There are 32.5 million small businesses in the US. For many of these business owners, it is difficult to know how to manage business funds and expenses.
So, how can companies have better business expense management practices? There are a few ways! Keep reading to learn more about business expenses.
What Are Business Expenses
Business expenses are the costs of running a business. You claim them in the year you incur them. These expenses can include items like rent, utilities, office supplies, and travel.
3 Types of Business Expenses
There are many types of business expenses to claim. The following are three many businesses don’t realize they can write off:
A home office is an office that is not in the main workplace of a business. Home office expenses are any expenses incurred by a business that is conducted from the home of an individual.
This includes any kind of expense, such as utilities, rent, furniture, and supplies. A home office is an extension of the company for legal purposes and it is treated as such for tax purposes.
Entertainment expenses for businesses are important for companies. Entertaining is a great way to boost morale and show appreciation for employees. It’s also a way to meet or engage with clients or business partners.
Marketing expenses are a necessary evil for every company. It is important to understand the different types of marketing expenses and how to use them to your advantage.
Marketing expenses include everything from marketing research to advertising, PR, and sponsorship. They can be done in-house or outsourced to external agencies.
Business Expense Management Best Practices
There are many best practices that can be followed to effectively manage business expenses. The first one is to get a clear understanding of the company’s needs and goals.
The second is to set up the right policies, procedures, and controls. Thirdly, it is important to have a system in place that will allow you to track all expenses and report them accurately. Other best practices include:
Create a System
A company should have a system in place to manage their expenses because it will help them with their bookkeeping. It will also help them to stay on top of what they spend and make sure that they are not paying for things that they do not need. You can create a system easily with various types of software, such as telecom expense management.
Companies that categorize their expenses are able to better manage them. They are able to track what is being spent, where it is being spent, and who is spending it. This helps them allocate funds more wisely and make better decisions on how they spend their money.
Review Records Regularly
The importance of regularly reviewing company expenses is that it can help the company save money and improve its cash flow. It can also help the company make better decisions when it comes to finances.
Discover More About Running a Business
This article covered the basics of business expense management. Now you have a better understanding of what business expenses are and how to manage them. We hope you enjoyed this article!
If you are interested in learning more about business management, check out our blog.