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What is considered utilities?
In business accounting, utilities refer to recurring services that are essential for the day-to-day operation of a business facility. These include services like electricity, water, gas, and internet that support a company’s operational infrastructure.
How to categorize utility expenses?
- Record as Operating Expenses in your income statement.
- Use a dedicated "Utilities" account in your chart of accounts.
- If applicable, split costs by department or location for better tracking.
- For home offices, categorize only the business-use portion of shared utilities.
- Include utilities tied to production (e.g. factory electricity) in COGS, if relevant.
Examples of utility expenses
- Electricity: Powers lighting, computers, and office equipment.
- Water and Sewage: Provides water and handles wastewater disposal.
- Natural Gas or Heating Oil: Fuels heating systems and certain appliances.
- Internet and Phone Services: Supports business communication and operations.
- Trash Collection: Covers regular removal of office or facility waste.
- Air Conditioning or HVAC: Maintains a comfortable indoor climate and air quality.
- Cable TV: Used for customer areas or industry-specific needs.
- Mobile Phone Plans: For employee communication and business-related tasks.
Tax Implications for Utility Expenses
- Utility expenses are generally 100% tax-deductible if used solely for business
- purposes.
- For home-based businesses, only the business-use portion is deductible, usually calculated by square footage or time of use.
- Keep detailed records and receipts to support deductions in case of an IRS
- audit.
- If utilities are included in rental payments, they must be separated to claim the full deduction.
- Some businesses may claim sales tax exemptions on utility usage directly related to production or resale activities, depending on local laws.
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The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
Automatically Track and Categorize Utility Expenses with Slash Analytics
Get automated real-time visibility into spend across departments or locations, sync everything to QuickBooks or Xero, and keep your books tax-ready.
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