Credit Card Accounting - The Best Ways To Track Expenses
As a business owner, you already know the importance of keeping track of your expenses and ensuring each credit card payment is accounted for. This is especially true when it comes to credit card expenses. If you don't track them properly, it can be difficult to accurately report your financial status and make sound business decisions.
In this guide, we will discuss the best ways to track your business credit card expenses. We will also explain how credit card accounting works and how you can record credit card payments. Let's get started!
The Importance of Tracking Business Credit Card Expenses
The importance of monitoring your business credit card expenses cannot be overstated. By keeping track of your expenditures and credit card purchases, you can ensure that your finances are in order, so you make sound business decisions.
Additionally, tracking your expenses can help you identify spending patterns and areas where you can cut costs. That is why you should always strive to keep your business credit card expenses in order.
What Are the Best Ways to Track Small Business Expenses?
One of the most important things you can do when running a business is to ensure you’re properly tracking business credit card expenses. This will help you stay organized and on top of your finances. There are a few different ways you do that, so let’s look at some ideas.
Use Software To Categorize Your Expenses
One of the best ways to track your business credit card expenses is to use software to categorize credit card transactions. This will allow you to quickly see how much you spend on different categories, such as travel, office supplies, or advertising. There is a lot of credit card accounting software available, so you should be able to find one that meets your needs without much trouble.
Open a Business Bank Account
Another way to track your business credit card expenses and ensure every card purchase is accounted for is to open a dedicated business bank account. This will allow you to keep your personal and business finances separate, which can be helpful come tax time.
Additionally, having dedicated accounts helps users keep track of their spending and better manage their cash flow.
Create Financial Statements
Another system that can help you manage business credit card expenses is creating financial statements. A credit card statement will give you a clear picture of your income and monthly payments. This will let you see where your money is going and help you make informed decisions about your spending.
You can create a credit card statement yourself or hire an accountant to manage your books and credit card statements.
Use a Dedicated Business Credit Card
One of the best ways to keep track of your credit card purchases and expenses is to use dedicated business credit cards. This will give you an insight into how much you are spending on different categories, such as travel, office supplies, etc. Also, using a dedicated business credit card can help build your credit history and improve your chances of getting approved for loans in the future.
Digitize Your Receipts
If you want to keep track of business expenses even easier, you may want to digitize your credit card receipts. It will allow you to track all your credit card purchases even if you lose your paper receipts.
There are several different ways you can digitize your receipts. For example, you can scan them or take pictures of them with your smartphone.
Review Your Expenses Regularly
No matter which method you use to track your business credit card expenses, it is crucial that you review them regularly. This will allow you to catch any errors or discrepancies and ensure you are staying on budget. Additionally, reviewing your expenses can help you identify areas where you can cut costs.
How To Record Credit Card Payments in Accounting
When you use a credit card to purchase goods for your business, that purchase is recorded as a liability. That is because you will eventually need to pay back the credit card company. Whatever you owe is registered as a current liability on your balance sheet.
When you make a payment on your credit card, it is applied to the credit card liability account and removed from your balance sheet.
To record your credit card payments in accounting, you must create a journal entry in which you will need to debit the cash account and credit the liability account.
The amount of the debit should equal the amount of the credit. For example, if you made a payment of $500 on your business credit card, you would debit the cash account for $500 and credit the credit card liability account for $500.
By following these steps, you can ensure that your business credit card expenses are being properly tracked and accounted for. For more information on credit card accounting principles or journal entries, you can consult with a certified accountant.
The best way to track your business credit card expenses will depend on your specific needs. However, there are a few methods that can be helpful for all businesses. You’ll have to determine which one will work best for you and your business.
Remember, the most important thing is to check your expenses regularly and make sure that you are staying on budget.
How can I track my expenses for free?
Various solutions such as Wave or Mint offer free expense tracking for businesses. Both of these apps allow you to automatically categorize your business credit card expenses, which can help keep track of your spending.
They also offer several useful features, such as creating a budget or tracking your progress over time to see which areas need improvement.
How do I track business expenses in Excel?
If you are looking to track your business expenses in Excel, you can do so by creating a budget template. This will allow you to input your income and expenses into the spreadsheet and see how much money you have leftover each month.
You can also use this method to track your spending over time and see where you may be able to cut back.
Is Mint worth using?
Yes. Although it isn’t an actual credit card accounting software, Mint can help track your spending.
It is a popular choice because it is easy to use and has many features, such as categorizing expenses, setting up budget alerts, and tracking spending over time.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.