There are many reasons you need to track your work at home expenses. Perhaps the most obvious reason for business owners or freelancers who work from home is taxes. However, that's just a small part of why you want to accurately track your finances.
Since you should always try to be efficient in how you run your business, it pays to learn about tools that can help you manage certain tasks and give you more time to focus on other areas. With advances in technology and affordable tools available, there's really no excuse to not track what you're spending when you work at home. These tools won't just save you time at the end of the year, but can also become essential to operating your business successfully.
You can make your own spreadsheets to track your home office expenses, but you may have to invest some time in learning how to create spreadsheets that work the way you want them to. If you do decide to create your spreadsheets, it's important not just to track expenses in the form of the cash you pay out, but the time you spend as well. It's not even about what your time costs, but about what it costs to run the office itself, which can be difficult to figure out without using some of these tools. Further, an added benefit to using Google spreadsheets is that you can access what you need no matter where you are, even via mobile. Plus, it's fairly easy to download your data when you need it at tax time, if you have it organized and in one place.
Several different devices and programs are available to track your receipts for you. You're probably aware of the feature offered with many business credit cards that lets you take photos of your receipts, as well as label and store them. Some scanners can even read the total in order to make tracking easier. Note that you should always make office purchases separately from home purchases for easier tracking.
Without some kind of app or software you are stuck with the long method of trying to keep receipts in one folder or envelope and tracking them as best as you can. Don't get me wrong. That old school method works for a lot of people. Keep it if you want. At the end of the day you've got to do whatever works best for you.
Professional accounting programs exist that allow any business to track expenses easily. Some also work well with the IRS website and other tax programs so that all the information easily transfers over to your tax forms at the end of the year. All you need to do is input expenses as you create them. The system does the work for you. Banks offer various types of programs and there are even free services online that help do the bulk of the work for you when it comes to business accounting.
When you're ready to do more than just tracking a few simple bills and invoices, it's time to start breaking everything down into codes. Tag each task with a code so that you know what you were doing and which client you were doing it for. This part of the process can help you break down the costs so you can see where you need to improve. Once you track where your time goes, you can create job sheets that let you create pricing based on real-time statistics.
The systems and tools you use shouldn't just be for taxes or your own personal information, but a means by which you can address bottleneck areas and elements that are costing you more than you make. These tools can also provide a close-up view of where you need to adjust your time, effort, and pricing, to increase productivity, and of course, make tax time a little bit easier at the end of the year.