Recording Expenses & Bills
Categorize correctly, capture receipts, and decide between cash, card, and accounts payable workflows.
Three ways money leaves
Direct payment (debit expense, credit cash), credit card purchase (debit expense, credit card liability), or bill received (debit expense, credit accounts payable, then later debit AP, credit cash).
Capitalize or expense?
Items expected to last over a year and costing above your capitalization threshold (commonly $2,500) get capitalized as fixed assets and depreciated. Below that, expense immediately.
Owner expenses
If the founder pays a business expense personally, record it as a reimbursement (debit expense, credit Due to Owner). Never just ignore it — you're losing deductions.
Key takeaways
- Three flows: direct, credit card, AP.
- Above the capitalization threshold = fixed asset.
- Owner-paid expenses get reimbursed through the books.