Difference between office expenses, office supplies and office equipment

Truth: It’s confusing! If you’re guilty of putting everything you spend for your business into the Office Expense Category raise your hand!

No judgement here, it’s a lot simpler than what you think.

//Office Expenses (Expense Account): Think about what the business needs in order to function; your printer, your monitor, your phone, the cleaning lady you pay every week, when you post something, your accounting software etc…

//Office Supplies(Expense Account): Think about the things that you need to be replaced or refilled on a regular basis; your stationery, paper for your printer, staples, pens, coffee, water and snacks for your employees etc…

//Office Equipment(Fixed Asset): Think about your “long-lived” items that have a lifespan of more than one year and are more expensive; your office furniture, your computers, this expensive couch for your precious clients to sit on, the big bulky photocopy/multifunction machine etc…

The reasons why it’s so important to properly categorise your items is so you get the right deductions at tax time and that the true financial position of the business is reflected on the balance sheet. You wouldn’t want to code a fixed asset to an expense account!

If you are unsure about low cost items you buy for the business that is furniture for your office for example, just ask your accountant where you should put it. Sometimes accountant will create a pool for the minor plant and equipment and reconcile this expense type under this category for depreciation and deduction purposes.

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