not an out-of-pocket expense, because the business paid for it directly. For example, if you pay for a train ticket on your business debit card rather than your personal credit card, remember that this cost would need to be recorded as paid by the business rather than by you. When you're recording expenses, it's really important to keep these separate from costs that were paid for through your business's bank account. This doesn't just save you space, it also makes it easier to trace back the receipt to the entry in your accounts if you, your accountant, or HMRC has a query on that transaction. You can also upload your receipts to an online accounting system like FreeAgent and attach them to your accounting entries. For digital storage options, consider using a service like Depositit. You may be surprised to know that you don't have to keep that big folder of receipts - HMRC say that they are happy for business owners to store expense receipts electronically, so long as the electronic copy includes both the front and back of any receipts that have information on the back, such as terms and conditions. Try using our weekly checklist method to stay on top of any expenses that you haven't already recorded, and to stay on top of how much is going in and out of your business. Review your expenses weeklyĪt FreeAgent, we believe that spending just one hour a week on your business's bookkeeping gives you a real head start towards keeping your finances in good order. For example, if you're waiting on the train platform, use those two minutes of downtime to snap a photo of your train ticket on your mobile and upload it with your expense entry to an online accounting system like FreeAgent. The best time to record an expense is as soon as you spend the money - whenever possible, take two minutes out of your day to record expenses on the go. The long name for expenses is "out-of-pocket expenses". Examples would be if you used a personal credit card to buy a train ticket to go and visit your client, or if you bought a stamp at the post office and paid with your own cash. "Expenses" are business costs that you pay for yourself, which the business may later reimburse you for. Keeping on top of expenses can be a big hassle when you're just trying to get on with your work, especially if it's grown into a big pile of unprocessed paperwork! So in this guide, we'll walk you through the basics of recording, claiming, managing, and storing your business expenses. A 6 step introduction to managing your day-to-day expenses