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.
Advertising & Promotion
Bad Debts written off
Bank fees & charges
Cartage & Freight
Cleaning & rubbish removal
Equipment < $1,000
Fuel & oil
Government Charges, Fees , etc.
Hire or rent of Plant, Equip
Home Office expenses
Materials & Supplies
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
Printing & Stationary
Protective clothing etc.
Registrations & Licences
Rent on Land & Buildings
Replacements (tools etc)
Telephone & Internet
Tolls & Parking
Wages & Salaries
#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.