Business expenses can be separated into different categories for tax purposes. Find the list of categories for business expenses here.
Do you manage a small business? If so, you know being an entrepreneur is tough.
Dealing with employees, customers, and finances is not a walk in the park. Keeping your books in order is an absolute must.
Many entrepreneurs lack a formal business accounting education. The lucky ones have one, but many get by the seat of their pants. Still, with proper accounting, you and your company will perform better.
That’s why we’re here to help. Today, we’ll be breaking down a few of the different categories for business expenses. That way you know exactly where to allocate your budget.
Category 1: Cost of Goods Sold (COGS)
The Cost of Goods Sold (COGS) is the cost of the products or services sold to customers. This category includes expenses such as materials, labor, and direct production costs.
Category 2: Rent and Utilities
The second category of business expenses includes rent and utilities, such as electricity, water, gas, and internet. These expenses are often fixed costs that you can more or less predict. But they are essential to keep your business running.
Category 3: Travel and Transportation
If you travel for business purposes, expenses such as airfare, hotel stays, car rentals, and gas can also be included in this category. Keep in mind that only business-related travel expenses are tax-deductible. So, make sure also to categorize trips accordingly to avoid any confusion.
Category 4: Office Supplies and Equipment
This category includes expenses such as computers, printers, paper, pens, and other office supplies. You can also include office furniture and equipment such as desks, chairs, and filing cabinets.
Category 5: Marketing and Advertising
Marketing and advertising expenses can include expenses related to online and offline advertising. They could be expenses for social media ads, business cards, flyers, and website design, to name a few. These expenses are essential to growing your business and increasing your revenue.
Category 6: Insurance
Insurance expenses include premiums paid for liability, property, and other types of insurance. It is essential to have proper insurance coverage to protect your business from potential risks and liability.
Category 7: Employee Expenses
Expenses such as salaries, wages, benefits, and payroll taxes are included in this category. Keep in mind that you should have proper documentation and records of employee expenses for tax purposes.
As a small business owner, you can use a spend management tool to track all these expenses. With this spend management tool, you can view all the costs associated with each category. With this spend management tool, you can view all the costs associated with each category. You’ll need a startup payroll management guide to help you better understand how to streamline this process for your small business.
This will give you a clearer idea of where and how your money is spent. This information can also be invaluable in helping to decide on budget allocations and ensuring that you are being as efficient as possible with your financial resources.
Know the Different Categories for Business Expenses
From taxes to travel, there are many business expenses to consider. This list highlights the different categories of business expenses that companies should review and analyze for their specific needs.
Be sure to keep track of your expenses and remain aware of how your business budget can be optimized for the greatest benefit! For assistance with budgeting, make sure to get the help of a professional.
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