• Business & Productivity

  What are acceptable business expenses?

  Posted by Christian on February 22, 2024 at 6:55 pm

  Acceptable business expenses are costs incurred in the ordinary course of running a business that are necessary and directly related to the operations and growth of the business. These expenses must be both ordinary (common and accepted in your trade or business) and necessary (helpful and appropriate for your trade or business). The IRS and other tax authorities typically allow businesses to deduct these expenses from their income to calculate their taxable profit. Key categories include:

  1. Salaries and Wages: Payments to employees, including benefits, bonuses, and commissions.
  2. Rent: Cost of leasing office space, retail space, or equipment.
  3. Utilities: Electricity, water, internet, and phone services.
  4. Supplies and Materials: Items used in the production of goods or services sold by the business.
  5. Professional Services: Fees for legal advice, accounting services, and consulting.
  6. Insurance: Premiums for property, liability, and workers’ compensation insurance.
  7. Marketing and Advertising: Costs related to promoting the business, including advertising, marketing materials, and website expenses.
  8. Travel Expenses: Costs for business-related travel, including transportation, lodging, and meals (subject to limitations and rules).
  9. Education and Training: Costs for professional development, training programs, and educational materials for employees.
  10. Depreciation: The gradual deduction of the cost of business assets over time, such as vehicles, buildings, and equipment.
  11. Repairs and Maintenance: Costs for maintaining and repairing business property and equipment.
  12. Taxes and Licenses: Certain taxes and fees paid to government bodies, as well as costs for business licenses and permits.

  These expenses must be documented and substantiated through receipts, invoices, and financial records. It’s crucial for businesses to maintain accurate records to support the deductions claimed on their tax returns and to comply with tax laws and regulations.

  Christian replied 6 months, 3 weeks ago 1 Member · 0 Replies
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