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Expenses receipt format for Finance

hi everyone i'm attorney aidan durham with 180 law co in colorado and you are watching all up in your [Music] business in this episode of all up in your business we're going to talk about tracking business expenses i'm going to give you guys some tips for tracking business expenses let you know why it's so important to do so and we're going to cap it off with some of my favorite apps and tools for tracking business expenses but first don't forget to like subscribe and share and check the description for links to additional information and resources okay so most of us didn't decide to be self-employed because we wanted to be bookkeepers but nevertheless a fun side effect of being self-employed is that we often get to be our own bookkeepers web designers receptionists and uh our own lawyers sometimes despite my protests otherwise but regardless even if you have a bookkeeper accountant cpa or somebody else handling your business's bookkeeping and accounting properly tracking your business expenses is going to make all the difference and if you can set up a good system for tracking your expenses early on from the very inception of your business then it's going to make everything else that much smoother and more efficient moving forward we can also easily get lost in the day-to-day of everything else having to do with our businesses so entering all your receipts and doing the books gets you know pushed back to the back burner and next thing we know boom it's three months later and we're spending an entire weekend trying to get caught up but if you've got a good system in place and take advantage of different tools and apps and programs the rest of it can be set up largely on autopilot so why is it important to keep good track of business expenses easy because it's going to help you save money on taxes when we prepare our tax return every year we have to tell the irs how much and what kind of income we've earned over the past year and if we earn income from being self-employed we usually need to use schedule c to report that income in a nutshell we use schedule c to tell the irs how much revenue your business received how much you spent to keep your business running and the net income or loss for the year we don't pay taxes on the revenue our business receives we only pay taxes on the profit or net income which is the money we received minus the money we spent any ordinary and necessary payments that you make to run your business are considered business expenses and business expenses are deductible on your schedule c meaning that we get to subtract those expenses from our businesses taxable income business expenses potentially can be anything again as long as it's considered ordinary and necessary then it's going to be a deductible business expense but here are a few examples of common business expenses advertising bank fees consulting fees professional fees contract labor dues and subscriptions mileage office supplies postage printing payroll software travel utilities and so on so that's why it's so important to track business expenses so we know what to report on our taxes and so we don't miss any potential business deductions and end up paying more in taxes and we actually have to so let's say if the business made a hundred thousand last year and you don't deduct any of your business expenses then you're paying tax on the full hundred thousand let's pretend your average tax rate is thirty 30 that means you're paying 30 000 in taxes and by the way i'm saying 30 just as an example i don't mean that all of you are going to be taxed at 30 but if you properly track your business expenses then they total let's say forty thousand dollars that forty thousand is deducted from the hundred thousand and now you're only paying taxes on the sixty thousand dollars of profit or net income that means you're paying eighteen thousand dollars in taxes as opposed to thirty thousand and that's a pretty big difference but we're also doing this to make things easier on ourselves come tax time we don't want to waste our valuable time combing through boxes of receipts and trying to piece together our tax returns in time for the filing deadline or even worse pay somebody like our accountant or cpa to try to make sense of our chaos and it's not just enough that we track what the expenses are we often need to remember why we spent that money meals for example are often deductible business expenses but it makes a difference if we bought that meal let's say during a business meeting or if we bought it while we were on a business trip again we can deduct anything that is ordinary and necessary and we want to be able to prove that it was both ordinary and necessary if the irs ever comes in knocking so having a good system in place to track your expenses is going to save us time and money and in addition to reducing your overall tax bill best practice is to make a regular habit of tracking business expenses throughout the year we don't want to wait until the end of the year to record all of our expenses if we regularly track our business expenses throughout the year that makes it easiest easier for us to keep a close eye on our businesses financial health makes it easier to budget and put money aside in savings and helps us see exactly where every dollar is going it doesn't matter if you do it daily weekly monthly quarterly just make sure you dedicate some time on a regular basis to track your expenses in bookkeeping or even better take advantage of the millions of programs apps software and other tools available to automate all of it for you seriously there's like actually zero reason for you to manually track all of your business expenses or income we can quite literally use technology to do all of that for us so here are some of my favorite tools for tracking and managing business expenses and finances let's start with the free stuff because you know it's cool if you don't have to spend more money just to track where you're already spending money first your bank a lot of banks are starting to incorporate expense tracking tools into their online banking platforms i bank with chase and i have a chase business credit card you can categorize payments and expenses and see your spending report right there in the online banking platform now i mentioned this because it's probably already available for a lot of you and it's free except for you know any fees that your bank's already charging you but i wouldn't totally rely on this method of tracking expenses if you have very very few expenses then i guess it could work just fine for you but most of us are going to want something a bit more substantial keeping with the simple and free trend mint is another really good option if you're not familiar with mint it's an online budgeting platform that connects to your bank accounts and automatically downloads all of your transactions then you can categorize all of your income and expenses and create you know spending budgets and see where all of your money is going i have been a long time fan of mint but mostly for my personal budget budgeting kind of like what i was saying about chase you can view spending reports and track where you're spending money but it's not really going to give you like detailed reports or financial statements now if you're old school or just a fan of spreadsheets excel is a really good option i guess it's not technically free since you still have to buy the software but i'm including it in the free category or google sheets which is actually free most of the time you can literally just have a simple spreadsheet of expenses you know the dollar amount who it was paid to why the date of the expense it doesn't have to be fancy or it can be fancy and you can create spreadsheets to track and categorize expenses and collect cash flow and budgeting and more so those are a few simple and mostly free options for some basic expense tracking but most of us are going to need a little bit more and this usually means some kind of full-blown accounting software there are a lot of options out there but there are a few things that we want to look for when we're trying to decide which one to go with first make sure it's a program that syncs with your bank almost all of them do that these days but it's going to make things so much easier if your accounting program can just automatically pull in all of your transaction data from your bank as opposed to you manually entering that information find one that offers a mobile app so you can record your expenses on the go a lot of programs have apps that include automatic mileage trackers for example if you're a gig worker or if you drive a lot for work a mileage tracking app is gonna be a lifesaver it's also great if the mobile app allows you to scan and save digital copies of your receipts it's good practice to hold on to all of your receipts for at least three years in case of an irs audit many programs allow you to scan your receipts on the go and you can attach them to each transaction for further record keeping finally bonus points if it integrates with other apps a lot of programs have the ability to integrate with e-commerce platforms like shopify you can integrate with your crm systems or email marketing tools and so on so most programs you're gonna have to pay for it if you want all of the great bells and whistles but there are some really good options that are free or offer free plans and i'm gonna link to all of these things in the description so you guys can check them out later wave wave apps has a great accounting software that is completely free to use i'm a big fan of wave zip books is another popular one and they offer a free plan though a lot of their features are going to require the paid plan one that i think is very cool is new cash spelled gnu cash it's a free open source software that has a lot of accounting capabilities the only downside though is that since it's open source there's not really a whole ton of support available if you need help setting it up or with troubleshooting like i said you can get a lot out of these uh for free but the additional features that you get with some of the paid options really might be worth the cost which brings me to some of the more traditional accounting and bookkeeping tools quickbooks is a heavy hitter in this category and it does way more than just tracking your expenses quickbooks really can be used to handle all of your finances running payroll invoicing and accepting online payments tracking your expenses and bills and of course managing taxes and so on and so forth but you know quickbooks can easily become pretty overwhelming just because of how much it can do so if you're brand new to the scene and you don't already have an accounting or bookkeeping background it might be too much for you unless you're going to hire somebody to set it up and manage it for you but freshbooks offers a lot of similar features to quickbooks but it's a bit more simplified and be would be a good option for service based businesses and you know solopreneurs and freelancers and stuff and then xero is another good option similar to quickbooks and freshbooks lastly outside of these full-blown accounting programs there are a lot of great apps on your phone that can help with tracking business related expenses mile iq i love mile iq i used mile iq's mileage tracking app for like six years i only just recently canceled a few months ago only because of covid19 though and because i'm not driving for business anymore i really just stay home now but up until then i used it on on a daily basis and it was well worth it mile iq uses gps to automatically track all of your mileage and then you can categorize your trips and calculate your business mileage if you're a gig worker or you drive a lot for work mile iq is is going to be life changing everlance is another app that's really similar to mile iq from what i understand i haven't used it myself but it does have a gps tracker to log your mileage and you can scan digital copies of receipts into the app as well both mile iq and everlance they offer free and paid plans shoeboxed is a really cool app that i recently learned about that helps with tracking and categorizing your receipts too and lastly expensify this is going to be primarily useful if you have employees who are going to have a lot of reimbursable expenses or if you have a lot of expenses that you reimburse to yourself again i'm going to link to all of these in all these apps and stuff down in the description if you guys want to check them out so when it comes to tracking expenses the bottom line is this have a system in place from the very beginning make it a regular habit to track review and categorize your expenses and finally take advantage of tools and programs to automate as much as possible that's all for this episode folks drop a comment below let me know what you think and don't forget to check the description for links to all the products that i mentioned as well as additional information and resources thank you all so much for watching i'm aiden durham and i'll see you next time [Music] [Applause] [Music] [Applause] [Music] you