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ChrisHeggem
01-17-2011, 08:39 PM
Unfortunately, the government requires small business owners to categorize expenses, and this can be a very time-consuming and complicated task. How much effort do you put into categorizing your business's expenses and what is your method to the madness?

vangogh
01-17-2011, 11:34 PM
I have limited expenses, at least limited in the types of categories they fall under. More madness than method on my part too. Most of my expenses are monthly bills which I can easily grab from my bank statements. The rest usually fall under things like software, technical books and magazines. I can't say I categorize things as I buy them. I just record the purchase and organize thing at the end of the year. If I had more types expenses I might not do that, but for what I do spend it works for me.

Evan
01-18-2011, 12:31 AM
I don't think that categorizing expenses is that difficult, but that's just me.

vangogh
01-18-2011, 12:33 AM
I don't either. I can't even think of too many ways the IRS asks for categories. Seems most things fall under 2 or 3 general categories of expenses.

billbenson
01-18-2011, 12:43 AM
Here's a method of keeping track of things. If I log on to my bank account online, I get a listing of all the transactions for the last three months. If you want these in an excel sheet:

Copy and paste the transaction rows from your online listing into an excel sheet.
Delete nonrelevant columns.
Highlight all columns and rows of data and copy and paste them into a text editor such as notepad. This is to get rid of any html or other code that may be there
Then copy and past the data from the text editor into a fresh excel sheet. It should go into its proper rows, if not, paste special and use tab delimited for the separator.


Now you have all of your account data in an excel sheet. Add a column or two to put it into catagories. Its much easier to manage in an excel sheet.

What you are doing is three copy and pastes to remove unwanted data and html code and put clean data into an excel sheet. 5 minutes tops once you have done it a time or two.

Your bank may also have a csv formated file which you can download. You should be able to open this file in a text editor and copy and paste it directly into an excel sheet simplifying things a bit as well.

billbenson
01-18-2011, 01:17 AM
Actually, this post just prompted me to backup my checking info. Its easier than described above at least on my pc. I click on the download csv format and it gives me the option to open in excel.

Steve B
01-18-2011, 06:27 AM
I think categorizing expenses takes literally milliseconds. If I'm at the print shop and I just purchased business cards, it takes less than a fraction of a second to categorize that as "advertising". When it gets entered into Quickbooks, perhaps it requires one more click. I don't see these things as time consuming or complicated - and certainly not madness. As a matter of fact, it probably forces a few naturally unorganized people to be able to speak a common language with their accountants and other business advisors (if they have any).

jamesray50
01-19-2011, 03:27 AM
As a bookkeeper I do see a lot of misclassifications, but they are mostly for big items like computers and such. Those type of items are assets and not expenses and should be depreciated over so many years. I believe most credit card companies send statements at year end showing classifications for you. That would be helpful for those that use credit cards a lot.

ChrisHeggem
01-19-2011, 06:02 PM
It doesn't always have to be hard, but I recently found out that the IRS compares Schedule C filers to others with the same NIC code and you are flagged if any of your categorized expenses are unusually high. I'm glad you are all on top of your categorization! :-)

Evan
01-19-2011, 10:33 PM
It doesn't always have to be hard, but I recently found out that the IRS compares Schedule C filers to others with the same NIC code and you are flagged if any of your categorized expenses are unusually high. I'm glad you are all on top of your categorization! :-)

Of course they do that. Why wouldn't they?

Steve B
01-20-2011, 06:53 AM
That's exactly what I would do if I worked for the IRS.