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Here's how to categorize your small business expenses:Review and reconcile your bank accounts on a regular basis. Each time you spend money, determine what you're spending it on. Assign that transaction to a category. Run a Profit and Loss report that will identify where you're spending the most.

There are three major types of financial expenses: Fixed, Variable, and Periodic. Fixed expenses are expenses that don't change for long periods of time, like office rent or vehicle lease payments for you or your staff. Variable expenses change from month to month. Such as utilities or meals and entertainment.

There are two main categories of business expenses in accounting: Operating expenses: Expenses related to the company's main activities, such as the cost of goods sold, administrative fees, and rent. Non-operating expenses: Expenses not directly related to the business' core operations.

More In Forms and Instructions Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if: Your primary purpose for engaging in the activity is for income or profit.

If you're self-employed, you use a Schedule C form to report your self-employed income and expenses. It's also known as Form 1040....You can categorize these types of transactions as interest:Other interest.Business loan interest.Mortgage interest.Credit card interest.

Here's how to categorize your small business expenses:Review and reconcile your bank accounts on a regular basis. Each time you spend money, determine what you're spending it on. Assign that transaction to a category. Run a Profit and Loss report that will identify where you're spending the most.

Learn about Schedule C categoriesAdvertising.Listing fees.Web advertising, banner ads, and pay-per-click fees.Promotional purchases and giveaways (T-shirts, caps, bags, pens)Fees paid to advertising and public relations agencies.Business logo design.Marketing emails and direct mail campaigns.More items...