Скачать или смотреть The Best Approach for Categorizing Business Expenses

In bookkeeping software, it's really easy to add one more category to the chart of accounts. It's really important to keep that chart of accounts simplified. I don't like to see extra categories in a chart of accounts.

Accounting software comes with a stock set of categories. And for the most part, most businesses will never need many more categories than what's included in that stock set.

There should never be categories specifically for certain customers or vendors. There are better ways to categorize that information in the accounting software than adding more categories to the chart of accounts.

You can categorize a transaction not only to a category that'll show up on your profit and loss or on your balance sheet, but you can also add that customer or vendor information separately from that.

If I look at a profit and loss statement and I see advertising expense, that will include Facebook ads, Google ads, Zillow ads, but I can run another report that will break out the advertising expense based on which vendor those expenses were paid to. That is a much better use of the software and a much better presentation of that information.

The users of a profit and loss statement won't care who the advertising spend went to. They will care how much was spent on advertising relative to how much revenue the business brought in.

If they want that more-specific information, you can easily pull that information in a separate report without having to add that extra unnecessary detail to the overview you give in the profit and loss or the balance sheet.

#Business #Taxes #Accounting

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