One of the most important reasons that lead to business failure is lack of money. What many people do not understand is that businesses can be profitable but still have no cash.
What is a Business Expense Schedule?
A business expense schedule is simply a table used to record your business expenses. It is not a budget. Instead, it is a place to log all the money that leaves your business.
Why is a Business Expense Schedule Important?
As mentioned earlier, many companies, whether large or small, do not have a good understanding of the money they spend in their business. There are companies making millions of dollars but are still cash-poor. A business expense schedule can help:
- Identify money leaks. Are you paying extra fees because you don’t meet a minimum or you are late in paying your bills?
- Catch mistakes. Have you missed or been overcharged for something?
- Determine expenses that you can cut. Are you paying for things you no longer need or use?
- Make decisions about what is important in your business. The less money you spend in your business, the more money you can keep. When you see how much you are spending and on what, you can decide whether the expenses are worthwhile, or if you’d prefer to save the money.
- Simplify tax time. Most of your expenses, if not all, can be used as a tax deduction. Having a sheet to track makes it easy to organize and calculate your deductible expenses.
How to Create a Business Expense Schedule
There are a variety of financial software, applications, and tools that can automatically create your expense tracker. However, sometimes automated tasks go unchecked. In this case, an expense tracker isn’t useful if you don’t look at it to determine if your expenses fit within your limits.
Creating your own tracker takes more time and effort, but it will ensure you have an accurate insight into your finances, which is crucial for financial success.
Here are some tips for creating your own expense tracker:
- Decide on the software you will use for your scheduling. You can use Excel or Google Spreadsheet or any other scheduling tool.
- Gather your statements from the previous 6-12 months. This will help you determine what you want to track as well as give you a good idea of what to include in your expense tracker. You don’t need to have the numbers, just the items you’ve spent money on that you are still paying for in your business.
- Define what you want to track for each of your expenses. At the very least, you’ll want to track the actual amount spent, but depending on your business, you might want to track things like the client that incurred the expense, details about the expense (such as size and/or vendor), and anything else that can help you understand why you are spending the money. Put these headings in column headers across the top like:
Item | Description | Cost | Client
If you only care about knowing how much something costs, you can track your expenses by month, where you list what was spent on each item in that month:
Item | January | February | March etc.
- List all of your fixed expenses. These are the expenses that recur regularly and do not change in amount. For example, a payment service might charge you $20 each month. Many services are billed annually or quarterly, so you’ll put those amounts in the month they are incurred. As you look at past statements, identify the regular payments that are always the same price. Examples of fixed expenses include:
- Hosting
- Web
- Domain Renewal
- Email Service
- Phone
- Internet
- Other services like social media tools, image services, etc.
- Memberships or subscriptions
Depending on the number of fixed expenses you have, you may want to categorize them under headings like “Phone” and “Marketing,” etc.
For example, you might have under the Phone category:
Phone | Business Line | Mobile Phone | 800 #
These will be listed vertically in row cells (down the side of the table).
- List common variable expenses. These are the expenses that vary in price. For example, if you have voice services that change in price based on the bandwidth you use. Examples of variable expenses may include:
- Outsourced services (like virtual assistant or web designer)
- Usage-based fees (like bandwidth)
- Supplies (office supplies or materials to make your product)
- Marketing materials (like business cards)
- Shipping and mailing materials
- Training
These will be listed vertically in row cells. Since they are variable, you may want to list them below the fixed expenses.
Note: Since you want an accurate view of where your money goes, you may want to break down each of your expenses by vendor, rather than by category. For example, instead of “Supplies,” where you place a total cost for spending at the office supply store in one cell, you may want to break down your purchases into subcategories so you can track things like how much paper or ink you use.
Once you have filled in the tracking headers and the list, your table should look like this:
Leslie Truex
Set a Regular Time to Enter Data
This may take time, but it will ensure you are aware of your actual expenses and help you catch errors. If you don’t want to enter data manually, your bank probably has a feature that allows you to download it in CSV format or similar Excel format; however, this will provide all individual expenses, and it may not align with what you have set up above, so you will need to adjust it. For example, if you have two payments a month for your virtual assistant, the downloaded file will contain two separate payments, but in your tracking, you may want a single total cost.
If you are using financial software, you may be able to download your expenses directly or as a spreadsheet file from the bank. Again, you may need to adjust it to fit what you are trying to track.
Use Formulas to Do the Calculations
While large expenses can significantly impact a business, companies often struggle due to small amounts of cash. Many small expenses can add up to considerable spending. To find out how much you are spending, you want to add all your expenses.
If you are using Excel, select the cell next to the numbers you want to add, click on AutoSum in the Home tab, and then press Enter.
For example, if you want to know your total expenses for January, select the cell below the last number you entered for January, click on AutoSum and press Enter. If you want to know how much you spent over a specific period on a single expense (like phone), select the cell to the right of the last phone cost you entered, click on AutoSum and press Enter.
If you are using Google Sheets, open your spreadsheet, select the cells you want to add, and then click on Sum: Total next to Explore. You can also calculate averages, minimums, and maximums.
If
If you were using a financial program, it’s likely that it would automatically calculate these numbers for you.
Your Expense Analysis
Are you paying for two services that could be met by one? Are you using the membership that you pay for monthly? Did you know you were spending this much on printer ink?
By looking at your expenses in one table, you’ll realize how much you’re truly spending in your business (and perhaps answer the question of why you don’t have as much money as you thought), as well as identify areas where you can cut back or save.
Source: https://www.thebalancemoney.com/make-a-track-spending-sheet-4586263
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