3 Most Excellent Reasons to Track Your Business Expenses

3 Most Excellent Reasons to Track Your Business Expenses

Reason #1

Let’s say your business makes $100.  The tax man comes round and hands you a bill for taxes on $100 worth of income. And you say, “But wait, I spent $50 in order to make that $100!”

And the tax man says, “Okay, no problem.  Show me the receipts for your expenses.”

And you say, “Well, I don’t have any receipts, but I know I spent 50 bucks in order to make a hundred.”

And the tax man says, “Sorry.  If you can’t prove your expenses, then you have to pay tax on the full $100.”

Which would you rather pay taxes on?  $100 or $50?

Reason #2

You look at your business checking account and it’s got $1000 in it and you’re like, “Hooray!  I’ve got $1000!  Awesome!”

And then you remember you’ve got some bills to pay and you start paying them and the balance dwindles lower and lower and lower…

…until pretty soon, you have just $127.53 left in your account.

And you’re like, “What the heck and where did all my money go?”

If every month your money disappears and you really have no idea where, you now know the second reason for tracking business expenses:

to KNOW where your money goes

AND more importantly,

to prevent it from going unless absolutely necessary

• Bookkeeping tells you where your money goes.
• Financial Data Management helps you prevent it from going unnecessarily.

Reason #3

Let’s say your business makes $100–again.  You fill out your tax return and you know you spent $50 in order to make that $100, but you don’t have any receipts. You claim the expenses anyway and send in your return.

Six months later the IRS knocks on your door and says, “Hi, we’re here to audit your business!” and you end up paying a fine larger than your taxes would have been on the whole $100.

So–

• increased taxes
• too many expenses
• fines

are three most excellent reasons to keep track of your business expenses!
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If you need help keeping track of your business expenses, contact Cooks Bookkeeping.

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