Office expenses vs. office supplies
Office supplies are consumable, short-term items used daily, while office expenses include broader administrative and operational costs that keep the office running. Both are deductible as ordinary business expenses when used for business purposes.
Office expenses vs. office supplies
While they sound similar, office expenses and office supplies refer to different types of business costs. Office supplies are short-term, consumable items used in daily operations, while office expenses cover broader costs associated with running and maintaining an office, such as software, postage, or small equipment.
What are office supplies?
Office supplies include tangible, consumable materials used regularly in the workplace. These are typically low-cost items that get used up quickly and are expensed immediately. Because they don’t provide long-term value, they’re considered current operating expenses.
Examples of office supplies:
- Pens, paper, and notebooks
- Printer ink and toner
- Envelopes, tape, and staples
- Post-it notes and folders
- Cleaning and breakroom supplies
- Small desk accessories
What are office expenses?
Office expenses refer to broader, often less frequent costs that support business operations but aren’t tied to direct production. These can include small equipment, software, and administrative tools that help the office function. Some office expenses last longer than typical supplies but still fall below the capitalization threshold for fixed assets.
Examples of office expenses:
- Computer accessories, keyboards, and cables
- Office furniture under the capitalization limit (e.g., <$2,500)
- Postage, courier, and delivery costs
- Subscriptions and office-related software
- Internet and phone service for office use
- Minor repairs or maintenance supplies
How to categorize them in accounting
- Record both as Operating Expenses in your income statement.
- Use separate accounts in your chart of accounts for “Office Supplies” and “Office Expenses.”
- Supplies are expensed immediately upon purchase.
- Office expenses that provide multi-month benefit can be recorded as prepaid expenses and expensed over time.
- For clarity, set a capitalization threshold (e.g., $2,500); anything above that may be treated as a fixed asset.
Tax implications
- Both office expenses and office supplies are fully tax-deductible if used for business purposes.
- Supplies are deductible in the year they’re purchased (cash-basis) or used (accrual-basis).
- Office furniture or equipment exceeding your capitalization limit must be depreciated over time.
- Home-based businesses may also deduct office supplies and a proportional share of office expenses related to the business-use area.
- Keep detailed receipts and categorize items properly to prevent audit issues.
