As a bookkeeper, I am often asked where to code or classify specific business expenses. As always, it may depend on what your tax professional says, however, here are my recommendations for 5 of the most common expenses.
1. Business Cards: Supplies, Legal & Professional Services or Advertising?
110 Bookkeeping Recommends: Advertising, since these are generally handed out to prospects in an effort to generate revenue.
2. Website Hosting: Advertising, Utilities or Office Expense?
110 Bookkeeping Recommends: Utilities because it’s a monthly service. You could also use Advertising (since it is likely used to attract customers) however, your website may be used for more than this. So, we tend to classify hosting expenses to utilities.
3. Website Designer Payments: Legal & Professional Services or Contract Labor?
110 Bookkeeping Recommends: Contract Labor. You typically use Professional Services for legal, accounting/tax/payroll consultant services. Also, remember to receive a completed W-9 form for your designer so that you can send out a 1099 (if appropriate).
4. Web-based Software/Subscriptions: Utilities, Office Expense or Taxes & Licenses?
110 Bookkeeping Recommends: Utilities. This is because you are utilizing their program and some of these subscriptions can be a substantial cost to your business.
5. Coffee Machine, coffee & Filters: Supplies or Office Expense?
110 Bookkeeping Recommends: Office Expense, mainly because these may be substantial expenses to your business over the course of the year.
I hope this list helps! If you have any other items you would like to know how to classify, please feel free to send us an email to firstname.lastname@example.org!