Canuckbusiness

Start a business, Do your taxes, Save money

Question: Difference between Supplies & Office Expenses?

I’m starting a new section on this blog called “Random Questions“.

Someone commented on my post Setting up your business books: Step 1 – Expenses and it was such a good question that I wanted to dig it up and let it breathe. Feel free to email me or ask questions on posts, and if I know the answer I may elevate it to my “Random Questions” category. If I don’t know the answer, I’ll say “I have no idea” and that question will never see the light of day.

Here we go.

“What’s the difference between Supplies & Office Expenses? And what are “Office SUPPLIES”? I don’t know what envelope to put my printer ink in.”

People get confused by this because many accounting programs have accounts called “Office Supplies” and some have “Office Expenses“. “Office Supplies” does not exist in CRA’s world. They only recognize “Office Expenses” and “Supplies“, so I suggest we seek out all instances of “Office Supplies” in our books and destroy them now. From this point on let them be known as “Office Expenses“.

Here are CRA’s definitions of both of these expense categories (note there is no “office supplies“):

“Supplies:
You can deduct the cost of items used indirectly to provide the business’s goods or services, such as drugs and medication used in a veterinary operation, or cleaning supplies used by a plumber.

Office Expenses:
You can deduct the cost of office expenses. These include small items such as:

  • pens
  • pencils
  • paper clips
  • stationery and
  • stamps.

Office expenses do not include items such as:

  • calculators
  • filing cabinets
  • chairs and
  • desks.

These are capital items.”

Now, back to the real world. Here’s what I tell my clients:

“Every business should have Office Expenses, but not every business needs Supplies.

Supplies” are things not associated with a normal office, but you use them in your business. Things like earplugs for a sculptor using power tools, or gloves for a cleaning business. If you only have one or two of these types of things, don’t bother having a “Supplies” expense in your business. Just put them in your “Office Expenses” envelope and never talk about it again. It will all work out in the end.

So where do I put printer ink?

Office Expenses. ‘Nuff said.

July 4, 2011 - Posted by | Random Questions | , , , ,

11 Comments »

  1. Thank you so much. It really helps a lot. You are great!

    Comment by Zena | April 13, 2013 | Reply

  2. Hi. Thanks for your work on this web site. I’m a fiction writer, and this past year I paid a professional editor to do a consultation on a manuscript for me. Try as I might, I can’t discern which category I can slot this expense into. Is it another office expense?

    Comment by alwaysunderrevision | April 21, 2013 | Reply

    • I would put it under “Subcontracts” (line 8360). You have contracted out work to someone and they should report the amount on their own taxes as business or professional income. Thanks for stopping by!
      james

      Comment by -- | April 21, 2013 | Reply

  3. Hi. Thanks for these “random questions”. As a graphic designer, would I put typeface and template purchases under the Supplies category, or would this be more of a Capital Expense? Thank you!

    Comment by Staci | April 25, 2013 | Reply

  4. Do I have to apply gst/hst on parking in BC while entering the transaction in Quickbooks?

    Comment by Nishi | April 26, 2013 | Reply

    • Sorry, not sure so I can’t comment on this.

      Comment by -- | April 29, 2013 | Reply

      • I am not sure about certain things like furniture, cost less than $300 or things like calculator, cost just $50.
        Do I have to enter them in Capital asset, office expenses or supplies?

        Comment by Nishi | April 30, 2013

      • Use your common sense in cases like these. If you think the item has a good chance of needing to be replaced within one year, put it in either Office Expenses or Supplies. A $50 calculator is not worth capitalizing in my experience, so I will put it in one of these. Class 8 is where office furniture generally goes and it allows a 20% CCA deduction per year. You could lump a bunch of cheap things together, like chairs and bookshelves, and put them in this class. Don’t lose sleep over this–stick to capitalizing more expensive items and you’ll be okay.

        Comment by -- | May 3, 2013

      • Thank you so much, It was such a help

        Comment by Nishi | May 5, 2013

  5. I wanted to start a handmade greeting cards business, but I am a little confused where to put the tools, inks, cardstocks, and stamps that I already have?

    Comment by Lorie | May 15, 2014 | Reply

    • Hello Lorie,
      Tools, inks, and stamps I would put in Supplies. Cardstocks would probably be best in Inventory (as Purchases), unless you are sure you will use them all up within the tax year, then I would just put them in Supplies as well and not bother with keeping an inventory. List everything at “Fair market value” — you don’t need receipts (you probably don’t have these anymore right?) but be reasonable in assigning a cost to them.

      all the best,
      james

      Comment by jkswift | May 17, 2014 | Reply


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 170 other followers