There are about a thousand things you need to take care of when you start a small business. And with almost half of small businesses failing within the first five years, you need to do everything you can to stay on top of your finances.
As your company grows, your expenses will increase as well. It’s crucial to be able to track how much you’re spending by creating a business expense spreadsheet.
Although it can feel daunting getting into the financial nitty-gritty of your business, creating an expense spreadsheet doesn’t have to be hard. In this article, we’ll teach you how to make a business expense spreadsheet so you can stay on top of your purchases.
What Is a Business Expense Spreadsheet?
An expense spreadsheet is a standard template that simply helps you track business spending. It can help you organize the details of where your company’s money has gone.
For example, you can quickly find out:
- What your money was spent on
- Why you spent that money
- Who spent the money
- And how much was spent
Depending on how detailed your spreadsheet is, it can include a very specific look at these expenses or it can just give a simple overview of your expense history. What works best depends on your business and what you’re spending your money on.
For example, some companies might need a travel-focused expense sheet to track all travel expenses like transportation, meals, and lodging. Another is a monthly expense sheet that shows your spending from month to month.
No matter what your spreadsheet focuses on, it should have these common features:
- A list of rows that include the expense item’s name
- Several columns for details including date, description, amount, costs, method of payment, vendor, etc.
- Formulas that can automatically calculate the expense
These spreadsheets can help you get a quick and deep understanding of your purchases.
How To Create a Business Expense Spreadsheet
Building a spreadsheet for your small business isn’t difficult at all. Let’s walk through the steps to create your first one.
1. Find a Template or Software For Your Expense Sheet
The bad news is that creating an expense spreadsheet from scratch is difficult and time-consuming. The good news is that there are thousands of templates and expense-tracking software that are already available.
You should be able to find a template that works in Excel, PDF, Word, as well as Google Docs and Sheets. Just do a quick Google search for expense report templates.
For example, Microsoft Office offers free downloadable expense report templates for Excel.
Once you download the template, you can customize it to your liking. Add your company’s name, date range, and whatever else needs to go in there.
2. Edit the Columns
When you download an expense sheet, there will probably be several standard columns that are included. These might include:
- The date the item was purchased
- The vendor that item was purchased from
- The client the item was purchased for
- Which project the item was purchased for
- The person who bought the item
- Notes and descriptions
- Cost of item
However, there are no hard and fast rules about what needs to go into each column. Add or edit columns to reflect the most common expenses that your business uses.
For example, if you often take clients out for meals, you can add a “travel and meals” section. If your business involves a lot of transportation, you might need to add a “transportation expenses” section.
You can also separate your expenses by tax categories. This will allow you to easily track tax exemptions when tax season comes around. These categories include:
- Rent or lease
- Office expenses
- Travel and meals
- Repairs and maintenance
- Car and truck expenses
- Employee benefit programs
- Pensions and profit-sharing plans
- Repairs and maintenance
- Taxes and licenses
Organize your columns as you see fit for your business.
3. Add Itemized Expenses
Start adding in your expenses to every new line. When you fill in an expense, do your best to be as detailed as possible so you can quickly remember and categorize it in the future. This includes showing what project or client the expense was made for.
Do this in chronological order so your most recent expenses are at the end of the sheet.
4. Add Up the Totals
After you’ve added your expenses, there should be a section that has a grand total of your expenses. A good expense template should already include these equations so you can quickly see how much you’re spending in different categories.
5. (Optional) Attach Receipts
If you have employees that will be submitting expense reports, it’s important to remind them to attach any receipts that they have to justify the purchase that they made. To create a file of it on your computer, you can simply print the expense report, attach the receipt to the physical copy, then photocopy it again.
Make sure to keep your receipts for future situations, like being audited by the IRS.
6. Finalize, Print, or Send Your Report!
That’s it! Your expense report is ready. Make sure to double-check all of your totals to make sure that they make sense.
Creating a Business Expense Spreadsheet Will Help You Run Your Business More Efficiently
There are several benefits to creating a business expense spreadsheet for your business.
By visualizing your expenses all in one place, you’ll be able to better plan future months’ spending. This will help you make better financial decisions because you’ll have a more holistic view of your company’s spending.
This will ultimately help you save time and money and run your company more efficiently.
If you’re serious about optimizing your small business’s financial structure, get a free consultation with us to see how our bookkeeping and tax planning services can help you keep more of your hard-earned cash.