If you do not track your business expenses, you pay more tax than necessary and you cannot price jobs accurately. Track every expense as it happens with a photo of the receipt and a category, and your tax prep and your pricing both get easier.
Expenses handymen commonly forget
- Small hardware-store runs and consumables
- Tool purchases and repairs
- Software, phone and internet
- Insurance and licenses
- Vehicle costs and mileage
- Safety gear, uniforms and advertising
Whether each item is deductible depends on your situation, so confirm with a CPA and the IRS guidance at irs.gov.
What not tracking costs you
Missed deductions raise your taxable income. Unknown costs also hide underpriced jobs. Compare a job's revenue with its real materials, labor and drive time to see whether it made money.
Receipts without the headache
Photograph the receipt at the counter. HandyBook has expense tracking on all plans and receipt OCR on Pro; see expense tracking.
Mileage
Business mileage is a commonly missed deduction. Keep a log with date, start and end, and purpose. Confirm the current standard mileage rate and record-keeping rules at irs.gov. HandyBook's Business plan includes automatic GPS mileage tracking.
Categorize as you go
Pick a short list of categories that match your tax forms (ask your CPA) and stick with them. Categorizing at purchase takes seconds; doing it in January takes days. See the tax season guide.
FAQ
What business expenses can a handyman deduct?
Ordinary and necessary business costs such as tools, supplies, insurance, vehicle expenses and software may be deductible. Rules vary, so confirm with a CPA or at irs.gov.
How long should I keep receipts?
Retention periods depend on your records and tax situation. Check IRS guidance on record keeping or ask your CPA.
Do I need to track mileage?
If you want to claim vehicle expenses, you generally need a contemporaneous log. Check the current IRS rules.
What is the easiest way to track expenses?
Photograph receipts immediately and categorize them in an app or spreadsheet the same day.