Tech Tip #228: Why Firms Should Separate Their Direct and Indirect Costs
Be sure to classify direct costs (any amount paid as an expense to a vendor on behalf of a client) and indirect costs (in-house expenses associated with a matter like postage and long distance calls). Failing to properly record direct costs impacts the net income and can cause increased tax liability. If audited, inaccurate tracking can also present a compliance issue. Learn more about tracking direct and indirect costs.