The short answer is expense them. Cleaning supplies like disinfectants, paper products, trash bags, glass cleaner, and floor chemicals are consumable items that get used up quickly. When you buy a case of all-purpose cleaner or a box of microfiber cloths, record it as a supply expense in the period you purchased it. There’s no reason to track individual bottles on a balance sheet.

This follows the materiality principle in accounting. If an item is low-cost and consumed in the normal course of business, tracking it as inventory creates extra work without improving the accuracy of your financial picture. For most cleaning service businesses, a month’s worth of supplies represents a few hundred dollars. That’s an operating expense, not an asset.

The one situation where you might treat supplies differently is a large bulk purchase near the end of your fiscal year. Say you find a great deal in December and buy $4,000 worth of chemicals and supplies that will last you well into the following year. If that amount is significant relative to your overall expenses, it can make sense to record it as a prepaid expense on your balance sheet and then expense it monthly as you use the product. This keeps your financial statements from showing an inflated expense in December and understated expenses in January through March.

How do you know if a purchase is “material” enough to warrant this treatment? There’s no hard dollar threshold that applies to every business. A $4,000 supply purchase is material for a two-person residential cleaning operation but might not be for a large commercial janitorial company doing $80,000 a month in revenue. Think about whether leaving it as a lump expense in one month would meaningfully distort your profit picture for that period.

For day-to-day purchases throughout the year, keep it simple. Buy supplies, expense them, categorize them consistently. Use a dedicated expense account like “Cleaning Supplies” or “Janitorial Supplies” so you can track the total over time and spot trends. If your supply costs jump 30% in a quarter, you want to see that clearly in your numbers without digging through a general supplies category.

One common mistake is confusing cleaning supplies with equipment. A mop bucket is a supply you expense. A commercial carpet extractor or floor buffer that costs $1,500 and lasts several years is equipment that gets capitalized and depreciated. The dividing line is useful life and cost. If it wears out in weeks or months and costs relatively little, it’s a supply. If it lasts years and has a meaningful price tag, it’s equipment.

If you’re unsure how to handle a specific purchase or you want your chart of accounts set up to track supply costs properly, working with Beaver Dam accounting services like Rock Steady Bookkeeping can save you from overcomplicating things. The goal is books that are accurate and useful without creating unnecessary busywork around every bottle of degreaser you buy.