Accounting for Electricity and Water Expenses
gabrielmarquez484
Member Posts: 9
Hello! My business is located at my home, which I share with my family. I'm not sure as to how exactly I will "bill" myself for water and electricity, considering that my bills are for my entire household.
What would be the easiest way to figure out how much electricity and water I have to pay for just my business? I had a friend suggest to take about 5%-10% of my bills each month and to "bill" that amount to my business. Would this practice be okay?
How would you do it? 
Also, would it be fine not to add a rent expense? (We own our house and lot)
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Comments
@gabrielmarquez484,
Are you in the US?
@Mikeg -
Hello again! No, I live in the Philippines
Unfortunately, I'm in the US so this would just be general advice. You should check with an expert in the Philippines for exact treatment.
In general, you would debit the expense such as utilities and credit owners equity. This allocates a portion of expenses that the owner is paying for that are business related. The exact amounts are going to depend on what your government allows.
@Mikeg -
Thanks for your advice! I think that would be a good way to account for it! I just need to figure out exact amounts.. I'll definitely check with experts here!
Curious though, how is it usually done in the US? I've read about using square meters/area as a basis for computing utility bills. Do people there usually do that? Or are they more specific and actually compute for energy consumption of appliances, etc.?
@gabrielmarquez484,
Yes, that is how it is done here. You take the business square footage(meters) over the total and use that percentage against utilities, real estate taxes, homeowners insurance and repairs etc. It depends on the business entity type as to where it is shown. We do not compute actual utility use unless there is a special circumstance.
@Mikeg -
That seems like an easier way! I'll figure out if we do the same here. Thanks for your help!