04 Oct What is a Deductible Expense?
A deductible expense can be tricky if you don’t do it right. According to the IRS, your company can “deduct anything and everything that is ordinary and necessary for your business.”
Sometimes it seems like this definition doesn’t really help at all. So ask yourself these questions, “Is this item ordinary for a person in my type of business?” and “Is it essential for business in my field?” If you can confidently answer yes to each question, then you can absolutely deduct that expense!
When looking at business deductions, it is so important that you do not cloud your judgment. Just because you want an item to be a deduction from your company doesn’t mean that will fly with the federal government if you get audited.
According to Entrepreneur.com,
the United States tax code can be so “complex” because of the allowed deductions.” They go on to say that “there's a wide variety of deductions you can use to reduce the taxes you'll pay as your business grows.”
Some of the best tax deductions for a company can include:
• business expenses such as employee benefits, legal services, utilities, rent, office supplies, and insurance.
• meal expenses such as any business related meal or entertainment where you discussed business matters – make sure to keep your receipts!
• travel expenses such as meals, lodging and any transportation you take for business matters.
• equipment expenses such as a computer system, shelving, or other business related equipment that your business might need.
• auto expenses such as a mileage rate, gas, insurance, and depreciation are all able to be deducted from your company
Keep in mind that your company can deduct anything that is ordinary and necessary for your business. So keep track of your deductions throughout the year and keep the receipt that you think might be helpful for your deductions!
Do you know where your business is heading? To learn more about how we can simplify your accounting process, call us at 727.828.9945 to schedule your free consultation.
About Accounting & Business Partners
Accounting & Business Partners is a CPA firm with an efficient bookkeeping department. We believe that success lies in numbers. However, the drive behind the numbers is what truly matters. That’s why we look beyond the financial statements.