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Just What Does Qualify as a Business Expense?
Posted Saturday, March 31, 2012
In the most simple words possible: A business expense is an expense which is normal or necessary to the operation of your business [except for illegal activities].
Yes, my imagination and experience have given me many a giggle about what does qualify in any given situation, but only you know your business well enough to define what is normal and necessary.
Common expenses include (this list is only some common items):
• Cost of sales [if you are selling merchandise - the cost of that to you]
• Advertising and marketing
• Auto or vehicle expenses [whether standard mileage or actual expenses]
• Commissions
• Contract Labor [may require a Form 1099 to be issued]
• Depreciation [for larger pieces of equipment with useful life greater than one year]
• Employee benefits if you have employees - this would mean you are filing payroll tax returns
• Insurance
• Interest on Business debt
• Legal and professional fees
• Office expenses and supplies
• Parking and tolls for business trips in your vehicle
• Rent or lease paid for equipment or space
• Meals and entertainment - 50% of cost is considered normal and not allowed generally
• Travel expenses - whether local transportation or out of town travel with airfare, lodging etc
• Utilities - including cell phone, internet, electric, heat, and so on.
• All those other expenses you can justify.
• And possible home office if you qualify.
Yes, my imagination and experience have given me many a giggle about what does qualify in any given situation, but only you know your business well enough to define what is normal and necessary.
Common expenses include (this list is only some common items):
• Cost of sales [if you are selling merchandise - the cost of that to you]
• Advertising and marketing
• Auto or vehicle expenses [whether standard mileage or actual expenses]
• Commissions
• Contract Labor [may require a Form 1099 to be issued]
• Depreciation [for larger pieces of equipment with useful life greater than one year]
• Employee benefits if you have employees - this would mean you are filing payroll tax returns
• Insurance
• Interest on Business debt
• Legal and professional fees
• Office expenses and supplies
• Parking and tolls for business trips in your vehicle
• Rent or lease paid for equipment or space
• Meals and entertainment - 50% of cost is considered normal and not allowed generally
• Travel expenses - whether local transportation or out of town travel with airfare, lodging etc
• Utilities - including cell phone, internet, electric, heat, and so on.
• All those other expenses you can justify.
• And possible home office if you qualify.