Tracking Expenses for your Aromatherapy Business

ReceiptStack

It’s the start of a new tax year and a chance to get better organized in 2013!

Like any business owner, when you run an aromatherapy business you have to keep good records of your earnings and expenses. Not only will the IRS want to know how much you made and spent during the year, but you need to know if your business is profitable.

What is Considered a Business Expense?

Business expenses include any money you spend to operate your business that you would not have had to spend, otherwise.  Some examples of business expenses include:

  • Office equipment – furniture, computers, printers, software, cell phones, and anything else you need to operate your business.
  • Product Materials – essential oils, carriers, containers labels and ink
  • Insurances – professional liability, general liability, rental damage.
  • Outsource services – writers, designers, developers, virtual assistants, and anyone else who you pay to perform some duty in your business.
  • Learning resources – memberships, ebooks, private mentorships, coaching, and anything else you use to improve your business.
  • Legal and accounting – your lawyer, your accountant, court fees.
  • Office space – rent or or a portion of your house if you work at home, including a percentage of your rent/mortgage and utility bills.
  • Business trips – travel and related expenses if you go to conferences, classes or other events directly related to your aromatherapy business.
  • Fees for online services such as PayPal fees, monthly charges for hosting services like GoDaddy, Aweber or your domain register.

Some other things that can be claimed as business expenses is your mileage if you travel to do an aromatherapy class or consultation, meals if you entertain customers, gifts for clients, and anything else that can legitimately be connected directly to your business.

 

Keeping Good Records

Quicken-2013-Starter-Edition-PGRecord keeping, especially for a small business, doesn’t have to be complicated. A simple spreadsheet will do the trick if you have few expenses. You can set up your spreadsheet similar to a checking account register, and record each transaction and what it was for. Then file the actual receipt in a folder marked with the year.   I use a little 3 ring binder with 12 brown envelopes inside with the month written on each one.  I stick all my receipts inside the envelope each month.  Or you might want to keep a small notebook and envelope in the car for tracking mileage and gas expenses.  When it’s time to do your taxes, you’ll be able to easily calculate how much you spent and in what categories.

A better solution is to use an accounting software like Quickbooks or Sage.   It’s a simple matter of just recording each expense and selecting which category it belongs to.  At the end of the year, simply email the file to your accountant and he or she will be able to prepare your taxes using that information.

How you record your expenses is not nearly as important as is simply doing it. Regardless of the system you choose, be sure to use it consistently. You’ll find it much easier to deal with taxes at the end of the year if you spend a few minutes each week recording expenses and income, rather than trying to do it all in January.

 

Related Posts:

  • No Related Posts
Did you enjoy this article?
Share the knowledge
Get weekly recipes FREE

2 Comments

  1. What a great and useful post Liz! Sometimes we all need a reminder to get organized! I use Quickbooks and love it. Recently I realized there were a few things about the program I did not understand so I Googled “quickbooks help”. Several people came up in my town who have a business helping people learn quickbooks. They come to your house and give you a tutorial. I signed right up-doing it next week.
    Andrea Butje recently posted…Headache? Try Essential Oils.My Profile

    Reply
  2. That is a great reminder to keep track of our expensise.

    People tend to overspend on certain things so having a spreadshit where all the expenses are tracked and when you see the numbers at the end of the month, that makes you think strategically about your expensise.
    Ion recently posted…Can We Really Trust Fire Cupping Therapy?My Profile

    Reply

Submit a Comment

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

CommentLuv badge

Pin It on Pinterest

Share This