Track Your Solopreneur Expenses in Minutes On Your Mac
Introduction
Are you a solopreneur struggling to keep track of your business expenses? You're not alone. In today's episode, we're diving deep into efficient methods to manage this right from your Mac. No matter your current setup, there's a solution for you. We'll break down the pros and cons of four main approaches, along with specific recommendations for popular tools. You will also find out how a simple oversight in expense tracking almost cost me a fortune. I'll unpack all of this after the intro.
Welcome
Hello, hello, and welcome to episode 94 of the Macpreneur podcast. Whether it's your first time or you're a longtime listener, I appreciate that you carve out some time in your busy solopreneur schedule. I've created Macpreneur to help as many solopreneurs as possible save time and money running their businesses on their Macs.
Now, in order to give you the most relevant Mac productivity tips and information, I need to know how well you're currently dealing with the three killers of Mac productivity, namely, unnecessary clicks, repetitive typing, and file clutter. After submitting your answers, you'll receive personalized, time-saving tips based on your results. Once again, visit macpreneur.com/tips and start boosting your efficiency today.
The Importance of Tracking Business Expenses
Efficiently dealing with supplier invoices is one thing; tracking how much money gets out of our solopreneur business bank account is another. At a high level, there are two types of business expenses: variable ones and fixed ones. Variable expenses are those that are directly linked to serving our clients.
If you travel a lot, then it's the petrol, transportation, and parking costs. If you make and deliver physical goods, it will be the raw materials and shipping costs. And since those expenses tend to change on a weekly or monthly basis, it is more likely that we will pay attention to them.
Fixed expenses, on the other hand, are much more predictable, and therefore we tend to have a "set and forget" attitude towards them. However, it doesn't mean that they don't evolve over time, and the most recent examples for me have been Teachable and Podio.
So Teachable drastically reduced the number of products that could be offered through all its pricing tiers.
For the basic tier, for instance, coaching offers and digital downloads went from unlimited to a maximum of 5 for each type. And the pro plan, which used to accommodate an unlimited number of courses, is now split into two tiers. The new pro is limited to fifty courses, and the pro plus is limited to 200 courses.
And so the cost of hosting between 50 and 200 courses suddenly jumped between 57 percent and 67 percent depending on the billing frequency.
And for those with more than 200 courses, the price increase was even more dramatic as the price would have been multiplied by 4.
Okay, Podio, on the other hand, redefined user roles, and one role that used to be free suddenly needed to be paid for in the new pricing structure. As a consequence, the monthly cost of using Podio shot through the roof for many solopreneurs, including myself, and small enterprises that relied on that specific user role to collaborate with others.
Now, to be totally frank, it took me 9 months to realize that the Podio pricing change affected me. Luckily, the cost impact was much lower than it could have been because Podio gave me a 50 percent discount for being a long-time customer. So how did it happen that I didn't notice anything for 9 months?
Well, remember the previous episode, episode 93? In this episode, I explain how to fully automate the filing of supplier invoices, which means that I barely look at them because I don't have much reason to do so. I knew that Podio was changing its pricing structure because they had informed me and I saw the email, but the issue was that I mistakenly thought that it didn't affect me.
And because of that, I didn't double-check the invoices. All this is to explain the vital importance of keeping track of all our expenses as they can hurt both our profitability and cash flow situation.
Exploring Solutions for Expense Tracking
So how can we, solopreneurs, leverage technology to better keep an eye on our business expenses?
At a high level, there are four types of solutions.
The first one would be using an online accounting tool. The second one would be to use an application to log our invoices. The third one would be using spreadsheets. And the fourth one would be using budgeting software.
So if you're already using an online invoicing tool, I recommend checking whether it supports expense tracking too.
In addition to minimizing the number of tools that you have to deal with and pay for, you will easily know how much tax you owe your local authorities.
FreshBooks, FreeAgents, and QuickBooks Online do that, whereas Zoho Invoice doesn't. If you remember, I talked about those four tools extensively in episode 92 of the podcast.
Deep Dive into Online Accounting Tools
Let's start with FreshBooks. It supports the direct import of bank transactions from banks all around the world. FreshBooks uses different intermediaries based on the bank location, and connecting the bank account from Luxembourg that I use for EasyTECH was pretty painless.
Now please note that a maximum of 90 days of activity can be pulled through a bank connection.
For transactions older than 90 days, or if your bank is not supported by FreshBooks, you can still manually import those transactions from a file in CSV format. So CSV stands for comma-separated values. It's a format where all the data you will see are separated by commas. And these types of files are natively supported with Excel, Numbers, and even Google Sheets.
Now, for items that you pay for with cash, you can easily snap a picture of the receipt using the FreshBooks mobile app. Then you can manually enter the amount, the merchant, and the category to which the expense belongs, such as gas, parking, dining, etc.
For individuals in the U.S., Canada, and the U.K., the receipt will be scanned, and information such as the amount, the merchant, and the tax will be automatically extracted.
However, FreshBooks mentions on their support page that it can take between 30 minutes to several hours for the receipt to be scanned. So this process is actually taken care of by one of their partners called Sensibill, which may experience an elevated workload from time to time.
Having said that, FreshBooks is the perfect online accounting tool for solopreneurs, and if you're still on the fence, I wholeheartedly recommend you consider FreshBooks. You can try it free for 30 days using my referral link, macpreneur.com/freshbooks in one word. Enter your email address or sign up with your Apple ID or your Google account.
No credit card is required. And if you end up becoming a FreshBooks customer after using my referral link, I will get a small commission at no cost to you. It's like a virtual high five for recommending stuff that I love and that I use. So thanks in advance for supporting me and the Macpreneur podcast.
Once again, visit macpreneur.com/freshbooks to start your 30-day free trial today.
Okay, so now let's talk about FreeAgent. Since it's headquartered in Scotland, it supports the direct import of major banks established in Great Britain and Northern Ireland that take part in open banking.
And those banks are AIB Group UK, the UK branch of the Bank of Ireland, Barclays Bank, HSBC Group, Lloyds Banking Group, Nationwide Building Society, NatWest Group, Northern Bank Limited, trading as Danske Bank, and Santander UK. Now, for other banks, a manual import of a CSV file will be required.
You can also take a picture of receipts from the FreeAgent mobile app, which even offers smart capture functionality by detecting the amount and the merchant. Now, this functionality requires iOS 16 and Android 9 or newer.
All in all, if you are based in the UK and you still manage your invoices and expenses manually, then FreeAgent is certainly a great option to consider.
And last but not least, QuickBooks Online offers direct import of transactions from banks established all around the world.
In the U.S., the bank must support a security protocol known as OAuth, which includes Capital One, Chase Bank, Wells Fargo, Bank of America, Citibank, PNC Financial Services, USAA, and American Express. In the UK, it's basically all the same banks that FreeAgent supports. And everywhere else in the world, QuickBooks Online supports major banks and financial institutions.
And the list can be easily found by searching the regional help pages.
And like FreshBooks and FreeAgent, QuickBooks Online has a companion mobile app with which you can scan receipts on the go.
Alternative Solutions: Invoices vs. Bank Statements
Now, if you're not using an online accounting tool or if the tool that you use doesn't support expense tracking, then the best tool to use will depend from whether you want to exploit the electronic invoices themselves. Or, you want to use bank or online payment statements.
The big advantages of using the invoices themselves are, first, that we already need to collect them anyway, so there is no further action required. And on top of that, they include the amount of tax, if applicable, and we can also log them even before the payment is made.
The big disadvantages of using invoices are that we need to make sure that we collect them all. For that, I will refer to episode 93, where I covered solutions extensively to do that.
And the second disadvantage is that it's not necessarily easy to extract information because the format of the invoices can change from supplier to supplier. The
advantages of dealing with bank and online payment statements are that the format is consistent regardless of the supplier, and there is also no risk of missing anything. The big disadvantages are that they only account for paid invoices. And, they don't specify the amount of tax, it's just the total amount.
And also, sometimes the name of the supplier can be cryptic and inconsistent. For example, on my bank statements, Amazon is sometimes abbreviated as AMZN.
Okay. If you decide to use the invoices themselves as the source for expense tracking, then you will need an invoice logging app.
And the best option for us Mac users is an app called Receipts. So let's start with the big advantages of this app. It's a native Mac application. It automatically scans the invoice and extracts the amount, the date, the merchant, and even the tax. You can import PDF invoices via drag and drop, but the app can also watch one or more specific folders, which means that this tool can be used in conjunction with Hazel that can do the automatic renaming and filing and moving.
And on top of that. It provides direct integration with the native print to PDF of macOS and also with Apple Mail. So you can create in Apple Mail a rule so that whenever you receive a PDF invoice that is attached to your email, that this PDF invoice gets automatically imported into the Receipts app.
On top of that, it's possible to track what is paid and what is due. It does approximate currency conversion on the fly. And something that I like a lot, it provides nice graphs, so donut graphs. Showing the expense distribution by merchant and by category. Now, the disadvantages of this application is that it's a database, and it will contain a copy of all the invoices that you import.
So, first of all, it will take more and more space over time, and second, on your computer, on your Mac, you will have duplicate copies of your invoices. the original one, and then the one that is being copied inside the database. And the second disadvantage is that it's really Mac only. So there is no iPhone or iPad app. that you can use to check when you are on the go.
You can try the Receipts app for free by importing up to 50 invoices and then you have three options to purchase a license. You can do that directly from the developer's website. or from the Mac App Store, in both cases it's around 80 euros, or it is also part of the Setapp subscription.
Setapp promo code
In case you don't know Setapp, it's a subscription service that gives access to a catalog of more than 240 Mac applications, including the Receipts app. The base plan covers one Mac, the intermediate plan covers one Mac and four iOS devices, and the plan that I have, called Power User, covers four Macs and four iOS devices.
Normally, you can only try Setapp for seven days, but if you use the promo code Macpreneur at signup, the free trial period will be extended to 30 days.
To get this special bonus at no cost to you, just visit macpreneur.com/setapp, S E T A P P, in one word, and then you will see that the promo code Macpreneur will be pre-filled for you.
Just click on the continue button, then create a new Setapp account, either using your Apple ID, your Google account, or by submitting your name, email address, and the password of your choice.
Once again, visit macpreneur.com/setapp to test the Receipts app without limitations for 30 days.
Choosing between spreadsheets and budgeting software
Okay, if you decide to use the bank and online payment statements instead of electronic invoices, then you have two main options: either use spreadsheets or budgeting software.
When we talk about spreadsheets, obviously, we are referring to Excel, Google Sheets, or Numbers, and it's usually a four-step process. Step number one, you will log into the web portal of your bank account or the online payment processor like Stripe or PayPal. Then, step number two, you will export the transactions as a CSV file.
Step number three, you will import that CSV file into the spreadsheet tool, and step number four, you will analyze the data. Now, to speed up the data analysis part, I recommend using pivot tables, which can be refreshed very quickly once you import new transactions.
Once it's set up, the updates that you can do either on a weekly or on a monthly basis are pretty quick. And after a year, it will give you a nice overview of monthly but also seasonal spending in your business. The disadvantage is that you need to manually categorize the expenses. And it can take some time to set up at the beginning. On top of that, it's not ideal if you want to keep track of the amount of tax that is owed to the local authorities.
Overall, it's a decent solution at the beginning of your solopreneur journey when finances are the tightest, and provided that you're comfortable with CSV files and pivot tables.
And so, if this is an issue for you, then you might want to consider using budgeting software. In that case, it's a three-step process. Step number one, you will log in again to your bank or online payment web portal. Step number two, you will export the transactions as PDF files so that you can annotate them electronically, or you could print them and annotate them manually. And then, step number three, you will go through each transaction and then either enter the amount and frequency into the software or look in the software and confirm that the transaction has taken place if it's already in the budgeting software.
In terms of tools, there are two main categories: either native Mac applications or online solutions.
A native app that you might consider is called Chronicle. It's available on Mac, iPhone, and iPad, and it allows you to easily manage bills and subscriptions. It's available on the Mac App Store under a freemium model, meaning that you can try it for free to manage up to five bills. And then, to unlock this restriction, there is an in-app purchase of about 15 dollars.
Interestingly, it's also part of the Setapp subscription, so if you have a Setapp subscription, you can download and test Chronicle as part of your subscription.
When it comes to online tools, YNAB, the initials of You Need a Budget, is in my opinion the best solution out there. In addition to the web portal, there is a companion app for iPhone and iPad. Fun fact, I have used YNAB to track EasyTECH's finances until 2022 when they stopped supporting version 4 of the software, which was a native Mac application that allowed synchronizing the budget via Dropbox.
Now, even though I've stopped using YNAB for my business, I still use it for my personal and family finances, and I find it really great for that. The new YNAB can import transactions from a select number of banks in North America and the UK. However, I think it defeats the purpose of budgeting, in my opinion, because the risk of duplicate transactions is high for recurring expenses.
And when it comes to budgeting software as a way to track solo business expenses, there are some advantages and disadvantages. The big advantages are that once it's set up, there is little to no manual entry needed because recurring expenses will appear automatically. And it's also very easy to forecast expenses.
The disadvantages are that there is no concept of tax or VAT. Usually, those tools can only accommodate a single currency per budget, and you will need to manually reconcile every transaction.
Having said that, using budgeting software might be a good option for your business in two cases: either you're in the early stages and you are already using budgeting software for your personal finances.
In that case, you just create a new budget for your business. Or, if you operate your business as a sole proprietorship and you haven't set up a separate bank account for your business yet, in that case, all the transactions, whether they are private or business-related, will anyway be drawn from the same source.
However, at one point, I still recommend you to upgrade the way you manage the finances of your business by investing in a proper online accounting tool like FreshBooks, for instance.
The Role of an Accountant in Your Business
Before concluding this episode, there's one more thing I'd like to mention. Hiring an accountant is not the reason to stop monitoring your business finances. So, the first and one of the best executive decisions that I made when I started EasyTECH was to hire an accountant to take care of preparing and filing all the paperwork that the tax authorities in Luxembourg demand from businesses.
However, I also knew that I needed a way to keep track of the financial state of EasyTECH, if not on a weekly basis, at least on a monthly basis. And as Chris Ducker, one of my business mentors, says a lot, the numbers never lie. And so, waiting for a full quarter or worse, a full year before getting new financial numbers is, in my opinion, the wrong way to drive one's solopreneur business.
This is why, even though I pay for accounting services and I'm using FreshBooks, I also have an Excel sheet where I track on a monthly basis, not only the actual income and expenses but also the forecast for both of them. On top of that, it includes the historical data for the past three years, as well as my financial goals on a quarterly basis.
If you don't have something similar yet, I urge you to create one, as it will give you a ton of clarity on the financial state of your solopreneur business.
Recap
So, to recap, we've explored different ways to keep track of your business expenses.
If you're already using an online tool to create professional-looking invoices, chances are that it can be used for expense tracking too. That's the case for FreshBooks, FreeAgent, and QuickBooks Online. And best of all, it's even possible to connect them to your business bank account to pull new transactions automatically. And if your bank is not supported, you can still import CSV files or scan bills and receipts from their mobile app.
If you're not yet using an online accounting tool, then you can use an app to process either the invoices in PDF format or the bank and the online payment statements.
The best Mac app to process electronic invoices is called Receipts, and it's the tool that I would use if I were not a FreshBooks customer. It's available from the developer's website, the Mac App Store, and it's part of the Setapp subscription.
Finally, processing bank and online payment statements can be done either via a spreadsheet or by leveraging budgeting software. Each of those solutions has pros and cons, and the most appropriate one will depend on the stage of your business and how comfortable you are with pivot tables and dealing with CSV files.
I hope this episode has given you some clarity. If you enjoyed this episode, please share it with a fellow solopreneur and DM me on Instagram. My handle is @MacpreneurFM.
360° Tech Diagnostic Service
And if you're ready to streamline your solo business but don't know where to start, sign up for my 360 Tech Diagnostic Service.
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To learn more about that, just visit macpreneur.com/diagnostic or click the link in the show notes.
Next and outro
So that's it for today. In the next episode, I will share with you the strategy I've put in place to be able to forecast the revenue of EasyTECH using an Excel spreadsheet.
So make sure to subscribe or follow this podcast to get it automatically next week.
And until next time, I'm Damien Schreurs, wishing you a great day.
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