How to Calculate Employee & Business Expenses
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Every business, regardless of size, needs to track expenses as they relate to profits. Depending on the type of business, calculating expenses on a daily or monthly basis may be the best approach. All costs necessary to operate the business, as well as employee expenses related to business matters, such as client dinner meetings and the purchase of office supplies, should be included. Calculating expenses as they occur not only keeps finances in order throughout the year but also helps get tax-related paperwork in order.
Step 1 - Collect all receipts related to purchases that directly affect the business. This could include the purchase of a fax machine, gasoline charges for traveling employees, or monies paid to third-party suppliers and vendors for services rendered on behalf of the business. Work-related education to improve job skills is another expense you can add to the calculations.
Step 2 - Sort these receipts by category, such as travel, equipment and meetings. You can sort them further by dividing the piles into two sections, one for expenses charged directly to employees and the other for expenses charged directly to the company.
Step 3 - Purchase a software program that focuses on expense reporting or purchase an accounting-type ledger from an office supply store or a computer software program designed for tracking expenses. Enter all of the totals from the receipts into whichever system you use.
Step 4 - Total all of the amounts entered into the program or handwritten log. If you have organized your expenses by month, you can determine whether you need to be more conservative with business-related expenses the following month due to budget constrictions.
Step 5 - Plan on having the same amount of expenses for the rest of the business year for items that are based on common experience. For other types of expenses, consult with an accountant or banker.
Source: Small Business Chron
Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.
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