How To Track Business Expenses For Taxes
You already know you can use Timesheets.com to track attendance and time on projects. You probably also know that you can use it to track commission, mileage, and other employee accrued expenses. But did you know that you can use your Timesheets account to track business expenses for taxes?
In this post I am going to show you how to do it, but first let’s take a look at what qualifies.
Deductible Business Expenses
If the expense is incurred for business purposes, then it is probably deductible.
“To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.” From the IRS website
Types of deductible business expenses include but are not limited to:
- Accounting fees
- Consultation expenses
- Contract labor
- Domain names and hosting
- Legal fees
- Maintenance and repairs
- Office supplies
- Postage, print, and copy
- Professional developments
How to Use Timesheets.com to Keep Track of Business Expenses
As an administrator on the account, you can use your own expense sheet to track any kind of business expense. Your employees can use their own expense sheets to track reimbursable expenses, like travel and meals. They can also use their expense sheets to track other deductible expenses like commission.
At the end of the year you can run reports on the various expenses you’ve set up in the system. It will be much easier than having to dig for it at tax time.
To get started, create Account Codes for your own deductible expenses like software purchases, postage, and advertising. Also set up some Account Codes for your employees, like travel and meals. When employees are out on a business trip, they will enter each meal, hotel, and airfare as specific vendors – so Outback Steakhouse, Hilton, and United will be the Vendors. Then they will also select the Account Codes for meals and travel. These will be the Account Codes.
Now when you run expense reports sorted by Account Code, you will see all of your expenses sorted by category.