14 Small Business Expense Categories to Consider

Use this category to categorize items you buy and then sell or use to make the products you sell. Use this category to categorize office supplies you bought during the tax year. Use this category to categorize payments you make to contractors who worked for you during the year. Costs incurred for renting or leasing your place of business would be included here. If you own the property your business is situated on, or work out of your home, you still want to track those expenses too. Don’t forget your utilities, phone, and any real estate taxes you pay on your building.

• You can also deduct other activity fees such as making copies of assignments or traveling to and from classes.
• Use this category to categorize expenses to insure your business and it’s operations.
• Having a separate account will also give you easy access to necessary information if you are audited.
• Since they are stapled together, they won’t get mixed up with new receipts coming in.
• Keeping up with your IFTA data is one of the most important parts of running a trucking business.
• The more tax-deductible expenses you have, the lower your taxable income will be, and the more cash flow you’ll have to reinvest into your small business.

Let’s assume that your business purchases a new van on January 1. The van cost $50,000 and your business paid cash for the van. This will need to be recorded as an asset so that it appears on your financial statement. The app’s receipt capture tool allows you to take a photo on your phone of a paper receipt and it is then stored with your other financial records. Being a functioning current account, Countingup can also send you reminders to record your purchases. Countingup is the current business account with built-in accounting software that allows you to manage all your financial data in one place.

Use Accounting Software to Track Spending and Categorize Business Expenses

For example, if a tire burst on our truck during a journey, that is an unforeseen expense. You would then take that cost out of your revenue for the service. Another example could be paying road tax and fuel for the journey. Tax strategies for truck drivers can be surprisingly complicated. Even some CPAs are unaware of the specifics of the industry, where unique rules and changing regulations can cause you to misreport your tax-deductible expenses.

• Use this category to categorize business credit card interest, loan interest (not the loan itself), and other business-related interest.
• The Category Accounts and categories are customizable in StudioCloud but the Category Account Types are not.
• One of the primary reasons to categorize business expenses is so that they can be properly assessed for tax breaks at year-end.
• Even some CPAs are unaware of the specifics of the industry, where unique rules and changing regulations can cause you to misreport your tax-deductible expenses.
• Use this category to categorize deductible tax and license fees related to your self-employed work.
• All businesses need to keep track of their expenses, but it’s more challenging in some industries than others.

As a trucking business owner, you should keep records of all your expenses and the documents that support them, such as receipts and account statements. For example, that includes data from your ELD, invoices, bills of lading, payroll statements, and tax payment receipts. Use this notebook (in addition to your receipt envelope) or a document on your computer or smartphone to record any expenses you cannot obtain a receipt for.

Expense accounts

In the past, companies could deduct expenses related to entertaining clients. For example, treating clients to a concert or taking them to a sporting event, could be included in deductible expenses. However, the Tax Cuts and Jobs Act of 2017 eliminated the deduction for entertainment expenses. While you can still deduct meals, tickets to sporting events, concerts, and other forms of entertainment aren’t deductible. On the other hand, if you took out a short-term loan to make repairs on your truck, then you would likely have to pay that off within the year. Nick Gallo is a Certified Public Accountant and content marketer for the financial industry.

A liability is something that you owe another person or organisation. There are, again, current and non-current liabilities (also known as fixed liabilities). For example, if you took out a long-term loan from the bank to buy your truck, it is a fixed liability as long as you don’t have to pay it off within a year.

How do I record a truck purchase in QuickBooks?

For example, you can categorise your fuel and food as different categories, being able to see where the most expenses come from. When starting a business, it’s common for truckers bookkeeping service owners to invest some of their own funds. By keeping track of equity, you can see whether that initial investment has paid off and how much it is worth to you today.

To comply with IFTA, you must report your trips and fuel purchases quarterly. The IFTA office in your home state will allocate your payments to the proper jurisdictions and determine whether you owe more or deserve a refund. Truckers must choose between the two fundamental methods of accounting, the cash and accrual bases.

A long-term asset account that reports a company’s cost of automobiles, trucks, etc. The account is reported under the balance sheet classification property, plant, and equipment. When you categorize your vehicle expenses, mark them as Business and use Car and Truck for the expense category. If an expense is for both personal and business travel, categorize it as Business. Use this category to categorize expenses to insure your business and it’s operations. However, QuickBooks Self-Employed doesn’t track depreciation.

It’s a routine, administrative process that requires relatively little critical thinking. Purchase an expanding file folder, a stapler, and a desktop calculator with register tape from an office supply store. You want to be able to deduct as many legitimate https://www.bookstime.com/ costs as possible. Keep an envelope in your truck for collecting receipts, or use the dedicated folders on your computer or in a cloud for e-receipts. Use the folders for your monthly profit-and-loss statements and accurate quarterly tax estimates.

You don’t want to leave money on the table or risk triggering an audit. The ever-expanding capabilities of modern software have made many aspects of business ownership significantly easier. You must be strategic about which tools you invest in to avoid wasting resources, but it’s worth utilizing in many areas.

Last but certainly not least, it’s always a good idea to hire a CPA for help with tax preparation and trucking accounting services. Trucking and accounting are full-time jobs, so don’t try to do both. The cash basis involves recognizing revenues when you receive payments and deducting expenses when you pay them. Because it’s easy to implement, many small businesses favor this method. Your logbook and/or electronic log records are your best proof of entitlement to per diem expenses (primarily composed of meal costs). If you rely solely on your electronic logging device (ELD) for bookkeeping for truck drivers, make sure you can save and access your history.