Business Expense Recording Tips

Author: Duncan Warnock CPA | November, 2022

How to categorise business expenses transactions ?

If you are a Maribyrnong Business owner and not using accounting software to record & allocate your business expenses then you may be unsure about how to group or categorise your business expenses into logical categories. Although this is a subjective exercise this article provides an example list of business expense categories that will at least get you started and more organised.

• Accounting

• Advertising & Promotion

• Bad Debts written off

• Bank fees & charges

• Bookkeeping

• Borrowing expenses

• Cartage & Freight

• Cleaning & rubbish removal

• Commission

• Contractor Payments

• Depreciation

• Donations

• Equipment < $1,000

• Fuel & oil

• Government Charges, Fees , etc.

• Hire or rent of Plant, Equip

• Home Office expenses

• Insurance Premiums

• Interest Expenses

• IT Expenses

• Lease Payments

• Legal Fees

• Maintenance

• Materials & Supplies

• Merchant Fees

• Motor (set rate) - Cents per km

• Motor Vehicle Expenses (log book) - Fuel & Oil

• Motor Vehicle Expenses (log book) - Insurance

• Motor Vehicle Expenses (log book) - Loan Interest

• Motor Vehicle Expenses (log book) - Other

• Motor Vehicle Expenses (log book) - Registration

• Motor Vehicle Expenses (log book) - Repairs & Maintenance

• Postage

• Printing & Stationary

• Protective clothing etc.

• Registrations & Licences

• Rent on Land & Buildings

• Repairs

• Replacements (tools etc)

• Subscriptions

• Telephone & Internet

• Tolls & Parking

• Utility Expenses

• Wages & Salaries

.

TIPS: 

• #1 - For Motor Vehicle expenses to claim a portion of actual motor vehicle expenses incurred you typically need to have completed a car logbook for 12 weeks in a compliant way to demonstrate the business use percentage of the motor vehicle. If a logbook has not been completed successfully then an alternate option is the Cents Per Km method (maximum business kms claimed is 5,000) 

• #2- For any asset purchases, when summarising your business expense transactions its also important to record the purchase date of the asset

• #3 - Remember that you should only record transactions as business expenses if they are used for the business and you have the relevant supporting documentation (ie tax invoice). 

• #4 - If a purchase is mixed use (partly for business, partly private) then you need to identify what portion the transaction was used for business. 

• #5 - Drawings by a Sole Trader are not 'Wage expenses'

• #6- For any payments to Contractors you generally need to withhold 47% (from 1 July 2017) from payments to them if the Contractor has not provided you with their ABN (Contact an Accountant or the tax office for further details pertaining to your particular situation if unsure how to proceed)

For further assistance with a Sole Trader Business (or any other business), contact us to arrange a meeting with Duncan Warnock CPA from the Warnock Accounting Maribyrnong office.