Billable expense is the most frequently used term while tracking expense in business. It is a type of expense which incurs on behalf of a client when doing their work. They are different from the cost of manufacturing the product. Example: Travel cost of a meeting with the client. 

These expenses are reimbursable. This means that you can bill the consumer for the cost if agreed in advance. 

It would help to mention all agreed-on billable expenses with the client on the purchase order or contract. You need to attach receipt copies with bills of business expenses. Mention billable expenses as expenses in accounting books. 

Types of Business expense

All business expenses fall under a particular category. So it is vital to record this under the correct type. This makes it easier to look into the areas where you are investing more money and saving more. It simplifies tax returns, but for this, it should be listed correctly. 

Here is a list of business expenses categorized by Aron Govil that applies to sole traders and small businesses-

• Travel expenses- This includes travel by bus, air, taxi, or train for business work. Motor Vehicle expense includes fuel, repairs, insurance, and interest on vehicles, depreciation, and lease payments. The ride between the business premise and home is not included. 

• Wages, salary, and other perks- Salary, wages, and other allowances you give your employees. It is important to check things with your accountant because these deductions are different and depend on which type of business you run. 

• Maintenance, repairs, and replacements- This includes repairs and maintenance of the business property. Substantial improvements like unnecessary upgrades or extensive building are not included. 

• Office home expenses- If you are working from home, then home expenses like mortgage interest, taxes, rent, and insurance are included. Running expenses like phone bills, furniture repairs, cleaning, and energy bills are also included. 

• Expenses and Capital assets- Capital assets are generally large long-term items like office furniture and machinery. Website development also comes under this category. The expense of general operation includes basic costs that are important for running, like rent, phone bills, and office stationery.

Benefits of Expense tracking

• You become more conscious about how and where you are spending business money. This improves business management.
• You get prepared for tax and may get your sum of money back.
• It helps collect all records of billable expenses and ensures that you don’t lose money. 
• You get a precise idea about where your business stands. This makes handling cash flow easy. 

Cloud Accounting

Many business people don’t know about the benefits of tracking because the method they use is messy and time-consuming. But the new and best way to track business expense is through cloud accounting. 

The cloud offers many benefits to the business. They are-

• Easy tracking without putting manual effort.
• Easy-grip on cash flow.
• Better records than spreadsheets.
• This makes an easy grip on costs.

Conclusion

As per Aron Govil, these were some benefits that you might experience by tracking business expenses. Then what are you waiting for? These reports are easily accessible and create profitability. Because the most important thing is if you can follow something, then you can also change things. By tracking, you can know where the problem stands and make changes accordingly.