Financially Adjusted

#41: 3 WAYS TO TRACK EXPENSES

Leslie Roth Episode 41

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Are you truly keeping track of your expenses in your chiropractic business? In this episode, I break down three essential ways to track your expenses so you can stay on top of your finances, avoid cash flow surprises, and maximize your profit margins. I cover:
✅ Why a Master Expense List is a must-have for managing recurring transactions
✅ How Budgeting (aka Your Money Allocation Plan) keeps you proactive with your money
✅ Why an Up-to-Date Bookkeeping System is crucial for financial clarity and tax deductions
If you’re ready to take control of your finances and avoid costly mistakes, this episode is for you!

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Disclaimer: This content is for educational and informational purposes only. Please consult with an accounting professional for direct advice based on your specific business situation.

What's up my chiropractic friend I you're having a great week, and things are flowing smoothly in your business and in your life. Speaking of things going smoothly, Today's podcast topic is one that will ensure that things flow smoothly…in your business. I'm going to touch on three different ways you can track your expenses in your business. You’re probably wondering why three ways and do I need to do all of them. The answer is yes. Ideally you should track your expenses in all the three ways I'm talking about today. However, don't panic if you're new to all things business finance and you've never really tracked your expenses before. If you haven't really been tracking even just one way that I'll talk about today, Take it one step at a time.

You can pick one of these and work on it at a time, don't let yourself get overwhelmed…by all three This is informational, and you have to show yourself patience and grace. So, it's not realistic to think that you'll just Get these all done immediately, and understand them nah, you got to take it one step at a time. Give yourself some patience and grace and…

Things will be a lot easier and smoother for you in your business. And the idea is to not be stuck in analysis paralysis but to move forward imperfectly. So, I'll get into the first way that you can track your expenses. That is with a master expense list. So, I recommend having one place, one central place, where you list out all of your recurring transactions in your business.

You will organize this by…month…by quarter and by yearly expenses. The benefits of having this central master expense list is really to just keep your finger on the pulse of what your common recurring expenses are. This will guide you when it comes to cash flow, and cash flow is really just the timing of your revenue coming in your income coming in and when your bills go out. So when people run into cash flow issues, they're running into timing issues like they don't have enough coming in to cover expenses that are going through and the timing is off. So, you find yourself scrambling in those situations, having a list like this where you are in tune to when different expenses are coming out, will help you manage the timing of your bills and ensure that you have enough funds to cover those bills at the right time. 

So, keeping your finger on the pulse of all of your recurring expenses is huge.

It'll help you just manage your expenses better overall and just have the details of each expense And you can have um

office manager helping you with these, um to keep this up to date You can have a spouse helping you with these. So it doesn't need to fall all on you but the key is to keep this up to date. Another benefit is that it's going to help you catch any unused subscriptions…and unnecessary expenses…

Even though I teach on this stuff, I fall into this trap too of…setting up the recurring automated payment for something, or I'll be like oh yeah I'm gonna try something…with a trial period and then I forget about it So this keeps you honest It keeps you…staying on top of anything that could fall through the cracks and you know any subscriptions that you just keep paying for and you forget that you're not even using them and they're they're coming out and you're not checking. Your expenses so you don't know about it. This sheet…And by checking in with this sheet once a month is going to allow you to stay on top of that and catch anything unnecessary.…

Another huge benefit is that Let's say you have to get a new credit card for some reason or a debit card, This is going to be a great place to work from to know what…You have to change or what expenses…need to be changed for that new credit card So, ideally you'll just able to look at your list and say oh okay. That was you know an expense that I paid for with this card and I have to go in and change that one because that's one of the most frustrating things whenever you get a new credit card or debit card and you're like Oh shoot I don't remember what bills I have on this and…

you know you wait until you get the alerts in your email. Saying your payment didn't go through. So instead of having to scramble every time that happens, you just go to this list and you have everything laid out for you and you know exactly where to change it It's just very helpful. And another benefit is that it makes budgeting more simplified, and it brings clarity. To what to put in your budget So, you know you might be saying I don't have a budget yet but that is gonna be something I touch on in my episode So definitely tune into that where I'll deep dive a little bit more.

I think every business owner needs to have a personal and a business budget. I like to call it a money allocation plan because I feel like budget…has a lot of negative connotations for some people A lot of kind of limiting vibes, if you will.

Now I'm going to talk about the how for creating this master expense list. Really, whatever method you use I always say make sure it's one that you're more likely to check-in with So if you hate spreadsheets, maybe don't use a spreadsheet. I do think spreadsheets are the more of efficient organized way to do this but if you are more of like an old school tablet pen person, then use that I mean it's just really about doing it and checking in with it. Versus the method So you have to pick your preferred method to really make this work for you and make it more realistic that you'll show up into it. So, I think spreadsheets are more efficient and more organized.

If you can spend some time familiarizing yourself with Google sheets or Excel, It may not feel like such a big deal to do it in a spreadsheet. But I recommend a Google sheet so you can share that if you need to it's very easy to share, um Google documents and Google sheets with people so if you're having an office manager or a spouse help you with this, That could be a great tool…

How the organization will look within this master expense list. Is you're going to break down all of your recurring expenses by monthly…recurring expenses quarterly recurring expenses and annual recurring expenses.…

I always recommend saving. On a monthly basis for quarterly and annual expenses so this is going to be the spot that tells you how much you're paying. For those quarterly and annual expenses and then you can break it down for your budget into monthly so that you know what to save monthly So you want to make sure you list out um, in these bigger…overarching columns, monthly quarterly annual. Then within those you're going to list on what day of the month which month in that quarter are you paying it Which month in the year are you paying it and put the dates on there that's going to be very important. Because that's what's also going to help you with cash flow and knowing that you have the revenue to cover those bills at a certain time.

And another thing you want to put in this spreadsheet or in this list that you're making is the payment method so that like I mentioned earlier if you happen to change credit cards you can easily just go and see which expenses you linked up to that particular card so you can easily change them. So, payment method, amount is another one You definitely want the amount in there because that's the most important information.

You want to do just a little side note of what you're using this for. And when you go back to this list, each month and you're looking at…what you're spending money on, you really know…what the business purpose is what you wanted it be in the beginning and then you can analyze whether or not that's still relevant to you. And you can list any other notes in this list as well. Like if you got an initial discount for a trial period or use somebody as an affiliate link It could have been cheaper up front but you want to put in there What the renewal amount would be for the next time you pay that So that you know and you're not surprised by that and you can plan for that.

You want to check-in with this list monthly and keep this as up to date as possible This is how it's going to work for you If you're not keeping it up to date, it's kind of pointless in a way because you're not able to derive from this list all the information that you should and really keep your finger on the pulse of what's going on with your expenditures. Ideally you have a business budget, and you can check-in with both at the same time. So, you might not be there yet no worries but when you do end up Also having a budget you would ideally just…

Check-in the week before a new month starts. And you would update your expense list and then update your budget. To add or remove any expenses. Tune in next week because I will break down how to create your budget or your money allocation plan and walk you through all those steps.

So, speaking of budgets, that would be the second way that I am recommending you track your expenses…

I'll do a deeper explanation of that next week but I'm just going to highlight the importance of how to track and why to track in your budget. Mainly the biggest benefit you're ever going to get with a budget is that you're taking a proactive approach with your money. If you're familiar with me, you know I love talking about allocating your money in a proactive way with a money allocation plan or business map as I like to call it. This is the way that you're able to stay in control of your dollars every month in your business because you're forecasting…what's flowing in and what's flowing out of your business.

Your master expense list will help you keep this money plan realistic, and up to date So if you're going in And you're tuning up your master expense list every month you're going to be clued into, you know if you…have a recurring expense that you canceled and you're no longer paying or if you know the amount of an expense went up or if you added a new subscription or a new expense that's recurring, So you can use that master expense list to then help you keep your budget realistic.

The idea is that you'll be aware in advance of the month happening, whether or not you have the revenue to cover all of your expenses and still have margin in your business. Alright, the last and third way to track your business expenses…is a bookkeeping system. And this is probably the most obvious way for a business to track their expenses. Most of you likely have some type of accounting software. I highly recommend QuickBooks online and it's what I use exclusively in my bookkeeping business for myself and for my clients. You'll find an affiliate discount link in the show notes if you are thinking about getting QuickBooks um that will get you a nice discount.

If you don't have up to date bookkeeping, I urge you to get that straightened out immediately. If you DIY your books and you're not able to stay up to date with them or you're unsure if things are accurate, it's likely time for you to consider outsourcing your bookkeeping. The key to tracking your expenses is to stay up to date. So whether it's your bookkeeping or anything else, staying up to date on it and being able to plug into that monthly to know your financial health is just the absolute key to all of it. Your master expense list is your central one stop shop for all your recurring transactions and your budget is proactively putting together money plan for your money and forecasting whether or not you have income to cover expenses and how much margin there is You're also using your budget to include any one off or variable expenses.

You may have random expenses that aren't recurring, or you may have recurring expenses that are variable each month. 

You're plugging in that more accurate number each month when you do your budget. And your bookkeeping system - this is where you're accurately tracking what's actually happened in your business and which expenses actually came through your accounts so this is where you're capturing in real time with your bookkeeping system. all of those expenses.

By staying up to date with this you can make sure you're able to capture every single deduction you could possibly get in your business. One thing I see people, um leaving out of their books is if you purchased business expenses with personal funds, A lot of times, many business owners fail to capture that So you want to make sure that you're grabbing any of those transactions because if you have your business accounts linked in your QuickBooks or whatever accounting software you're using, that's not going to be caught it's not going to catch those personal…transactions because you don't have those link up which you shouldn't. Um and you want to make sure you're not really co-mingling funds. It's okay if every once in a while, you accidentally pay for something on your personal card or vice versa but make it a practice to have all business transactions coming through business accounts and vice versa.

So, another thing that I see people missing out on with deductions is mileage. Make sure you're tracking your mileage. 

But staying up to date on your bookkeeping will make sure will help you make sure that you're capturing all of those deductions, all of those expenses that are flowing through your business.…There are a few different ways to track and view your expenses in your bookkeeping system What you're tracking your expenses when they're flowing through your banks. Feed or your bank feed um, where you can link up your accounts in your bookkeeping system. 

Ideally, you're using an efficient ways to do that Like you're setting up rules where things get automatically categorized and you're staying up to date on that. So once that happens, there's these different ways that you can view your expenses in your bookkeeping. For looking up very specific expenses like let's say you're wondering how much did I pay like the cleaning person this month You can look that vendor up specifically…and see what you paid to them or see all of the payments made to them. So, a key for categorizing expenses in your bookkeeping is to make sure you input the vendor or the person that you paid so that you can easily look them up because if you don't attach a vendor to that expense, you're not going to be able to look up your expenses this way. So you want to be able to look up that vendor and see everything that you paid them.…

You can also run specific reports in your bookkeeping system, to track all of the expenses that came through for that month. Many bookkeeping systems are similar to QuickBooks but In QuickBooks you have a report section that says expenses and vendors. There are a few different reports you can run within that to show you a list of expenses that came through for that time period. One is called transaction list by vendor. And this will list out for that time period which is in this scenario a month you will see each vendor or person you paid listed out and then under that you'll see each individual expense or transaction that was made in the date.

The second expense report that you could run is titled expenses by expenses by vendor summary. This is exactly what it says it's a summary of the totals paid to that particular vendor for that particular time period. This is not going to give you individual transactions, it'll simply…total the amount of all the payments made So you'll just see that vendor and you'll see that total…

The third and final report that I recommend using to analyze your expenses is your monthly profit and loss report. Each month you should be viewing this report because it gives you a clear picture of the financial health of your business for that time period.

You can also compare it with your budget to make sure you're allocating your money as realistically as possible able So if something changed and you didn't have it correct in your budget you can correct it the next month. This report tells you facts of what happened and helps guide you in making proper decisions in your business. I recommend running a P and L that shows what percentage each expense category is in comparison with your revenue. This gives you a more clear picture of how heavily you're spending in each category. This also tells you what your profit margin is and that is just what percentage your profit is in comparison to your revenue. This is how much is left over after your expenses have been taken out. Keep in mind that when you're looking at this number a common misconception is that it already factored in what you took out in owner's draws and full debt payments. That's not the case.

You have to keep in mind that the profit margin or profit is before you took owner's draws and does not include the principal portion of debt payments. The interest portion of debt payments is the only thing that's included as an expense on the p and l. So be sure to grab also my free sample chiropractic P&L that I created This is going to show you an example of what a healthy P and L can look like and has different categories with those percentages so can use this as a guide with your own P and L and start to understand…what categories…to focus on what you should be spending in each category and just kind of use that as a benchmark.

If you're new to reading these financial reports in your business, check out episodes eleven and twelve, where I break down what is in a balance sheet and a P and L and how to understand them. I'll link those in the show notes but ideally tracking your expenses with your P and L on a monthly basis is giving you actual factual information which is so important to use when you're trying to figure out how healthy your business is and how to make business decisions that are realistic and up to date.

If you can get to the point where you're using these three different approaches to track your expenses each month, you'll be as on top of your spending as possible in your chiropractic business. Be sure to tune into next week's episode where I'll walk you through all the steps for creating your own money allocation plan for your business.

If you're new to all of these, just take them one step at a time. The important thing is to not be paralyzed in thought and take no steps forward. Step out in imperfect action. Imperfect action brings you clarity and is always better than no action at all.

Until next time Have a fantastic week and thanks for tuning in today! 

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