While handling all that comes with running your company, you may not find enough time to keep track of your business expenses. But bills can quickly pile up, and if you aren’t careful, you could lose track of payments that need to be made.
Monitoring the different bills you need to pay and paying business expenses on time should be a high-priority for every business owner. Repeat calculation errors and delays in paying vendors could damage your company’s reputation and, not to mention, your financial situation.
One of the best ways to stay in control is to find an efficient business bill pay platform that’s easy to use and allows your accountant to access all the information they need without sharing your password.
Types of business bills and expenses
Before we discuss how to organize small business expenses, let’s take a minute to list some of the most common payments that entrepreneurs need to make:
Wages and benefits
For many organizations, payroll and the costs associated with offering perks to employees is a major expense.
Rent or mortgage
You’ll need office space, and if you carry inventory, you will also need a warehouse. Most entrepreneurs can’t afford to buy property, so monthly rental payments will likely be a significant part of your expense budget.
If your company manufactures goods, you must know how to manage business expenses in this category.
Every business needs to spend money promoting its products and services. The expenses related to this include website development and maintenance, paid ads and retargeting, social media monitoring and community management, brand promotions, and more.
Company owners must develop systems and procedures to carefully track each business bill payment. If your payment processes are efficient and well-organized, your employees and vendors will get paid correctly and on time. This will help enhance your company’s reputation as a trustworthy and reliable organization.
How to organize your small business expenses
Here are two efficient ways that to organize your business bill payment process:
Business checking account
Find the right business checking account. These accounts are specially designed for your day-to-day transactions. You can use a business checking account to make payments as well as deposits. However, you should ensure that you don’t use the account for your personal expenses or to deposit personal funds.
How do you choose the best business checking account? Here are some of the key features you should look for:
- Zero monthly fees
- No minimum balance requirement
- No limit on the number of transactions
- Payments by ACH, wire, or check
- Earn interest on balances
Accounting software can be a lifesaver for small businesses. One of the biggest advantages of using accounting software instead of a manual accounting system is that you’ll spend far less time on manual data entry. The software will automatically sync business checking account entries with your accounting records.
Accounting software can also simplify tax work, help with inventory tracking and invoicing, and generate various standard business and accounting reports. If you find the right business checking account, you’ll be able to sync your account up with your accounting software, which helps you reconcile your finances even faster.
Tips for managing your business expenses
Here are ways to make your expense management process super efficient:
Connect your business checking account to your accounting software
As we mentioned above, this simple step will reduce your accountant’s workload, eliminate manual data-entry errors, and provide you with all your transaction data in one place.
Use sub-accounts to keep finances separate
This is a feature the best business checking accounts provide. Account holders get additional sub-accounts with their own dedicated account numbers. These account numbers are different from the main business checking account number, although both the main account as well as the sub-accounts have the same routing number.
Sub-accounts also will enable you to dedicate separate account numbers for vendors and contractors to bill, allowing you to set aside funds for specific purposes.
Give your accountant controlled access to your transaction data
Many business owners are reluctant to share their business checking account login ID and password with their accountant or bookkeeper, and rightfully so. Sharing passwords is never the best way, and compromising the security of your business finances is the last thing you want to do.
Fortunately, some business checking accounts allow you to give your accountant a secure login with specific permissions to access your account. For security purposes and peace of mind, you should use this feature if your business checking account offers it.
Pay your business bills online
Managing and keeping track of all your small business expenses can be exhausting. One way to alleviate the pain associated with this work is to switch over to an online bill payment platform. A good platform will let you set up one-time or recurring payments and you won’t need to rely on your memory or a to-do list. You will also be able to manage all your bills in one place and sync your records directly with your accounting software.
Finally, your bill payment platform could allow you to pay vendors by credit card, freeing up your cash flow and giving you the opportunity to earn rewards points.