Starting Your Business

What are Business Expenses

Business expenses are the costs of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit.

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.

• Accounting/Bookkeeping Expense
• Advertising
• Amortization
• Business Bad Debts
• Business Gifts
• Business Interest
• Car & Truck Expenses
• Casualty Losses
• Commissions
• Contributions
• Depreciation of Business Property
• Dues & Subscriptions
• Educational Expenses
• Entertainment
• Excise Taxes
• Franchise Payments
• Health Insurance Deduction for the Self-Employed
• Home Office/Business Use of Your Home
• Insurance
• Inventory
• Legal Fees
• Licenses
• Patents/Copyrights/Agreements Not to Compete
• Promotional Materials - Not Considered Business Gifts
• Rent and Utilities
• Repairs & Maintenance
• Retirement Plan Options
• Start-up Costs
• Supplies & Materials
• Taxes
• Tax Preparation Fee
• Travel & Entertainment

 

Important References:

Publication 334 Tax Guide for Small Business
Publication 535 Business Expenses
Publication 553 Highlights of 2005 Tax Changes
Publication 583 Starting a Business and Keeping Records