One of the easiest ways that small business owners can reduce their tax burden is to maximize business tax deductions. From your mileage to the costs entertaining clients – the deductions are extensive.
But doing so is often easier said than done. I’ve met business owners who fail to track their mileage throughout the year, only to second guess what their travel expenses are come tax time, putting themselves at risk of leaving valuable money on the table or worse, overestimating their expenses and incurring the wrath of the IRS. If you get audited, the IRS will want to see documented evidence of your expenses – receipts, dates, purpose, etc. – something that’s hard to pull out of a hat 12 months on.
Another problem with managing expenses is aligning them with IRS categories. Even if you are diligent with your record keeping, this can become a painful and time-consuming task, especially if everything is in Excel.
To help you streamline and automate this process, here are 10+ tools and apps that can ease expense capture and management process.
Accounting Software Expense Management Tools
Most cloud-based accounting software – QuickBooks, FreshBooks, Xero, etc. – offer the ability to easily track expenses based on real-time transaction data. So every check, credit card purchase, and receipt is kept in one place. Freshbooks, for example, does a daily download of expenses from your bank account, automating and streamlining the entire process. Software also takes the pain out of categorizing your expenses; it’s automatically done for you using pre-loaded approved IRS categories.
In addition, these tools allow you to capture and synchronize expenses on the road. Enter your expenses as you incur them from your mobile device – either through the app or take a picture of your receipt and everything is captured in one place. If you have employees, you can also review and approve claims within the software.
If your employees frequently travel, consider Concur, an integrated travel and expense management solution that includes a free mobile app as part of the paid subscription.
Expense Management Apps
If you don’t have a cloud accounting tool, there are lots of free and paid apps that you can use to simplify expense capture, reporting, and management.
Expensify for Business is a popular choice for scanning expense receipts using a variety of smart phone devices. Users can track different expense types including cash, credit cards, and bank transfers. It also allows managers to approve employee expense reports and enforce company expense policies and synchronize data with popular accounting tools. A free version is available for individuals.
Other tools include Mileage Log+ (purely for tracking gas mileage), Shoeboxed, Cashbook Expense Tracker (for Android), and ProOnGo.
Prepaid Expense Cards
If you have employees, and little time to keep track of their expenses, consider PEX Card. This pre-paid, reloadable Visa card can be given to employees so that you can control their expenditures – including how much and on what – from your computer or mobile device.