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Keeping accounts; what categories do you use for expenses?

hosting

#1

I’m in the process of updating our accounts. My wife asked me to take it on as she’s currently the work horse financially. And an utter legend.
I’m bringing her out of the paper ledger, a nightmare, into the fine world of spreadsheets - my bow, my string!
My question to you fine poeple is how far do you go to break down costs and what do you think is most useful as end analysis data?
I’m categorising like this:
Travel
Hospitality (milk, coffee, tea, sugar)
Laundry
Maintenance (paint, broken items etc)
Toiletries
Cleaning items (paper towels, polish, bleach etc)
Entertainment (kids books, dvds)

I’ve done a lot of data analysis in the past and am considering breaking down how much we specifically spend on milk rather than the group this falls under. I may just be overthinking it. I know I am, but when it comes to claiming expenses is this what others do, grouping? Or do you break things down item by item and are there any categories you would add?

I should say I’m not just tracking the milk!


#2

Major expenses that you would depreciate like room construction costs, mattresses, air conditioners.
Also Insurance, Office expenses, Utilities, Legal & professional services (like accountants), Taxes & licenses, Contract labor, & Airbnb fees.


#3

There is a free software package that I use to monitor my accounts. Its called Wave Accounting. You can set it up to have as many income and expense categories as you like. You can run profit and loss reports from it and even export the information into excel if you want to manipulate it further. You can connect your all your bank accounts to it and then all you have to do is refresh your bank transactions every few days and then categorise them into the expense or income accounts that you want. You can also use it to prepare your tax return on which is what I do but it would be great as way just to monitor your ingoings and outgoings. As nearly all my transactions are through the bank this is an quick way to ensure nothing gets missed.

These are my income and expense headings

Revenue
Airbnb

Operating Expenses
Repairs & Maintenance
Gas
Mortgage Interest
Kitchen/Cleaning/Sundries
Internet/Telephone
Office Supplies
Bank Service Charges
Room Purchases
Insurance
Miscellaenous
Council Rates
Electricity
Water Rates
Vehicle
Total Operating Expenses

I like to keep the number of categories small but you can go to town depending on what you need.


#4

Here are my categories, see image. These are based on the U.S. 1040 schedules of typical expenses. I keep all expenses in real time, and an Excel pivot table can be refreshed to see where everything stands.


#5

My suite is attached to my house so I group by whether all or partly allocable to the business:
100%: Air only supplies (snacks, etc), Air fees, sales tax, lodging tax, licenses (cleaning here but I do my own cleaning so can’t deduct)
Pro-rated for rental days/rental+personal days: Jointly used supplies (light bulbs, small appliances) Furniture & fixture depreciation, basis depreciation of improvements only to the suite (electrical upgrade), repair & maintenance expense specific to the suite
Pro-rated for days and suite sq ft/total sq ft: General repairs and maintenance (like gutter cleaning), landscaping, utilities, property and liability insurance (cuz mine is all bundled, with something like Slice it would all be allocable as STR expense).
Pro-rated for days, sq ft and building value/land + building value: Property taxes, mortgage interest, property basis depreciation.
All in a ginormous spreadsheet.


#6

Per US tax code, further limits on deductibility if personal days are greater than the greater of 14 or 10% of rental days. If exceeded, your deductions are limited to gross rental income MINUS pro rata mortgage interest, property taxes, casualty losses and all direct rental expenses. Should be held out for rent on unused days, or temp closed for some valid reason, to avoid personal use.


#7

I use a very similar excel form like your pic showing. How did you build the Sub-cat like that? Listing all the categories, and have them to add it up automatically. That’s very convenient.


#8

@Ping

That is called a pivot table. I learned how to do them via a YouTube video (a while ago). I’ll put in a link here.

The beauty of this is, literally on Dec. 31 at midnight you can have your income and expenses 100% ready for tax time entry.


#9

Wow thanks @Jacqueline, that’s incredibly helpful. Thanks for sharing. I will look up the program. You may have just saved me a great deal of doubling up on data entry!


#10

Thank you so much. Much appreciated.


#11

Oh wait reading @dpfromva 's post, I realize that I left out something important – the prorated expenses part. Mine looks like this:

So on a separate sheet in my Excel workbook, I track recurring expenses that I will only claim 50% or so for my STR deductions.


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