As many of us are aware of, there are many business expenses that can be deducted from our taxes, whether we are self-employed, or we are owners of our own company. However, there are so many different types of expenses that business of any size make as part of their daily operations, that missing some deductions can happen at any time. Therefore, we are bringing an extensive list with plenty of deductible business expenses so that you can take advantage of them and use this to make your business grow and become more successful.
To begin with, we need to keep in mind that we will come across two different types of business expenses, ordinary and necessary expenses. Ordinary expenses refer to all the expenses that other companies working on your field will make on a regular basis. Necessary expenses refer to all the payments we make that are needed in order to keep our operations going. This is a list of the most common fully deductible business expenses, including both ordinary and necessary expenses:
- Accounting fees • Advertising • Bank charges • Commissions • Consultation fees
- Professional education • Credit and collections • Delivery charges • Employee benefits
- Equipment rental • Insurance • Interests • Internet services • Legal fees
- Licenses • Maintenance • Office supplies • Training fees • Rent • Salaries
- Security • Software • Travel • Utilities
Other deductible expenses that we might not be aware of include gifts to customers or clients. Sometimes, a small detail to show appreciation can go a long way, helping us secure a long-lasting relationship with our clients or business partners. However, we need to keep in mind that gift expenses are only deductible for up to $25 per person. So, if you are buying $100 gifts, the remaining $75 will be out of your pocket, but if you buy $20 gifts, these would be fully deductible. Also, gifts you give to your employees also fall under this category with the same $25 limit still applying.
Another commonly forgot business expense that can be deductible is that of meals and entertainment. These costs are usually deductible up to 50% of what you spend, as long as the meal or entertainment cost was business related. So, taking a client or our employees to dinner and paying for their meals qualify for a business expense deduction, and you can even add the tip.
Car and transportation expenses are also deductible, and these consist in the costs of gas and fees, for example, when we are going to our business or when we are meeting a client. The best way to make sure we are keeping track of our daily expenses is by having a log, whether on paper or using a smartphone app. This way, we will be able to have an accurate record that will come quite handy when it is time to file our taxes.
In order to deduct your business expenses, you need to complete and file either Schedule C or Schedule C-EZ so that you can itemize your expenses and calculate how much income will be left after you have taken care of the deductions. If you want to get more information on business expenses and how to deduct them, get in touch with us and you will get all the assistance you need.