What can my business deduct?

Is it ordinary and necessary?  The IRS hasn’t issued a comprehensive list specifying what  is deductible.  The general rule is that if the expenditure ordinary and necessary and not addressed in some other context it is an acceptable business deduction.

More info here:  https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses

Some specific limitations, reductions, and non-deductible expenses do exist so if something seems questionable, talk to your CPA.

Here are a few costs asked about frequently:

Deductible:

  • Business Insurance
  • Mileage or Actual Expenses (ask your accountant)
  • Business Meals (50% Deductible)
  • Business Travel (with some rules)
  • Website Costs
  • Business Assets (stuff you aren’t reselling and plan to use for more than 1 year – computers, cameras, equipment etc. via depreciation)
  • Software Subscriptions
  • Licenses
  • Business Insurance
  • Office Supplies
  • Small Tools
  • Client Gifts (Up to $25…worth a discussion with your advisor)
  • Office or Business Rent
  • Bridge Tolls

Not Deductible:

  • Non-Uniform Clothing (sorry no suits, ties, dress shoes, dresses, etc. even if it is to “look nice for client meetings”).
  • Life Insurance
  • Entertainment (Thanks TCJA…)
    • Sporting Event Tickets
    • Fishing Trips
    • Etc.
  • Vacation Travel
  • Traffic Tickets
  • Club Dues
  • Commuting Costs

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