Expense Types

Expense Types

Understanding expense types in EquiBillBook helps you correctly classify and record different kinds of business expenses. This guide explains the various expense types and how to use them effectively.

What are Expense Types?

Expense types in EquiBillBook represent different classifications or characteristics of expenses. While categories organize expenses by nature (like Office Supplies, Travel), expense types can represent different ways of categorizing expenses such as billable vs non-billable, recurring vs one-time, or by payment status.

Common Expense Type Classifications

Expenses can be classified by different types:

1. Billable vs Non-Billable Expenses

• Billable Expenses: Expenses that can be charged to customers or clients (e.g., travel expenses for a client project, materials for a specific job)
• Non-Billable Expenses: Regular business expenses that cannot be charged to customers (e.g., office rent, utilities, general supplies)

2. Recurring vs One-Time Expenses

• Recurring Expenses: Regular expenses that occur periodically (e.g., monthly rent, subscription fees, monthly utilities)
• One-Time Expenses: Expenses that occur once or infrequently (e.g., equipment purchase, one-time consulting fees)

3. Direct vs Indirect Expenses

• Direct Expenses: Expenses directly related to producing goods or services (e.g., raw materials, direct labor costs)
• Indirect Expenses: Overhead expenses not directly tied to production (e.g., administrative costs, office maintenance)

4. Operating vs Capital Expenses

• Operating Expenses: Day-to-day expenses for running the business (e.g., salaries, rent, utilities, office supplies)
• Capital Expenses: Expenses for long-term assets (e.g., equipment purchases, property improvements)

Configuring Expense Types

When creating expense records, you may encounter expense type options:

• Check if the expense is billable - this allows you to mark expenses that can be charged to customers
• If billable, you can set markup percentages for billing
• Link expenses to specific customers or projects if applicable
• Mark expenses as recurring if they repeat regularly

Billable Expenses

For billable expenses:

• Enable the "Is Billable" option when creating the expense
• Link the expense to a customer or project
• Set markup percentage if you want to charge more than the cost
• These expenses can later be included in invoices or bills sent to customers
• Track which expenses have been billed to customers

Recurring Expenses

For recurring expenses:

• Set up recurring expense templates for expenses that repeat
• Configure the frequency (daily, weekly, monthly, yearly)
• Set the duration or end date for the recurring expense
• The system can automatically create expense records based on the schedule

Best Practices

• Consistently classify expenses by type for accurate reporting
• Use billable expense tracking for customer-related costs
• Set up recurring expenses for regular payments to save time
• Review expense types periodically to ensure proper classification
• Consider your accounting needs when classifying expenses
• Maintain clear documentation for different expense types

Expense Type in Reporting

Expense types help in:

• Generating reports by expense type (billable vs non-billable)
• Tracking costs that can be recovered from customers
• Analyzing recurring expenses for budgeting
• Separating operating expenses from capital expenses
• Understanding expense patterns and trends

Next Steps

After understanding expense types:

• Configure expense types when creating expense records
• Set up recurring expenses for regular costs
• Mark billable expenses appropriately
• Generate reports to analyze expenses by type
• Review and update expense classifications regularly