{"id":709,"date":"2017-03-09T22:44:36","date_gmt":"2017-03-09T22:44:36","guid":{"rendered":"https:\/\/bcmpayroll.com\/bcmold\/?p=709"},"modified":"2020-04-21T16:24:44","modified_gmt":"2020-04-21T16:24:44","slug":"guide-to-classifying-business-expenses","status":"publish","type":"post","link":"https:\/\/bcmpayroll.com\/bcmold\/guide-to-classifying-business-expenses\/","title":{"rendered":"Guide to Classifying Business Expenses"},"content":{"rendered":"

\"central<\/a>When you\u2019re a business owner, keeping track of all your business expenses can be complicated. You want to classify your business expenses correctly, so you can take advantage of any deductions for small-business owners and avoid basic accounting problems so audit risk is minimized. Here are some tips for classifying business expenses to help you avoid the types of errors in financial accounting that commonly lead to lost deductions or problems down the road.<\/p>\n

Business Expenses vs. Pleasure Expenses<\/h2>\n

Just because you spend money during the workday doesn\u2019t automatically make it a business expense, and assuming all expenses during business hours are deductible is one of those types of accounting errors that can land you in hot water with the IRS. If you take a client out to dinner, that\u2019s a business expense. If you order takeout while working late one night, that is not. Ordering takeout for your employees who are working overtime can be considered a business expense, however.<\/p>\n

You can avoid making a mistake here by making sure not to put any personal expenses on the business credit card. Before you whip out that company card, figure out whether you are about to incur a business expense or a personal one. Also, you can only take a deduction once. Taking a client out to dinner is either an entertainment or a travel expense, not both. Keep organized records and know how you are going to classify each business expense in advance to reduce your small business\u2019s audit risk exposure.<\/p>\n

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Tracking Reimbursable Expenses<\/h3>\n

If you\u2019re paying for certain business expenses out of pocket that you are supposed to be reimbursed for, these may still be business deductions. Be sure you get reimbursed and get the applicable deductions you are entitled to.<\/p>\n

Knowing the Basics<\/h3>\n

You should have a sense of some of the basic deductions for small-business owners that are available. These can include:<\/p>\n