Article 2: What Counts as a Shop Expense, and How to Record It
The short answer: a shop expense is money you pay to keep your shop running. Write each payment on the same day you pay it. At the end of the week, add up your list. It shows you where your money goes.
Two kinds of money you pay out
- Goods bought. Money you pay your suppliers for the things you sell in your shop.
- Other money spent. Money you pay to keep the shop open. For example: rent, electricity, water, workers’ wages, transport, phone, repairs, bags and packing, bank charges, and licence fees.
Write these two kinds on separate lines. When you find your profit, you will need them apart.
What is not a shop expense
- Food, clothes and bills for your home.
- Money you took for yourself. Write it on your daily page as “money you took for yourself”. Do not write it as a shop expense.
Loan payments
When you pay back a loan, there are two parts. The extra money the lender charges you (interest) is a shop expense. The part that pays back the loan itself is not an expense. But both parts take cash out of your cash box, so write them on separate lines.
Big things you buy once
A fridge, a shelf or a computer will last for years. Do not mix them with your daily payments. Keep a separate list with the date and the price.
Bills you pay once a month or once a year
Rent or a licence fee is easy to forget until the day you must pay. Divide it by the number of days. For example, rent of 6,000 a month is 200 a day (6,000 รท 30). Put 200 in a separate envelope every day. When the rent is due, the money is ready.
This is only a way to save. Do not write the 200 as a payment. Write the rent on the day you really pay it.
How to write it down
Use a notebook with five columns: Date, What it was for, Kind (goods bought or other money spent), Paid by (cash or bank), and Amount.
| Date | What it was for | Kind | Paid by | Amount |
|---|---|---|---|---|
| Oct 1 | Rice from supplier | Goods bought | Cash | 1,200 |
| Oct 1 | Transport | Other money spent | Cash | 150 |
| Oct 2 | Electricity bill | Other money spent | Bank | 800 |
These amounts are examples. Use your own money units and your own payments.
Three habits make it work
- Write each payment on the same day.
- Keep every receipt in one envelope.
- At the end of the week, add up each kind.
Common mistakes
- Forgetting small payments.
- Writing home costs in the shop list.
- Writing a payment many days later, when you have forgotten it.
- Losing receipts.
- Writing the full loan payment as an expense.
What comes next
Now you know your sales and your spending. In the next Article 3, we will use them to find your real profit.
This article is for general learning. It is not personal financial advice.
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