How To Track Expenses for Your NOLA Small Business in 10 Steps

Unsure how to track expenses for your small business? You’re far from alone. According to QuickBooks, over 50% of small business owners don’t feel confident that they’re paying taxes correctly. Given that tracking business expenses is such a huge part of filing your tax return and (gulp) finding out what you owe, this highlights a knowledge gap for small business owners.

We’re not here to tell you that tracking expenses for your small business is fun (unless you do enjoy it, which is great!), but we can promise you that it’s not as anxiety-inducing as it can seem if you’ve never done it before or don’t have a process to follow. (You will have a process by the end of this article, by the way.) The payoff is also well worth the effort…

Building strong financial wellness foundations, including tracking business costs, makes it much easier for you personally or, if you can afford one, your bookkeeper, to file your tax return correctly. Plus, if you follow a process, you’re less likely to forget to log expenses on your tax return, meaning you won’t lose opportunities to offset what you owe legally. As a New Orleans-based company, keeping an accurate expense log can also help you plan and prepare for the seasonal dips that come with operating in the city.

Why Is It Important for Small Business Owners in NOLA To Track Business Expenses?

How To Track Small Business Expenses: Your 10 Step Process

Now you know why it’s important to track your small business expenses as an entrepreneur in New Orleans; here’s a 10-step plan to help you do it.

1Start by Separating Your Personal and Business Finances…

If it isn’t already (no judgment, it happens!), separating personal and business finances should be high on your priority list as a NOLA-based small business. Doing so will give you the best foundation to maintain and ideally, grow your business. It can also protect personal assets, such as your home or savings, by keeping them separate from business liabilities. Beyond legal protection, it makes it much easier to track your small business expenses.

You can separate your personal and business finances in a few steps. We cover all of them in our resource for local NOLA business owners: Separating Your Business and Personal Finances (And Why It Matters To Small Business Owners in Louisiana). But for now, we’re highlighting two of the most foundational ones below.

2Which Includes Setting Up a Separate Business Bank Account…

Setting up a separate business bank account creates a clear boundary around your finances, making it less tempting to dip into your business account to cover personal expenses. It also makes it much easier to track business tax deductions because they all come from the same business bank account, without irrelevant personal costs adding confusion to your statements.

You will need to set up a separate business checking account at a minimum, and ideally, if you want your NOLA business to build financial stability, a savings account, too. Remember to route all of your client payments and business income directly to your business checking account.

You should also apply for a separate business debit card to cover business expenses. And, if you take a measurable approach, a business credit card can help you build up a credit score specifically linked to your company, meaning you have a better chance of attracting external investment.

3And Keeping Your Business and Personal Expenses Separate Where Possible.

Sometimes your personal and business expenses naturally bleed together. You might use the same car to deliver goods for your business and do the school run, for example. But where possible, you should keep your personal and business expenses separate. You can do this by:

• ✓Not using business accounts for purely personal expenses.
• ✓Separating your business receipts from your personal ones (and keeping them for your tax records!)
• ✓Tracking when you use personal items for business use. These are called ‘shared expenses’.
• ✓Track all business expenses (including ‘shared’ ones).

4Don’t Forget To Save Every Receipt

Receipts are evidence of your business expenses, and you need to save them in line with the IRS’ period of limitations for each tax return (which is typically three years for NOLA businesses). Not only are they important evidence to support your tax return, but you will also need these receipts to add the right information to your expense tracker in the first place…more on that later.

Going digital where possible will help you keep physical storage to a minimum. You can do this by taking screenshots or downloading digital invoices and receipts at the source and saving them to a specific file on your laptop or PC. To save physical receipts, you can take photos or scan them. Beyond reducing physical storage, digital copies protect against lost or faded receipts.

5Choose a Tracking Method That Works for You

Your tracking method doesn’t have to be fancy or expensive — even a minimal setup will make tracking and reconciling your expenses much easier. If you can afford it, you can use automated software to help you track business expenses. Meanwhile, a simple spreadsheet broken down into the correct tax categories can work for tighter budgets.

You can also use both together to keep costs low and make tracking your small business expenses a little more time-efficient. So you can use a free-to-low-cost business account app that auto-imports bank transactions and categorizes expenses, alongside a free spreadsheet that tracks the finer details.

6Categorize Your Taxes

For an expense to be a legal tax write-off, it has to be classed as ‘ordinary and necessary,’ so costs associated with rent, utilities, and marketing, for example. To file your expenses in compliance with Louisiana and New Orleans occupational taxes, and stick to allowable expenses, you can group these costs by standard IRS Schedule C lines from the expenses section.

Small business owners in New Orleans can make the process of tracking expenses much easier by categorizing their costs in line with the IRS Schedule C lines through their chosen tracking method:

7Log the Necessary Details via Your Expenses Tracker

Beyond categorizing your taxes correctly, you must also log specific details for each expense in your tracker. You will need to log the expense date, the vendor, how much it cost your business, and a standard category label (such as advertising, travel, office supplies, or software).

To keep on top of your business expenses, choose a regular but achievable frequency to update your tracker. This will also make you less likely to forget an expense and not offset it on your tax return. Some folks do it weekly, but monthly is probably more realistic for small business owners already spinning multiple plates.

8Track Sales Tax Separately

New Orleans and Louisiana have unique local sales tax rules. To stay compliant, make sure sales tax collected and paid isn’t lumped into general business expenses. You can do this by recording sales tax separately. That means you should split daily or monthly sales receipts by total cash collected into gross revenue (credited to income) and tax collected (credited to ‘Sales Tax Payable’).

9Reconcile Your Expenses Monthly

Small errors in tracking your expenses can quickly pile up, becoming bigger and more time-consuming to fix. To avoid this, make it a monthly habit to match your tracked logs against bank statements every month to catch errors early.

10Work With a Local NOLA Bookkeeper if Possible

As a small business owner, you’re likely already overstretched across multiple parts of your company. If your business can afford it, we recommend working with a local bookkeeper to ease that pressure. A bookkeeper can help you record your business’s financial transactions, reconcile your accounts, and even manage customer invoices if that’s relevant to your company.

FAQs on Tracking Your Small Business Expenses