- 1 What is a business expense spreadsheet?
- 2 The importance of preparing a business expense spreadsheet:
- 3 What are the different types of expenses to record on the spreadsheet?
- 4 How to make a business expense spreadsheet?
A business expense spreadsheet is used by the companies to understand and categorize the various types of expenses that they incur throughout their operations. It is important to evaluate the business expenses and track them so that business performance would be forecast more accurately.
What is a business expense spreadsheet?
A business expense spreadsheet is an electronic document used by the businesses to track expenses like money spent on operations, employee wages, equipment purchases, depreciation, and payments to vendors. Moreover, this spreadsheet can be used to track non-cash expenses.
The business expense spreadsheet proves very helpful for the business owners or the finance staff while making calculations. They can understand the company finances more accurately by having such details.
The importance of preparing a business expense spreadsheet:
Business expense spreadsheet is the most effective document for assessing business performance and calculating tax payables. People who have just started their business it is important to have this spreadsheet in order to get a better understanding of startup costs.
Furthermore, company’s owner and financial staff by having expense spreadsheet can see the financial position of the company on a specific date. All types of business expenses are categorized in it such as operating expenses, non-cash expenses, etc.
What are the different types of expenses to record on the spreadsheet?
Let us discuss below the different types of expenses to record on the spreadsheet;
Costs of goods sold (COGS)
The money required to get raw materials and then convert them into a selling product is referred as the COGS expenses. This expense doesn’t include the administrative or selling fees and losses or interest expenses. In addition, on the basis of the type of organization, the COGS expense has different names.
The cost which is incurred from earned income out of financial investments or borrowing money is referred as financial expenses. These expenses are considered as non-operating expenses as they aren’t the part of normal business dealings.
As its name implies, these expenses are fixed, predictable, and doesn’t change from month to month. Fixed expenses may include the monthly rent as it is the same every month.
These expenses are unpredictable and needs prior budgeting. A liability or divided payment is a common example of an irregular expenses. They occur due to a previous obligation.
Research and development expenses
The expenses that are relevant to the research and development of the services or products of an organization is referred as research and development expenses. Here is the list of industries that incur research and development expenses;
- Pharmaceutical companies
- Technological organizations
- Health care businesses
Taxes are considered as non-operating expense. They include any taxes paid for manufacturing or selling goods or services. Sales and employment taxes and provincial and federal business taxes are the common examples of taxes.
These type of expenses are changed from month to month or year to year. It is important to track variable expenses in order to make sure that the company isn’t overspending in any one area. When the production of goods or services increases these expenses increases and vice versa.
How to make a business expense spreadsheet?
Consider the following steps to make a business expense spreadsheet for a company;
Select a conventional spreadsheet or a software program
To track business expenses, you can use financial apps and accounting programs. If you want to build an expense tracking spreadsheet according to your requirements then you should use Excel which is the most popular software.
Additionally, an accounting program is another option that you can use. It provides expense reporting. One of its popular example is QuickBooks that provides excellent expense tracking. By having this accounting program, businesses can link their bank account and have more accurate tracking.
Customizing the spreadsheet
You can customize the columns and the categories on the basis of the business’ industry and its expense categories. In every expense spreadsheet, you can find the columns of date, amount, purpose, and nature of expense. However, these are the basic columns you can add more as per your requirement.
During adding new categories and modify the spreadsheet, you should make sure the readability. For reviewing the total expenses for the reporting period, aggregate all expenses at the bottom of the spreadsheet.
Itemize every expense
It is important to itemize every expense while making the expense spreadsheet. Itemizing means you have to add a separate line for every expense and insert important details. If you are working with clients then make a separate column for notes and state the reason for the expense. This section makes the businesses able to forecast total expenses per project. On the basis of the order you prefer, add expenses in chronological order. This way, you can place the most recent expense at the top or at the bottom.
Attaching receipts for each expense is an excellent way to improve accountability. To make sure the veracity of your employee’s financial claims, ask for receipts from them. Share business expense reports and templates with your colleagues so that they can submit them for reimbursement. In case of electronic submissions, you can scan each receipt. You just have to ensure that your receipt are easy to understand and the amounts are correct.
Users have to make backups and sync spreadsheet on daily basis. You should make use of expense tracking software because it is easier than others. In software programs, you can never lose your important data. They all offer cloud syncing support.
Audit the expense spreadsheet on daily basis
Audit the expense spreadsheet on daily basis and set specific periods for auditing. You can review your expense spreadsheet when the month ends. Then, you can determine any anomalies or errors, and correct them.