Many small business owners struggle to classify their expenses and income correctly. Understanding these categories is essential for organizing your business finances and making strategic decisions. In this article, we’ll explain what counts as an expense, what counts as revenue, and how the Jarbas App can simplify this process with its practical, automated features.

What is Revenue?

Revenue is all the money that flows into your business as a result of selling products, services, or other commercial activities.

Examples of Revenue for a Small Business:

1.      Sales of products or services: The income you receive from selling goods or providing services.

o    Example: If you own a clothing store and sell a t-shirt for $50, that $50 is revenue.

2.      Payments from credit sales or installment plans: When customers pay off balances from previous purchases.

3.      Additional income streams: Revenue from renting out equipment, earning commissions, or receiving interest.

o    Example: You rent out a sewing machine for $100 a month and receive that amount as revenue.

In the Jarbas App:
Any payments you record in the Jarbas App—whether they’re upfront payments, installments, or credit—are automatically registered as revenue. This automation helps streamline financial tracking and eliminates the risk of misclassification.

What is an Expense?

An expense is any money leaving your business to keep operations running. This includes direct and indirect costs.

Examples of Expenses for a Small Business:

1.      Costs of goods or supplies: Money spent to purchase items or materials for resale.

o    Example: You spend $20 on a t-shirt that you plan to resell for $50.

2.      Rent: The amount paid for your workspace.

3.      Recurring bills: Payments for utilities like water, electricity, internet, and phone services.

4.      Taxes and fees: Payments for taxes such as sales tax, income tax, or card transaction fees.

5.      Employee-related expenses: Salaries, commissions, and benefits.

6.      Marketing and promotions: Spending on ads, flyers, or social media campaigns.

7.      Maintenance and repairs: Costs to fix machines, equipment, or physical space.

o    Example: Spending $200 to repair your credit card machine.

8.      Bank fees: Account maintenance charges or transfer fees.

How Does the Jarbas App Help?

The Jarbas App makes tracking your revenue and expenses easier and more organized. Here's how:

• Automatically records revenue when payments are made (upfront, installment, or credit).
• Allows you to categorize specific expenses (e.g., rent, marketing, or utilities).
• Generates detailed financial reports so you can see exactly where your money is going.
• Keeps everything synced for full visibility over your finances.

Tips to Avoid Misclassification:

1.      Ask yourself: Is this money coming into or going out of the business?

o    Money coming in: Classify as revenue.

o    Money going out: Classify as an expense.

2.      Understand key dates: The Jarbas App lets you use filters to view revenue and expenses for specific periods, ensuring you stay on top of your financial tracking.

3.      Keep personal and business finances separate: Avoid mixing accounts to maintain clear and accurate records for your business.