Project accounting can be difficult to manage, especially if it includes tracking billable expenses on the go. When employees travel to a client's location to install software or equipment, transportation and living expenses are billed to the client. While the...
Project accounting can be difficult to manage, especially if it includes tracking billable expenses on the go. When employees travel to a client’s location to install software or equipment, transportation and living expenses are billed to the client. While the client may not require documentation for every cup of coffee, the IRS does. Getting employees to document their expenses can be a struggle.
Keeping track of receipts for on-the-go expenses can be a challenge. When employees are rushing to catch a flight, they may stuff the cab ride receipt in a pocket. If they pay for tolls, do they toss the receipt in the glove compartment of the car rental? QuickBooks expense tracker makes it easier for employees to keep on top of their project-related costs.
Why Tracking Business Expenses on the Go is so Important
The IRS requires documentation for all business expenses. Some companies provide employees with credit cards to cover expenses. Others expect employees to pay out-of-pocket expenses, reimbursing them when expense reports are approved. Regardless of the method, tracking expenses is crucial for billing clients and filing taxes.
Receipts
Not every expense is easily tracked. Whether it’s for the IRS or a client, receipts are the best way to document expenses. Transportation expenses such as airfare or car rentals can be tracked through credit card statements or bank accounts. Accommodations come with detailed listings of room charges.
Depending on how long employees are at a customer’s location, hotel dining can become tiresome. Besides, why not try a deep-dish pizza if in Chicago? Rather than hold onto the receipt, digitize the image, eliminating the possibility of losing a receipt.
With an expense tracker such as QuickBooks, employees can turn their smartphones into a scanner, digitizing all their receipts. The receipts are stored for easy retrieval. Employees can attach the images to the report when it’s time to file expense reports. The receipts can even be categorized by project to make it easier to monitor potential overruns.
Expense trackers provide the documentation needed to support every business expense ensuring the maximum deductions for business expenses. Reducing tax liability means more available cash for business operations for any business.
Expense Reports
Most companies have an approval process for expense reports. Whether it’s a business trip or printer supplies, business expenses with or without reimbursement are recorded through expense reports. These reports go through a review process to ensure that the expenses are reported and documented appropriately.
Paper-based expense reports take time to prepare and review. Even when reports are prepared electronically, they are often printed and submitted with the paper receipts attached. Someone looks through the receipts before sending the report on for approval. The process is time-consuming for employees and employers.
Employees don’t always submit expense reports promptly. They have more pressing tasks to address after returning from a business trip and put off doing the report. If a client is covering part of the expenses, employers need the reports submitted as quickly as possible so that the client can be billed. Expenses that are ultimately billed to a client require particular scrutiny which can lengthen the review process.
Digitizing receipts and categorizing expenses makes completing expense reports faster. Employees do not need to wait to be reimbursed and employers do not have to wait to bill customers. Digitized receipts and reports make it easier to include copies when invoicing a customer. More efficient processing provides a more accurate financial picture for a business owner.
Financial Awareness
Tracking business expenses makes it easier to keep on top of your cash flow. It lets a business know if it is over or under budget, so adjustments can be made quickly. However, failing to track expenses can distort the financial picture.
When expenses are not recorded promptly, businesses may find themselves going from under to over budget in hours. Similarly, companies cannot bill clients for expenses until reports are filed. Not only do delays impact financial statements, but they also hurt cash flow. With QuickBooks apps, organizations can view reports and receipts quickly for timely and accurate financial reporting.
Taxes
Staying on top of business expenses makes tax time less stressful. With QuickBooks expense tracker, companies can record their expenses and keep them centrally located for easy access. Digital copies can be attached as needed whether for traditional payments or on-the-go receipts. Using built-in categorizing capabilities ensures that expenses are associated with the appropriate project for tax reporting and project management.
If tracking business expenses is taking up too much time, consider accounting and bookkeeping services that can keep your records up to date and ensure that expenses are recorded appropriately. When it comes tax time, they can work together to prepare your taxes. At Pooley Accounting Services, we have been helping clients track their business expenses since 2007. Why not contact us to set up an appointment?
Resources:
https://www.irs.gov/pub/irs-pdf/p535.pdf
https://www.businessnewsdaily.com/15745-business-expenses-you-should-track.html#