As a company, we work with a Title company for title deed registration. Title invoices us for expenses made. The invoice amount consists of expenses such as title deed registration, filing fee and trip fee if needed.
How should we, as a company, record this payment?
Should I categorize payment to the title as a "professional service fee" or should we categorize payment in details as title deed registration fee, filing fee and trip fee?
Best.
@Ugur01 It depends mostly on your own taste.
If you are only worried about categorizing expenses for your income tax return at year end, Professional Fees works well enough for that purpose.
If you prefer to have a more clearly defined P&L at year end, go ahead and break it down.
When it gets right down to it, the major distinction in your business deductions for income tax purposes is between Expenses and Cost of Goods Sold, and I am not aware of a scenario in which you paying somebody for title deed registrations would qualify as COGS. So, it is an expense, and Professional Fees is a perfectly normal category of expense for income taxes, and one that is presumably easily justified in your company's case.
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