Portable restrooms are essential for ensuring the comfort and hygiene of employees, clients, and event attendees. They’re commonly used in construction sites, outdoor events, and situations where permanent facilities are insufficient or unavailable. They are also, generally, tax-deductible as a business expense.
Expensing portable restroom rental is a practical consideration for businesses involved in construction, event management, or any project requiring temporary outdoor restroom facilities. This guide provides some tips for businesses to help them effectively manage and document the costs of renting portable restrooms for accounting and tax purposes.
Disclaimer: This article provides general tips on managing the costs of portable restroom rentals for accounting and tax purposes. It is not intended to be a substitute for professional advice from an accountant or tax advisor. Please consult with a qualified professional for specific guidance applicable to your business situation and location.
The Need for Portable Restroom Rental
1. Identifying the Rental Costs
The first step in expensing portable restroom rentals is going to be to identify all associated costs with renting the units or trailers. Gather any invoices and receipts provided by the portable restroom rental company as documentation for tax time.
2. Categorizing the Expense
For accounting purposes, portable restroom rentals might be categorized under “Utilities,” “Rent,” or a specific project cost, depending on the business’s accounting practices and the nature of the expense. Consult with your accountant to determine the most appropriate category for your business’s financial statements.
3. Allocating Costs to Projects
If the portable restrooms are used for specific projects, you may allocate the rental costs to those projects. This helps in assessing the overall cost of the project and can be useful for budgeting and financial analysis. Use project codes or identifiers to accurately track expenses.
Example scenario: A construction company in Colorado Springs, CO, is renovating a historic building (Project: “Pikes Peak Avenue Revitalization”). They need portable restrooms and portable hand washing stations for the duration of the project (estimated 3 months).
Since this is a specific project, the company can allocate the total cost of renting the units to the “Pikes Peak Avenue Revitalization” project. This helps them:
- Track project expenses – They can easily see how much—or how little—providing portable restroom facilities factors into the overall project cost.
- Budgeting & analysis – This information helps them budget for similar projects in the future.
Note: Remember, this is a simplified example for portable restroom rental in Colorado Springs and will not apply to everyone. As mentioned earlier, it’s critical to research any specific tax situations as well as any regulations associated with your local area.
4. Budgeting for Future Rentals
Based on previous rentals, businesses can forecast and budget for future needs. This involves analyzing past usage patterns, the duration of rentals, and associated costs to make informed budgeting decisions for upcoming projects or events.
While the example in the previous section involved a construction business renting portable restrooms in Colorado Springs, similar principles apply to various locations and industries. By leveraging past rental data, all businesses can forecast and budget for future needs more accurately.
5. Tax Implications
Portable restroom rental costs are generally tax-deductible as business expenses, but that doesn’t mean they will be in 100% of cases. Make sure you keep detailed records of all expenses to support deductions during tax filings. Above all, consult with a tax professional to understand how these expenses affect your business tax situation and to ensure compliance with local tax laws.
6. Streamlining Expense Reporting
If one doesn’t exist, it’s recommended to implement a system for reporting and approving rental expenses. This could involve using expense management software, or a manual process for submitting, reviewing, and approving costs.
Tip: Small businesses may be able to get help with this from their local small business development group, chamber of commerce, or other local resources. No matter how large or small your business is, the important thing is to sure all documentation is accurately maintained for audits and financial reviews.
Conclusion
Effectively managing and expensing portable restroom rental services is crucial for businesses to maintain accurate financial records and comply with tax regulations.
By following these quick tips and seeking specific guidance from financial and tax professionals, businesses can expense their portable restroom rental services; ensuring accurate financial records, optimized budgets, and compliance with tax regulations.