What is an expense?
Definition of an expense
An expense is a business cost that you pay for yourself that your business can then pay you back for. You might pay for expenses using your own personal cash, or a personal credit card. Expenses may also be referred to as 'out-of-pocket expenses'.
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Some non-cash expenses, such as an allowance for mileage travelled in your own car, can also be repaid to you by your business.
Make sure that you only record bona fide business expenses in your accounts. There may be extra tax to pay, particularly if your business is a limited company, if the business pays you back over and above the business expenses you've incurred.
The term 'expenses' might also be used to refer to all a business's day-to-day running costs, however they were paid for. At FreeAgent, we call these 'costs' to avoid confusion.
Examples of expenses:
If you pay for stamps to use on your business letters using cash out of your own pocket, or if you use a personal credit card to pay for a train ticket to go to visit a client, both those will be expenses.
Software for tracking expenses
You can use FreeAgent's accounting app to track and record your expenses. FreeAgent also enables you to sort out your expenses as they happen by snapping receipts with your phone and uploading them from wherever you are.
Can I claim it? A guide to business expenses
Download our free guide to claiming tax relief for your business's costs and expenses.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.