The Categorization of Business Meals

The topic of categorizing business meals expenses in the most appropriate way in your bookkeeping system can cause confusion because business meals (and perhaps the associated entertainment costs) can occur for a variety of reasons.

In the old days, it might have been enough to categorize business meals based on two main principles:

1. Geography: local vs. travel
2. Personnel involved: staff vs. clients

Now, I recommend to clients to expand on these meals categorizations and to also separate out the entertainment-type of expenses in your books.

I also highly recommend to consult with a Certified Public Accountant on the most befitting way to accomplish this in your bookkeeping as your business always may be prone to certain types of meals costs, Examples:

• Video Production Companies: Meals can be primarily for cast and crew as part of the production.
• After-School Programs: Meals can be primarily for kids functions and events.
• Fundraising & Consulting: Almost all travel and client meals, intertwined with entertainment costs.

So, to start things off for most small businesses, I would recommend to begin with this basic shell of business meals type of accounts; this is just for OVERHEAD ONLY:

1. Business Meals with Clients
2. Entertainment Expenses (There is a good chance these will not be deductible but at least you are trying to separate out these costs).
3. Food for Company Parties
4. Meals While Traveling
5. Meals with Employees and Contractors
6. Other Local Meals (be careful of being the business owner and always stopping off somewhere for a bite to eat, by yourself, on the company dime).

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.