Productivity Minute: Start an Expense Journal

stopwatch_time_management_tipsWhy wait until after tax time? February is a great month to turn your home office financial organization around.

Each day, taking one step forward toward better home office organization is vital. Start today by keeping an expense log or journal.

It just takes a few minutes each day. Here are some easy steps for organizing your home office expenses:

  1. Use a notebook, or a dedicated section in your daily planner to track expenses each day of the week.
  1. If you’re partial to using digital means create a spreadsheet in Excel or a similar program, just make sure it’s convenient to your daily workflow.
  2. Gather your receipts at day’s end and write down the amount and a category in your expense journal. Here are some suggested categories:
    • Administrative and accounting
    • Tools and supplies
    • Utilities
    • Marketing and sales
    • Dining out
    • Entertainment
    • Clothing
    • Transportation
    • Gas
    • Mileage: Be sure to record your business miles driven, including the ending mileage number
  1. Note: Business trips should be given their own dedicated expense page
  2. Indicate you’ve recorded each receipt by writing a checkmark at the top of the receipt itself
  3. File your receipts. I recommend using an expanding folder — like this expanding check file — divided into 12 monthly segments.
  4. At month’s end, total your expenses in each category and record them on a new page listing your 2013 expenses month by month

Remember: you can deduct business expenses relating to your home office if:

  • You use it exclusively and regularly for administrative or management activities of your trade or business.
  • You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.

Full details on tax deductions for your home office can be found at http://www.irs.gov/publications/p587/index.html