Record and categorize business expenses

Revenue tells you what came into your business. Bookkeeping also needs to account for what it cost you to earn it.

Use **Expenses** to record the business costs you incur throughout the year.

### Record expenses as they happen

Enter business expenses while the details are still easy to remember.

Keep enough information with the expense to identify what you purchased, what it cost, when it occurred, and why it belonged to the business.

Waiting until tax season to reconstruct a year of purchases makes accurate bookkeeping much harder than maintaining the records as you go.

### Choose the appropriate category

Assign each expense to the category that best describes the business purpose.

The NEST uses expense categories throughout bookkeeping and reporting, so consistent categorization helps keep your financial reports useful.

When subcategories are available, use them when the additional detail is meaningful to your business.

### Categorize by purpose, not by store

Think about **what the expense was for**, not simply where you bought it.

A purchase from the same retailer might represent office supplies, printing supplies, equipment, or another business purpose depending on what you actually purchased.

### Keep your records accurate

If an expense changes, was entered incorrectly, or needs a different category, update the existing record rather than creating another expense to compensate for it.

Your reports are built from the underlying bookkeeping records.

Accurate expenses produce more useful Profit & Loss and tax reports.

### Bookkeeping and tax treatment aren't always the same question

Recording a business expense in The NEST creates a record of what your business spent.

Whether a particular expense is deductible, how it should be treated for tax purposes, or whether special tax rules apply may depend on your individual circumstances.

The NEST helps organize your business records but does not replace professional tax advice.