Tracking Business Expenses
A shoebox of dockets tells you what you spent. It doesn't tell you which jobs made money. Here's the difference between a job cost and an overhead, and the habit that keeps both of them straight without an evening of admin.
Most tradies track expenses well enough to hand something to the accountant once a year, and that's the wrong bar. The reason to do it properly is that half your spending belongs to specific jobs, and until each dollar is attached to the job it came from, you cannot say which work is carrying you. This guide covers the split that matters, the setup you do once, the capture habit that makes it survive a busy week, and the monthly half hour that turns records into decisions.
Doing this job for a living? See job management in ServiceYak.
The split that makes it worth doing
Every dollar the business spends falls into one of two groups, and they're useful for completely different reasons.
- Job costs exist because a job exists — materials, subbie invoices, hire, tip fees, the parts run. Each one belongs to a specific job, and attaching it there is what tells you what that job made.
- Overheads exist whether or not you're working — insurance, vehicle, software, phone, accountant, advertising. These belong to the business, and their job is to feed your charge-out rate.
Bookkeeping that only sorts spending by category gets the second group right and throws away the first. You end up knowing you spent $84,000 on materials last year and having no idea which jobs consumed it — which means no idea which of your work is profitable and which you're subsidising.
The single most common leak this fixes is materials bought and never billed. Bought against a job, they reach the invoice. Bought loose and coded to "materials" at month end, they reach your profit and loss and nobody else's.
Set the plumbing up once
Nearly all the pain in expense tracking comes from a setup that makes you re-enter things. Fix that once and the ongoing work is minutes a week.
- Separate business money from personal. A business account and a business card, used only for business. Mixing them means somebody untangles it later, and that somebody charges by the hour. See setting up your trade business banking.
- Run accounting software with a bank feed. The feed pulls transactions in automatically so nothing depends on you typing a statement out. Accounting software for tradies covers what to expect from it, and where it stops.
- Connect job costs to jobs. Accounting software is built around your accounts, not your jobs. Getting per-job costs out of it is a real limitation — can Xero do job costing covers the gap and the usual ways around it.
- Open supplier accounts rather than paying at the counter. One statement a month beats forty dockets, and every line on it can carry a job reference if you quote one at the counter.
- Set the rules for anyone else spending. Who can buy what, up to what value, and what they have to do with the receipt. Write it down once — this is the part that quietly falls apart when you take on your first employee.
There's a large market of expense-tracking apps and most trade businesses don't need a separate one. What matters isn't the brand, it's whether the tool does these four things:
- Captures the receipt where you are — a photo at the counter, not a pile in the glovebox.
- Attaches the cost to a job, not just to an expense category.
- Feeds your accounting software rather than becoming a second place to type things.
- Handles more than one person if you have staff, with their own logins and a simple approval step.
Anything that fails the second or third test is a filing cabinet with an app on the front. Check current pricing and features directly with any vendor before you commit — this is a market that changes fast.
Capture at the point of spend
Every system that relies on you remembering something at the end of the week fails during the week you're busiest — which is exactly the week with the most spending in it.
- Photograph the docket before you leave the counter. Thermal paper fades, and a docket in the ute is a docket you'll be looking for in three weeks.
- Quote the job number when you buy. Most trade counters will put it on the docket, which means the allocation is already done when the statement arrives.
- Do it in the vehicle, not at the desk. Two minutes in the driver's seat beats an hour on Sunday night, and you still remember what the purchase was for.
- Log the small stuff too. Parking, tolls, tip fees and consumables are individually trivial and collectively a real number, and they're the ones nobody ever records.
- Record the trip, not just the fuel. If vehicle running costs matter to your accountant, they need the pattern of use, and reconstructing that from memory at year end isn't a record.
- Never let a receipt live only in your head. If it isn't captured, it doesn't exist — the money went out either way.
The habit is worth more than the tool. A tradie photographing every docket into a plain shared folder is ahead of one with excellent software who does it in batches when he remembers.
Job cost, overhead, or asset
Once a cost is captured it needs a home. Three buckets cover almost everything a trade business spends money on:
| Bucket | What goes in it | What it's used for |
|---|---|---|
| Job cost | Materials, subbie invoices, job-specific hire, tip fees, plant for one job | Working out what each job actually made against what you quoted |
| Overhead | Insurance, vehicle running, software, phone, accountant, advertising, licences | Feeding your charge-out rate and your break-even point |
| Asset purchase | Vehicles, major tools and plant you'll use across many jobs for years | Tracked separately because it's a purchase of something, not a running cost |
The grey areas are worth deciding once and applying consistently. Consumables that get used across many jobs are usually simpler as an overhead than as a fiddly allocation. A tool bought specifically for one job can reasonably sit against that job. What matters is that you pick a rule and don't change it mid-year, because inconsistent coding makes every comparison meaningless.
How each of these is treated for tax is your accountant's call, not something to work out from an article — and it's a conversation that goes much better when you arrive with complete, dated records and the receipts attached. If you're unsure about your obligations, the ATO and your accountant are the right sources.
The monthly half hour
Capturing costs and never looking at them is just tidier waste. Once a month, sit down with the last month's spending and ask five questions:
- What's unallocated?. Anything that hasn't landed on a job or an overhead category. This is where forgotten job costs hide, and they're money you can still invoice if you catch them early enough.
- Which jobs have costs but no invoice?. Finished work you've paid for and not billed. This is the most valuable thing on the list and it takes two minutes to spot.
- What am I paying for that I don't use?. Subscriptions, memberships, hire agreements, insurance on gear you sold. Recurring charges are the easiest money in the business to get back.
- What's drifted?. A supplier whose prices have crept, a fuel bill that's grown, an overhead that's now out of proportion to the work. You only see drift by comparing months.
- Do my overheads still match my rate?. Your charge-out rate was calculated from an overhead figure. When that figure moves materially, the rate needs to move with it.
ServiceYak keeps material and subcontractor costs on the job they belong to, so a purchase can't drift into a general expense bucket and vanish — and job reports show estimated against actual cost when the work closes, which is the whole reason for tracking expenses this way in the first place.
Frequently asked questions
What's the best way to track business expenses as a tradie?
Capture the receipt at the point of spend, quote the job number at the counter so the allocation is already done, and let a bank feed pull the transactions into your accounting software. The habit matters more than the tool — batching a month of dockets on a Sunday night is where most systems fall over.
Do I need a separate expense tracking app?
Often not. What you need is receipt capture on your phone, costs attached to jobs rather than only to categories, and a feed into your accounting software. If your job management and accounting tools already do that between them, a third app is another place to type things.
What's the difference between a job cost and an overhead?
A job cost only exists because a specific job exists — materials, subbie labour, hire, tip fees. An overhead exists whether or not you're working — insurance, vehicle, software, phone. Job costs tell you what each job made; overheads feed your charge-out rate. Sorting spending by category alone loses the first one entirely.
How long should I keep receipts?
Longer than you'd think, and the requirement depends on your circumstances — your accountant or the ATO will tell you what applies to you. Practically, keep them digitally and keep them all: a photographed docket costs nothing to store and the one you threw out is always the one that gets asked about.