How to Categorize Business Expenses

by Shemiah Williams - Updated September 26, 2017

Understanding what expenses are required to run your business ultimately helps you to do business better. Whether you're tracking expenses for general operations or tax preparation, it's important to be organized before reconciling your budget and planning for the future. Categorizing business expenses makes it easier to plan for and manage expenses.

Start by creating a category for Staffing. In this category you should include part-time and full-time salaries as well as expenses for temporary, project-based or consulting work.

Create a category for Benefits. Health insurance, tuition reimbursement, transportation incentives, life insurance, Flexible Spending Accounts, retirement benefits and 401(k) contributions should all be included in this category.

Create a category for Supplies and divide it into two sub-categories: Administrative Supplies and Service Supplies. Administrative supplies include office supplies. Service supplies are things you need to carry out a particular program or project. You can choose to include postage or mailing costs in either one of these subcategories.

Create a category for Advertising and Promotions. Include any print, radio or online advertising, website administration, online promotion tools, such as Google Ads.

Create a category for Technology or Technology Services. Include any expenses related to the Internet, telephone infrastructure, computers and associated hardware, software packages, cellular phone and accessories and conferencing hardware or software.

Include a category for Travel or Transportation that contains expenses related to airfare, hotel or lodging accommodations, car rental, maintenance of any vehicles owned by the business and mileage reimbursement for personal vehicle use by staff.

Tips

  • Think about the work you are directly responsible for to develop a comprehensive list of expenses. If you work with others, ask your colleagues to take an "expense inventory" of all expenses required for them to do their jobs. As you track expenses, if you notice there is an expense that doesn't necessarily fit into a predetermined category, develop a new one.

About the Author

Shemiah Williams has been writing for various websites since 2009 and also writes for "Parle Magazine." She holds a bachelor's degree in business and technology and a master's degree in clinical psychology. Williams serves as a subject matter expert in many areas of health, relationships and professional development.

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