The recent surge of digital wallets, P2P apps, and places you can use them have made it significantly easier to pay for business-related expenses. You no longer have to fumble around in your wallet to find a credit card, and you can split the check for a business lunch meeting with a couple swipes on your phone. There’s no question that digital wallets offer a great convenience.
On the flip side, with so many ways to pay using your phone it can be challenging to keep track of your spending. How do you keep your finances organized with a digital wallet? Here are some tips on how you can keep your finances organized when using a digital wallet:
Use One Credit Card
Whether you’re using Apple Pay, Google Wallet, or the myriad of P2P apps available, use the same card for all your business-related experiences. If you have a business account, even better. Link all your digital wallets to your business account card. That way you can easily review your statements and make adjustments as necessary.
If you do have more than one credit card that you use for your biz expenses, figure out which card you’ll want to use for which types of purchases. For example, you might want to use one card exclusively for travel expenses via Apple Pay, and another for office supplies and business meals.
If a P2P app or digital wallet has the option of linking to a card or banking account, you’ll have an easier time keeping track of your business expenses by linking to a card. That way all your purchase transactions are in a single place and you won’t have to sift through everything in our bank statements. This is a total time saver when it comes time to do your taxes. The drawback is that for some apps there is a transaction fee when you use a credit card, so spend some time looking into different options to figure out what works best for you.
Create a System of Tags
If you use a P2P app such as Venmo or Tab to split the bill, create a system of tags in the notes section for each transaction. By no means does this have to be complicated. You can mark a transaction simply “Taxes 2016” or “for work 2016”. If your transactions are public and your friends can see your purchase history, to be discreet about tagging your expenses, you can designate a specific emoji to meals and entertainment expenses that qualify for tax deductions. Just periodically check the “purchases” tab in the sidebar to see how this system is working for you.
Set Limits and Alerts
If you’re concerned with going overboard with spending when using a digital wallet, you can set limits on how much you spend with certain apps. For Google Pay and Venmo, you can set aside amounts to keep a balance in those accounts. Review your balance on a regular basis, say, every month or so, and “top off” the amounts so you have a holding fund in place.
Take full advantage of the alerts feature on your credit cards. Set alerts for transactions over X amount or for purchases in certain categories. Some cards even allow you to turn your card off once you’re hit a certain spending limit. Decide on your budget early on and monitor your spending accordingly.
While staying organized with your finances when using a digital wallet can be tough, employing tips and creating a simple system can help you keep track of your spending, make adjustments as you see fit, and help you be prepared come tax season.