As you may know, there are many business expenses that can be deducted from your taxes, whether you are self-employed, or you are owner of your own company. However, there are so many different types of expenses that businesses 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 them to make your business grow and become more successful and profitable.
Keep in mind that you 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 are all the payments that are needed in order to keep your 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
Car and transportation expenses are also deductible. They consist in the costs of gas and fees, for example, when we you are going to a business appointment or when you are meeting a client. The best way to make sure you are keeping track of our daily expenses is by having a log, whether on paper or using a smartphone app. This way, you will be able to have an accurate record that will come quite handy when it is time to file our taxes.
Other deductible expenses that you may not be aware of include gifts to customers or clients. Sometimes, a small gift to show appreciation can go a long way, helping us secure a long-lasting relationship with our clients or business partners. However, you must 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. Gifts to your employees also fall under this category with the same $25 limit still applying.
Meals and entertainment are other business expenses that can be deducted. 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 qualifies for a business expense deduction, and you can even add the tip.
In order to deduct your business expenses, you must 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, contact us and we will be glad to provide all the assistance you need.
