In the trade business, implementing methods to track your business expenses will help you manage your cash flow and ensure future growth. Knowing when and where to spend your money is key to scaling and not falling flat. Especially in a small business, financial clarity will be a big part of long-term success.
Why should you track your expenses each month?
Every month, quotes, invoices and payments come and go. Some costs are predictable, like subscriptions and paying employees, but unexpected, one-off expenses like broken tools or a new van can also pop up. Tracking everything monthly regularly helps you handle any surprises with ease. Having impactful tracking systems in place improves overall cash flow because businesses are able to anticipate what’s going to happen and avoid cash crunches. Additionally, if you plan to get a business loan or sell your business in the future, clear financial records are needed to prove your responsibility from the past.
Track your $$$ by category
As you start to reflect on your month’s spending, take a closer look at which categories are taking up the most and whether they align with your business goals. If fuel costs are high, is it because you're driving long distances to reach clients? Could you optimise your routes or focus on attracting local clients to reduce travel expenses?
By knowing exactly what’s eating up your budget, you can make more informed decisions. Breaking down your spending into categories like rent, insurance, payroll or materials helps you spot patterns in your spending and see how they all contribute to the total.
Expense tracking not only brings financial awareness to your spending habits but also helps you find opportunities to save. It will also show if you’re wasting money in areas you shouldn’t be. If you haven’t started yet, start tracking your expenses today.
Be ready to pay taxes
Another reason tracking expenses is beneficial is preparation for when tax season rolls around. Rather than trying to scramble through all your piles of paper, if you budget and track your expenses each month, you’ll already be ready to go. For taxes as a tradie, you’ll need to share financial statements relating to the work you completed, the materials purchased, and any travel or software expenses.
At this time of year, you’ll also need to be transparent about all your sources of income, including invoices from regular jobs and any cash jobs done on the side. Anything necessary to run your business can be refunded during the tax season.
How to track your business expenses
If you’re not currently tracking your expenses and just making purchases sporadically, that needs to change. Good thing, there are many ways to get organised.
First, you’ll want to open an Australian business banking account so all your business expenses are separate from your personal finances. This will help you streamline your payments in one place. You’ll want to have 3 accounts:
- Business checking account
- Business savings account
- Merchant services account
A business checking account is used for day-to-day transactions, a business savings account helps set aside funds for future needs, and a merchant services account processes payments from customers. With these three, you’ll be good to go.
With your accounts in a row, you then need a system to track the cash flow. You can create your own spreadsheet to manually track expenses or you can invest in business management software that automates the process. Simply use google drive or excel for your spreadsheet, but remember you will need to consistently go in to import the data.
If you want to streamline and simplify your work, an all-in-one software like Mira would be a great choice. Accessible online or through our app, Mira is with you every step of the day. You can easily record your financial information that integrates into accounting software, such as Quickbooks, Xero, and more. Features such as cost estimating, inventory tracking, and client management will reduce your admin time, in turn making your business more efficient.
Simplify your admin work today
Simplify your admin work today with Mira – the perfect software to manage your money effortlessly. Track expenses, manage invoices, and streamline your business with ease. Take advantage of our unlimited-day free trial and experience business made easy!