How to Track Business Expenses with Monarch Money (And When to Upgrade)
How to Track Business Expenses with Monarch Money (And When to Upgrade)
Category: Small Business Finances | Read Time: 8 min | By: Raymond Ihim | Updated: March 2025
Key Takeaways
- Monarch Money is a personal finance tool that can handle basic business expense tracking for freelancers and early-stage sole proprietors
- Its category customization and transaction tagging make it more useful for business purposes than most personal finance apps
- Monarch Money has real limitations for business use — no invoicing, no payroll integration, no Schedule C mapping, and no multi-user access
- When your business grows beyond the basics, QuickBooks Online is the purpose-built upgrade that protects your deductions and scales with you
You started using Monarch Money to get your personal finances under control. It worked. Now you are running a side business or a small operation, and you are wondering whether Monarch can pull double duty and handle your business expenses too.
The honest answer is: it depends on where your business is right now. Monarch Money is not a business accounting tool. It was not built for that. But for freelancers, consultants, and early-stage sole proprietors with relatively simple finances, it can function as a workable tracking system in the short term — if you know its limits and set it up deliberately.
This article shows you exactly how to use Monarch Money to track business expenses, what it does well, where it breaks down, and the clear signals that tell you it is time to move to a purpose-built business platform.
What Monarch Money Actually Is
Monarch Money is a personal finance management platform that aggregates your financial accounts in one place, tracks your spending, helps you build budgets, and gives you a net worth snapshot in real time. It replaced Mint as the go-to personal finance aggregator for a lot of users after Mint shut down in 2024.
Its core strengths are visibility and simplicity. Connect your accounts, and Monarch shows you exactly where your money is going across every linked bank account, credit card, and investment account. The interface is clean, the categorization is flexible, and the reporting gives you a clear monthly picture of your financial life.
None of that is designed for business accounting. But visibility is the foundation of expense tracking, and Monarch delivers it better than most tools in its category.
"A tool that shows you the truth about your spending is always better than no tool at all. The question is whether the truth it shows you is complete enough for the financial decisions you need to make." — Raymond Ihim, Founder, Lionhood Financial Coaching
Step 1: Separate Your Business Transactions from Personal Ones
If you are going to use Monarch Money for business expense tracking, the first and most important step is creating a clean separation between your business and personal spending. Without this, your reports will be noise, not data.
The ideal setup is a dedicated business checking account and a business credit card that you connect to Monarch alongside your personal accounts. Every business expense runs through those accounts. Every personal expense runs through your personal accounts. The accounts live side by side in Monarch, but the spending never crosses.
If you are not yet at the point of having separate business accounts — and many early-stage sole proprietors are not — you can still use Monarch effectively, but you will need to be more disciplined about tagging. Every transaction from a mixed account will need to be manually reviewed and marked as business or personal.
Here is how to set that up inside Monarch:
- Go to Settings, then Accounts, and connect all relevant financial accounts
- Navigate to Transactions
- Use the Tags feature to create a custom tag called "Business" and apply it to every business-related transaction
- Filter your transaction view by that tag whenever you need a business-only report
It is a manual process, but it works if you review transactions weekly rather than letting them pile up.
💡 Pro Tip: Create a second tag called "Tax Deductible" and apply it specifically to transactions you plan to claim as deductions. At year end, filtering by that tag gives you a quick list to hand to your tax preparer alongside whatever documentation you have gathered.
Step 2: Customize Your Spending Categories for Business Use
Monarch Money's default categories are built around personal spending: groceries, dining, entertainment, rent, utilities. If you are using it for business, those categories will not reflect how you actually spend or how the IRS classifies deductions.
The good news is that Monarch lets you create custom categories. Use this to build a category structure that mirrors your actual business expenses and aligns with Schedule C deductions.
To add or edit categories in Monarch:
- Go to Settings, then Categories
- Click Add Category to create a new one
- Name it to match a business expense type: Advertising, Client Meals, Contractor Payments, Office Supplies, Professional Development, Software Subscriptions, Travel
- Assign an icon and color if you want to distinguish business categories visually
- Apply the new categories to incoming transactions from your business accounts
Once your custom categories are in place, you can create a budget for each one inside Monarch. This turns your expense tracker into something closer to a financial management tool — not just a ledger, but a system that tells you how your actual spending compares to what you planned.
⚠️ Watch Out: Monarch does not map your custom categories to IRS Schedule C lines automatically. When it is time to file, you or your tax preparer will need to manually match your Monarch categories to the correct tax form fields. This is manageable with a simple business, but it adds a layer of work that a true accounting platform handles automatically.
Step 3: Run Monthly Expense Summaries
Monarch's reporting is built for personal finance, but it is flexible enough to serve a basic business reporting need. The key is running a filtered transaction report at the end of each month that isolates your business spending.
Here is the process:
- Go to Transactions in the left menu
- Filter by your "Business" tag, or filter by your dedicated business accounts if you have them set up separately
- Set the date range to the month you are reviewing
- Review the category breakdown to confirm everything is coded correctly
- Export the transaction list using the export function and save it as your monthly business expense record
Monarch allows CSV exports, which means you can drop the data into a spreadsheet and format it however you need for your tax preparer or for your own records. It is not as clean as a QuickBooks profit and loss report, but it is a real document with real data behind it.
Do this every month without exception. Monarch's value as a business tool drops sharply if you only look at it quarterly or annually. The monthly review is what keeps your records current and your categories accurate.
Step 4: Know the Ceiling
Monarch Money can take you a long way on a simple business. Here is where it stops working.
No invoicing. If you send invoices to clients, Monarch cannot track what has been billed, what has been paid, and what is outstanding. You are managing that process somewhere else, which means your income picture in Monarch is incomplete.
No payroll or contractor payment tracking. If you pay employees or contractors, those transactions need to run through a system that generates proper records for W-2s and 1099s. Monarch records the cash outflow but cannot manage the compliance layer.
No Schedule C mapping. A purpose-built accounting tool connects your expense categories directly to the tax form lines they belong on. Monarch does not. Your tax preparer has to bridge that gap manually, which costs you time and potentially money.
No multi-user access. If you have a bookkeeper, an accountant, or a business partner who needs to see your financial records, Monarch does not support collaborative access the way a business accounting platform does.
No accounts payable or receivable tracking. Monarch shows you what cleared your bank. It does not show you what you owe vendors or what clients owe you. For a business trying to manage cash flow, that is a significant blind spot.
These are not criticisms. They are design realities. Monarch was built for personal finance. When your business needs outgrow what a personal finance tool can provide, the answer is not to work around the limitations. It is to use the right tool.
When It Is Time to Upgrade to QuickBooks
The transition point is different for every business, but there are clear signals that tell you Monarch has reached its ceiling for your needs:
- You have more than two or three clients and are sending invoices regularly
- You have hired a contractor and need to issue a 1099 at year end
- Your monthly business transactions exceed 30 to 40 per month
- Your tax preparer is spending significant time reformatting your records before they can use them
- You are making real business decisions — hiring, investing in equipment, taking on debt — and you need accurate financial statements to make them
At that point, QuickBooks Online is the straightforward upgrade. It connects to the same bank accounts you already have linked in Monarch, imports your transactions automatically, categorizes them with Schedule C in mind, generates professional financial statements, and creates the audit trail that protects your deductions.
The learning curve is real but manageable, especially if you start with a clean setup rather than trying to import years of mixed records. A financial coach or bookkeeper can get you set up correctly in a few hours, and the system essentially runs itself after that.
Frequently Asked Questions
Can I use Monarch Money for my LLC or S-Corp? Technically yes, but it is not advisable. Monarch is not designed to handle entity-level accounting, and the reporting gaps become more significant as your legal and tax obligations increase. An LLC filing as an S-Corp has payroll requirements, separate tax filings, and owner distribution tracking that Monarch cannot support. Use a proper business accounting platform for any entity beyond a basic sole proprietorship.
Does Monarch Money work for freelancers specifically? For a freelancer with one or two income streams, straightforward expenses, and no contractors or employees, Monarch can work adequately as a short-term solution. The tagging and custom category features cover the basics. But even freelancers benefit from a platform that tracks invoices and maps to Schedule C, both of which QuickBooks handles cleanly.
What happened to Mint and is Monarch a replacement? Mint shut down in March 2024, and many of its users migrated to Monarch Money, which offers similar account aggregation and budgeting features with a more polished interface. Monarch is widely considered the strongest personal finance app in the post-Mint landscape. But like Mint, it is not a business accounting tool and should not be treated as one.
How much does Monarch Money cost compared to QuickBooks? Monarch Money is priced as a personal finance subscription, generally lower than QuickBooks Online. But cost comparison is the wrong lens here. The question is what each tool delivers for your specific situation. Monarch is less expensive because it does less. For a business with real tax obligations, the cost difference between the two platforms is small compared to the value of having accurate, defensible financial records. See QuickBooks Online pricing and plans here.
Can I use both Monarch Money and QuickBooks at the same time? Yes, and some business owners do. Monarch handles the personal side of their finances while QuickBooks manages the business side. This is actually a clean setup because it keeps personal and business financial management in purpose-built platforms rather than trying to stretch one tool across both needs.
The Bottom Line
Monarch Money is a genuinely good tool for what it was designed to do. If you are an early-stage sole proprietor or freelancer using it to track business expenses because it is what you already have, you can make it work with the right setup. But know the ceiling. Know the signals. And when your business grows past what a personal finance app can handle, do not wait for a tax season crisis to make the move.
The upgrade to a real business accounting platform is not a luxury. It is the infrastructure your business needs to grow without creating liability.
Not sure whether your current setup is costing you deductions or creating risk? Talk to Lionhood Financial Coaching and we will give you a straight answer.
Raymond Ihim is a banking leader with extensive expertise in risk management and financial services, and a proven track record of helping individuals and small business owners master their finances. As founder and head coach of Lionhood Financial Coaching, he has empowered countless clients to build generational wealth, eliminate debt, and establish financial stability through his popular "Make More of Your Money" podcast and practical financial coaching programs.