How to categorize postage and delivery expenses?
Postage and delivery expenses are business costs incurred to send documents, products, or materials. These expenses support communication, fulfillment, and client service and are common for businesses that ship goods, mail invoices, or send contracts and marketing materials.
What are postage and delivery expenses?
Postage and delivery expenses cover the costs your business pays to mail or ship items using other service providers. This includes both outgoing mail and shipped packages related to sales, operations, or administration. To qualify as deductible, the expense must be business-related and reasonable in amount.
How to categorize postage and delivery expenses
- Record as Operating Expenses on your income statement.
- Use a Postage and Delivery, Shipping, or Courier Fees account in your chart of accounts.
- Include only business-related mail and shipment costs; personal shipping is not deductible.
- Separate postage and delivery from freight or cost of goods sold when shipping inventory to customers.
- For mixed-purpose shipments, deduct only the business-related portion.
- Keep receipts, shipping invoices, and tracking records for documentation.
Examples of postage and delivery expenses
- Postage for mailing invoices, contracts, or checks.
- Courier or express delivery services.
- Shipping costs for sending documents or samples to clients.
- Delivery fees for office supplies or equipment.
- Packaging and mailing costs for non-inventory items.
- Certified mail or notary delivery services.
Tax implications for postage and delivery expenses
- Postage and delivery expenses are generally tax-deductible if they are ordinary, necessary, and business-related.
- Shipping costs tied directly to inventory sales may need to be included in Cost of Goods Sold.
- Personal or non-business delivery costs are not deductible.
- Proper categorization helps avoid overstating operating expenses.
- Deduct postage and delivery expenses on Schedule C or under operating expense sections on business tax returns.
