Some Do’s and Don’ts of Business Expense Tracking

Do:

Track everything

If you want to maximize your tax return, there’s no such thing as having too many records. Keep receipts and invoices. Log mileage. Keep records of any and all business-related expenditures.

Backup everything

One record is not enough, and you should always backup for your backups. Many expense tracking apps provide backup options, or the ability to export data so you can back it up to your personal cloud or external hard drive.

Be honest about your expenditures

Don’t round up. Or Down. If you are unable to procure a record of an expense, ask your accountant for options if you had planned to claim a deduction.

Track as you go

Don’t rely on your memory to claim mileage or expenditures. In the event of an audit, any discrepancies or inaccuracies will only invite further scrutiny.

Don’t:

Fudge the numbers

As previously mentioned, don’t round or estimate your income or expenses. Doing so may come back to bite you during tax time.

Rely on one set of records

We’ve recommended software before, but we can’t stress enough how indispensable expense tracking software can be. More robust offerings will also allow you to export and backup your files, meaning you can keep backups of your backups in case of a disaster or cyber attack.

Mix business and pleasure

At least do not mix them when it comes to tracking expenses. While there are some potential workarounds to a family trip–for example if you have a legitimate business trip and decide to bring your family along, you can deduct your own transportation expenses but if you start trying to claim business trips for yourself, spouse, and kids, or claim a day spa as a business expense, you’re sure to draw the attention of the IRS at tax time.

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