Tracking your business expenses doesn’t have to be a chore. Here’s how to set up simple systems,
use the right apps, and make sure you never miss a legitimate deduction.
Why Tracking Expenses Matters
Expense tracking is more than a tax task — it’s a window into your business’s health.
Done right, it helps you make better financial decisions, stay compliant, and keep more of what you earn.
- Maximize deductions: You can only deduct what you document.
- See true profit: Understand where your money actually goes.
- Stay compliant: Organized records make IRS audits painless.
IRS Rules in Plain English
- Ordinary & Necessary: Expenses must be common and helpful to your business (IRS).
- Keep Receipts: Store receipts showing date, vendor, and business purpose.
- Accounting Method: Choose cash or accrual and stay consistent.
- Home Office: Deduct $5 × sq ft (max 300 sq ft) or actual expenses (IRS Pub 587).
- Vehicle Mileage: Standard rate for 2025 = $0.70 per mile (IRS announcement).
What to Track
| Category | Examples | Notes |
|---|---|---|
| COGS | Inventory, packaging, shipping-in | Product-based businesses |
| Rent & Utilities | Office rent, phone, internet | Deduct business-use portion |
| Home Office | Sq ft × $5 or actual costs | Must be exclusively used for work |
| Vehicle | Mileage or fuel + repairs | Pick one method per vehicle |
| Equipment | Laptop, tools, furniture | Large assets may qualify for Section 179 |
| Software & Ads | Canva, Google Ads, hosting | Fully deductible if business-related |
| Professional Fees | CPA, legal, consultant | Keep engagement letters/invoices |
Your Monthly Expense Workflow
- Connect accounts: Link business checking + cards to your software.
- Tag weekly: Categorize transactions before they pile up.
- Upload receipts: Snap and attach right away.
- Reconcile monthly: Match books to bank statements.
- Backup data: Cloud + local copies = peace of mind.
Top Tools & Apps for 2025
QuickBooks Online
Bank feeds, auto-categorization, and receipt capture for growing teams.
Xero
Modern design and excellent multi-currency support.
Zoho Books
Affordable and great for solo owners needing time + expense tracking.
Wave Accounting
Free core tools for microbusiness invoicing and expenses.
Expensify / Dext
Smart receipt OCR + approval flows for small teams.
Everlance / MileIQ / Driversnote
Automatic mileage logs synced to IRS rates (Everlance guide).
Keeper
AI-powered expense categorization and tax savings (Keeper review).
Audit-Proof Your Records
- Attach receipts with dates and vendors — digital copies count.
- Log business purpose for travel and meals.
- Maintain mileage or actual vehicle cost records.
- Store files in two places (cloud + local drive).
Leave a Reply