As a business owner, you need to classify your business purchases as you made them in order to file your business tax and report your expenses as you should.
In this example, there 3 purchases including: fabric, glue, brush, and paper cutter.
It is easier to purchase them on different receipts. Make a copy of the receipts. File them in their respective folders. You could scan the receipts and file them on your computer if you save file online.
How to file your business purchases?
The folders to file the receipts for the above purchases include:
Raw material: fabric
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Business supplies: glue, brush
Depreciable assets: paper cutter
Then record these expenses in your business expense spreadsheet and depreciable asset spreadsheet.
When you record your expenses in the right category, to file tax, you just put the total of each category in the line they should go on your tax form. Additionally, when you file your receipts properly, you would be able to find them when you need them. You won’t need to look for a receipt for a depreciable asset among receipts for raw materials.
How to categorize Business Expenses?
The video explain the process.
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