Well of course it’s up to you whether you prefer illy or lavazza, Kenyan or Nigerian but that’s not what I mean here. There is a difference in terms of how you account for the coffees you drink in your business expenses (and thus from a tax perspective). We’re not tax accountants and this is not tax advice. We thought we’d give you a few pointers on the differences so that you can record and track your expenses a little better.
- Coffees (and other food and beverages) consumed in meetings which are billable time and expensed – if you have an expenses budget agreed with the client then you will be charging these on so you need to add them in to your book-keeping system as an expense and also allocate them to the right client and project. In MyCake you can run projects which are attached to individual clients, allowing expenses to be categories. This means that you’ll keep better track of these expenses and will be less likely to forget them when invoicing
- Coffees which are during work meetings but are not in billable projects – you should still add these in to your book-keeping system as expenses because you need to know how much you’re spending in order to measure profit. There are rules around what constitutes tax-deductable ‘subsistence’ expenses and although you record all expenses you can’t always deduct the cost from your tax bill
- Coffees which are just coffees and not really work related – these don’t belong in your business book-keeping system!
If you have employees who are incurring these costs and expensing them back to the company then you should also be giving them clear direction as to what is considered a reasonable business expense!