How to Review Your Business Expenses Each Month
Reviewing your business expenses each month helps you understand where your money is going, catch errors or unnecessary spending, and make better financial decisions.
Running a business comes with a steady stream of expenses, and it’s easy to pay them without taking a closer look. We often work with small business owners who are surprised to discover they’re spending more than expected in certain areas or paying for things they no longer need.
The good news? Your monthly expense review doesn’t need to be complicated.
What Should You Review in Your Business Expenses Each Month?
At least once a month, small business owners should review their bank and credit card transactions, recurring subscriptions, expense categories, changes in spending, and supporting documentation.
Here’s what to look for.
1. Review Your Bank and Credit Card Transactions
Start with each of your business bank accounts and credit cards.
Look for duplicate charges, unexpected payments, transactions you don’t recognize, and expenses that may not actually be business-related.
Reviewing these transactions monthly can help you catch mistakes early instead of discovering them several months later.
2. Review Your Recurring Business Subscriptions
Subscriptions are one of the easiest business expenses to overlook because they’re usually charged automatically.
Review your software, memberships, apps, and other recurring services. Ask yourself:
Are we still using this?
Does it save us time or make us money?
Is there a less expensive plan that would meet our needs?
Are we paying for multiple tools that do the same thing?
A $20 or $50 monthly subscription may not seem significant on its own, but several unused subscriptions can quickly add up.
3. Review Your Business Expense Categories
Make sure your expenses are being recorded in the correct categories.
Common business expense categories may include software, advertising and marketing, office supplies, professional services, travel, utilities, insurance, and other costs specific to your business.
Consistent categorization makes your financial reports much more useful because you can clearly see where your business is spending money.
4. Compare Your Expenses to Previous Months
Compare your current spending to previous months and look for significant changes.
If one category suddenly increased, find out why.
The increase may be completely reasonable. Maybe you increased your advertising budget, purchased equipment, or experienced seasonal changes. But an unexpected increase can also reveal duplicate charges, rising costs, or spending that needs to be reevaluated.
5. Check Your Receipts and Supporting Documentation
Make sure you have receipts, invoices, or other documentation supporting your business purchases.
Keeping these records organized throughout the year makes tax time easier and provides documentation for your business expenses when needed.
6. Ask Whether Each Expense Is Adding Value
Every business expense should have a purpose, but that doesn’t mean every expense has to directly generate revenue.
An expense may help your business:
Generate revenue
Save time
Improve efficiency
Better serve customers
Support employees
Operate more effectively
The important part is understanding why you’re spending the money and whether that expense is still serving your business.
Why Should Small Business Owners Review Expenses Monthly?
Reviewing business expenses monthly gives you a more accurate understanding of your profitability and cash flow.
Waiting until tax season to look closely at your expenses means you could go an entire year without noticing unnecessary spending, incorrect transactions, or changes in your business's financial health.
A monthly review allows you to make adjustments while they can still make a difference.
How Do You Review Business Expenses in QuickBooks Online?
If you use QuickBooks Online, your monthly expense review can be built right into your bookkeeping routine. A simple process is to categorize your transactions, reconcile your accounts, and then review your Profit and Loss report.
Categorize Your Transactions
Start by reviewing the transactions coming into QuickBooks from your connected bank and credit card accounts. Assign each transaction to the appropriate income or expense category and make sure you aren't adding duplicate transactions that have already been recorded elsewhere in QuickBooks.
Reconcile Your Accounts
Once your transactions are recorded, reconcile each bank and credit card account to its monthly statement. Reconciliation confirms that the activity and ending balance in QuickBooks match your actual statement and can help identify missing, duplicated, or incorrectly recorded transactions.
Review Your Profit and Loss Report
After your accounts are reconciled, run a Profit and Loss report for the month. Review each expense category and click into anything that looks unusual to see the individual transactions behind the total.
This order matters. Reviewing your financial reports after your bookkeeping is complete and your accounts are reconciled gives you a much more reliable picture of where your business is actually spending money.
What QuickBooks Reports Should You Review Each Month?
Your Profit and Loss report is a great starting point, but it shouldn't be the only financial report you review.
Depending on your business, your monthly financial review may also include your Balance Sheet, Accounts Receivable Aging Summary, Accounts Payable Aging Summary, and Statement of Cash Flows.
Together, these reports can help you understand not only what your business is spending, but also what it owns and owes, which customers still owe you money, what bills are outstanding, and how cash is moving through your business.
If you aren't sure what your QuickBooks reports are telling you, that's where having accurate, up-to-date bookkeeping becomes especially valuable. Your financial reports are only as useful as the information behind them.
How Can Accounting Software Help You Track Business Expenses?
Accounting software can help small businesses track expenses by connecting directly to business bank and credit card accounts, organizing transactions, generating financial reports, and allowing accounts to be reconciled each month.
If you’re currently tracking your income and expenses through Excel or Google Sheets, you’re not alone. Many small business owners start there because it’s simple and affordable.
The challenge is that manual bookkeeping leaves more room for human error.
You may get behind on entering transactions, mistype an amount or vendor, accidentally record something twice, or leave a transaction out entirely.
This is where accounting software can make a significant difference.
Bank feed connections allow transactions from your business accounts to flow into your accounting system. You can then reconcile those accounts each month to verify that your accounting records match what actually happened at the bank.
What Is a Monthly Bank Reconciliation?
A bank reconciliation is the process of comparing the transactions and balances in your accounting records with your bank or credit card statement.
Reconciling your accounts helps confirm that:
Transactions that occurred in your bank or credit card account are reflected in your accounting records.
Transactions haven’t been duplicated, omitted, or incorrectly entered.
This is an important part of maintaining accurate books. Simply connecting your bank account to accounting software does not mean your bookkeeping is automatically accurate.
How Can a Bookkeeper Help With Business Expenses?
A bookkeeper helps keep your financial records accurate and up to date so you can understand where your business is spending money and make decisions using reliable financial information.
Bookkeeping is also typically one of a small business owner’s least favorite jobs.
Even owners who are diligent about their books can struggle to find time to keep everything accurate and current. When you have a few extra hours to work on your business, you’re probably going to spend them advertising, marketing, networking, serving customers, or making sales.
And that makes sense.
Bookkeeping may not feel like a revenue-generating task, but accurate bookkeeping can become a revenue-generating tool when you use the information it provides.
Up-to-date books can help you:
Understand where your money is going
Monitor cash flow
Evaluate profitability
Identify unnecessary expenses
Create realistic budgets
Make more informed business decisions
A bookkeeper takes the day-to-day work off your plate while making sure you have reliable financial information available when you need it.
How Often Should You Review Your Business Expenses?
Small business owners should review their business expenses at least once a month.
Ideally, your expense review should happen after your monthly bookkeeping and account reconciliations are complete. That way, you’re reviewing financial information that has already been checked for accuracy.
You may also want to perform a more detailed expense review quarterly to look for larger spending trends and opportunities to reduce costs.
Monthly Business Expense Review Checklist
Each month:
Review all business bank and credit card transactions
Look for duplicate or unexpected charges
Review recurring subscriptions
Confirm expenses are categorized correctly
Compare spending to previous months
Make sure receipts and invoices are organized
Review unusual increases in spending
Evaluate whether recurring expenses are still providing value
Reconcile your bank and credit card accounts
Review your Profit & Loss statement
Make Your Monthly Expense Review a Habit
You don’t need to spend hours analyzing every purchase your business makes. The goal is to regularly understand where your money is going instead of waiting until tax season or until cash flow becomes a problem.
A monthly expense review, paired with accurate and up-to-date bookkeeping, gives you a much clearer picture of your business and helps you make financial decisions with confidence.
If you’d like help keeping your books up to date, understanding your business expenses, or getting clearer financial reports, Oak and Ledger can help. Contact us to learn more about our bookkeeping services.