What Are My Business Expenses?
When you start a small business that began as a hobby or a side hustle, it is very easy to confuse what constitutes a business expense and what doesn’t. For example, you may have a mobile phone that was originally your personal phone but with your small business it has become your only method of communication with your clients. It is all too common to mix your personal expenses and business expenses together when you are in the early stages of your business.
There are some tips you can use as guides to make sure that you are treating your business expenses correctly. This process will lead to better business books and better management of your small business.
Business expenses are those expenses that are specifically for the business. They can be incurred to run the business itself or be a part of the product/service that is provided.
Business expenses should be paid for by the business with a bank account specifically for the business only.
Business expenses should be entered into the business financial system such as Quickbooks for proper bookkeeping.
Accurate tracking of business expenses ensure that income/loss for the business is calculated correctly.
Tracking your business expenses will allow you to understand what your mark-up should be on your product/service.
Evaluating business expenses and the tracking process should be done regularly to assure the following:
Proper bookkeeping
Need to decrease expenses
Need to increase prices on products/services.