Running your business day-to-day can take up a lot of your time, we get it, and keeping track of all your business expenses can be quite intimidating and time-consuming. But tracking your business spend is so important as it helps you see exactly how your business is doing. As much as we love to watch how much money is flowing into our business, we always need to be aware of what is flowing out.

What are business expenses?

Simply put, it’s the money your business spends to keep your business running like a well-oiled machine. As a business owner, tracking and categorising your expenses is super important as it's a key part of understanding whether your business is profitable or not and how much tax you will need to pay. This leads us to the below…

What are tax-deductible business expenses?

It’s important you know what makes a business expense tax-deductible. A tax-deductible business expense is an expense that can reduce the amount of tax your business owes. Your tax-deductible business expenses are deducted from your income (money you make from sales) and this is the total amount you are taxed on. You can’t buy just anything and say it is a business expense in hopes it will reduce your tax, so unfortunately those 25 trips to Maccy D's are not going to cut it. So let’s see what those tax-deductible business expenses are.

Tax-deductible business expense categories

Advertising & Marketing: Money spent on advertising, PR and promotions

Bank Charges: Any amounts you are charged by your bank for any banking and financial services

Cash Withdrawal: Cash withdrawn from your business account

Cleaning & Gardening: Any amounts spent on keeping your office or business premises clean and groomed

Computer & Devices: Any laptops, tablets, phones, cameras, accessories etc you buy for your business. Btw, these could also be business assets if they cost more than R7000

Contract Workers: People you pay to help your business with a particular skill, service or advice on a temporary basis

Deliveries & Shipping: Money spent to ship, deliver or post goods to customers, suppliers and service providers

Donations: Any gifts of money or assets you give to nonprofits, NOG’s and other charities

Equipment Rental: Any machinery, office equipment, vehicles, or other tools that you rent for your business to run

Equipment & Machinery: Any equipment and machinery you buy for your business to produce goods or services. If these cost more than R7000, these could be business assets

Fuel: Petrol, diesel, fuel or EV charging purchased for any business-owned cars or machinery

Furniture: Any office chairs, stand-up work desks, shelving or any other office furniture purchased for your business. If any furniture costs more than R7000, these could be business assets

Gifts: Gifts purchased for employees, clients or vendors

Insurance: Amount spent on insuring your business and its assets

Interaccount Transfer: When you move money between business accounts or pay off your credit card. Moving money out of your business account and into a personal account is Drawings.

Internet & Phone: Wifi, data, airtime and other phone and internet connectivity fees or payments

Licences: Any licences, patents and/or trademarks you have purchased for your business

Meals & Entertainment: Don’t forget to keep the receipts 😉

Meals you buy when you are out doing business with a customer, working late at the office, business travel, meetings and office parties etc

Entertainment costs used to entertain customers and employees

Medical: Money spent on healthcare and medical services

Merchant fees: Amounts paid for processing payments

Office Supplies & Stationery: Money spent on office items such as teas & coffee, cleaning supplies, staples, paper, pens and office snacks

Packaging Amounts spent on packaging services and materials

Professional Fees: Money spent on any professionals, such as accountants, tax specialists, lawyers, doctors and/or other service providers

Rent: The rent you pay for your office space, warehousing, storage, facilities etc

Refundable Deposits: A refundable deposit paid temporarily to secure products or services

Refunds: Money refunded back to customers for returned products and/or services

Repairs & Maintenance: Amounts spent on repairing and maintaining business machinery, computers, hardware etc

Salaries & Wages: Money paid to your employees and/or directors for their work

Software & Subscriptions: Monthly or annual fees for software and subscriptions, like your favourite accounting software 😉

Solar & Renewable Energy: Money spent on things like solar panels, inverters, solar batteries and other green energy solutions etc for your business

Training & Education: Any money spent on business-related training, courses and educational studies

Travel: Money spent on business-related travel like flights, transport, meals, accommodation etc

Utilities: Money spent on electricity, water, waste disposal, heating, and sewage

Vehicles: Amount spent on running and maintaining a business car, van, trailer and other vehicles. If you buy a vehicle for your business, this is a business asset

Non Tax-deductible business expense categories

Fines & Penalties: Any fines or penalties paid for any damages your business has caused or law violations

Tax: Income tax or tax return payments

VAT: Value-added tax (VAT) is a tax added to most products and services you buy from VAT-registered businesses

Loan repayments: Money you spend to pay back business loans, overdrafts or credit

Drawings: Any money that is taken from your business account for personal use

Investments: Investments made into assets or other businesses

Interest Capitalised: Interest charged on business loans and credit

How to track your business expenses

1. Record expenses as soon as possible

Tracking your business expenses should become a habit. Make it part of your day-to-day workflow and you’re less likely to miss expenses and spend hours trying to catch up on weeks or months of expenses.

2. Information your expenses need to have

• The correct expense category like Office Supplies, Furniture, Internet & Phone etc
• A small description of what you paid for (this is to help you remember what the expense was for)
• The total expense amount
• The date you paid for the expense
• How you paid for the expense (the account you used to pay or cash)
• The supplier or name of the company/person you paid

3. Keep your receipts and supplier invoices

A file can work but scanning or taking photos of your receipts and/or invoices and keeping digital copies makes storing that much easier. Receipts and invoices must show the items that were purchased and the total amount paid - a card machine slip just doesn't cut it.

4. Make use of great accounting software (wink wink 😉)

Using accounting software, like stub 😉, to track your business expenses can simplify and automate your expense tracking process. Have a view of all your expenses in one place, get insights on how you’re doing, as well as generate important reports, like an expense report and Profit & Loss statement.

Using your personal bank account to run your business?

Are you running your business through your personal bank account? That’s ok, for now, but it does make things a little bit more complicated and you could get confused between what is a personal or business expense which can lead to tax issues. Not something we ever want. So if you are on the fence about whether or not to open a business bank account, we would highly suggest you do!

Any personal expenses cannot be included as a business expense and need to be categorised as a personal expense so it does not get included in your deductible business expenses.