Florist writing down expenses in flower shop | What are sundry expenses?

Contents

  1. 1. What are sundry expenses?
  2. 2. Sundry expenses vs general expenses – what’s the difference?
  3. 3. Why is it important to track sundry expenses?
  4. 4. Sundry expenses and tax
  5. 5. How to account for sundry expenses

What are sundry expenses?

March 2, 2023
When you start your own business, one of the accounting essentials you have to get to grips with is managing your expenses. Not only this, but you need to understand the different types of business expense and how they should best be recorded in your accounting records.In this guide, we’re going to dive in to sundries in accounting, what counts as a sundry expense, how to register them properly in your financial ledger and why keeping on top of them is important for the financial health of your business.

What are sundry expenses?

Sundries in accounting, or miscellaneous expenses, are one-off payments for items that are both small in amount and are random or infrequent. They also do not fit into standard accounting categories as either an asset or business expense.Examples of sundry expenses can include:
    One-time bank service chargesDonations to charityGifts for colleaguesExchange rate charges
It can be challenging to categorise these types of expenses on an income statement. as these small expenses can seem insignificant and difficult to record under any expense category or other line items on your balance sheet.To manage this, may small business owners find it useful to have a general ledger account for sundry expenses, as it means you won’t have to waste time when bookkeeping trying to identify each miscellaneous expense from every business receipt.Grouping all these small, non-specific items together means that you have an efficient record of this type of expenses without spending too much time accounting for them.Note: When a sundry expense becomes a regular payment, it no longer classifies as a sundry expense and instead becomes an operating expense.

Sundry expenses vs general expenses – what’s the difference?

If you’re unsure as to whether something should be classed as a general expense or sundry expense, then it helps to consider the following to understand the differences between the two.
General expensesSundry expenses
Easily classified under regular expense accountsDifficult to classify under regular expense accounts
Can include office expenses, travel, fuel, salaries, marketing and raw materialsCan include donations, one-time fees and gifts
Regular frequency expenses and predictableOne-off expenses, irregular or infrequent
Operating expenses, such as rent or lease payments, or non-cash payments, such as depreciation, cannot be classed as sundry expenses as they do not fulfil these criteria. They would therefore need to be accounted for in financial records under general expenses.

Why is it important to track sundry expenses?

Although sundry expenses are infrequent and of relatively low value, it’s important for them to be recorded on your financial statement and treated like any other business expense in terms of working out their taxable nature.Their value can also soon add up to a significant amount over the course of a fiscal year.When producing your profit and loss account or general ledger, you need to report sundries on the expenses side of your Chart of Accounts. All sundry expenses are added together to make a net sundry expense figure, which is then included on a company’s income statement.Having one single line for this means that the statement doesn’t become filled with small, random expenses that don’t need to be mentioned line by line.

Sundry expenses and tax

Another reason why it’s important to keep track of sundry expenses is that that you can use them to cut down your tax bill, in turn saving your business money and improving its financial health.

VAT

As an allowable expense, miscellaneous sundries can reduce your VAT liability if your business if VAT registered and VAT has been incurred on the sundry expense. This means you can potentially claim the VAT back, providing you evidence it with a receipt.

Corporation Tax and Income Tax

Similarly, as the sundry expense has been incurred for business purposes, it's can be used to offset your taxable profit, in turn reducing your tax bill.This depends on your trading structure: if you're a limited company, you can use these expenses to offset your Corporation Tax bill, whereas you can use sundry expenses to lower your Income Tax bill.

How to account for sundry expenses

When accounting for sundry expenses, one row on your financial statement should represent the total sundry expense amount for the business. If you have a statement that needs to be balanced, you would normally add a few keywords to the credit side explaining the nature of the sundry expenses – for example ‘bank fees’.Sundries should be reflected on the left-hand side of the profit and loss account. The sundry expense journal entry should be shown as a credit to the cash or bank account to adjust the debit entry in the ledger account. You should analyse your expense accounts from time to time to identify any spending patterns.If you find there are certain sundries that keep cropping up, then these becoming regular payments and so can no longer be classed as sundry expenses. They will require you to create a new account to cover this recurring expense.
While they may seem insignificant as individual costs, it’s good business practice to keep an eye on your sundry expenses. To make managing your business operations a breeze, why not give Ember a go? Not only can you store your receipts in a few simple clicks, but our savvy software can break down your balance sheet for you.

Caroline Wire
Caroline WireFreelance Copywriter

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