![]() Salaries and other compensation: Employee salaries as well as any wages paid to contract employees is completely deductible.Rent: If you rent office or retail space, the rent is deductible.Printing: Whether it’s a one-page document, or a booklet for your customers, the cost of printing is deductible.Postage and shipping: The cost of shipping orders or simply mailing a letter is a deductible expense.Office expenses and supplies: This includes things such as pens and pencils, file folders, toner for your copier, and ink cartridges for your printer.Maintenance and repairs: Whether it’s for routine maintenance like HVAC servicing, or replacing cracked tile in your reception area, maintenance and repairs are deductible.Insurance: General liability, worker’s compensation, product liability, and disability insurance premiums are deductible.Employee benefit programs: The cost of employee health insurance or retirement benefits such as a 401(k) match is fully deductible.Dues and subscriptions: Subscription costs to publications related to your business are deductible, as are membership dues for professional organizations.Credit and collection fees: If you need to use outside agencies to collect past due balances, you can deduct that.Continuing education: Thinking of going back to school to learn the latest in your field? That’s deductible.Advertising: This includes the cost of placing ads or running commercials for your business.You’ll also want to check out IRS Publication 535 Business Expenses, for a more complete explanation of business expenses and exactly what you can deduct. ![]() If you’d like more information on business deductions and exactly what is allowed, be sure to visit the Deducting Business Expenses overview on the IRS website. What are the business expense categories?īelow, you’ll find a list of some of the most common small business expense categories that can be deducted from your taxable income. If you use the accrual method of accounting, you are able to recognize the expense in the month that it was performed, December, so you can deduct the $1,750 expense for 2019, even though it will be paid in 2020. If you’re using the cash method of accounting, you cannot deduct that expense for 2019, but it can be deducted in 2020, when you pay the bill. The bill is for $1,750, and will be paid in January 2020. So, for every dollar that you spend on ordinary and necessary business expenses, which we’ll explain next, you’ll be able to take a tax deduction in the same amount, reducing your tax burden considerably.Ī word of caution: You’ll have to factor in your accounting method when it comes time to deduct expenses.įor instance, in December of 2019, you receive a bill from Atlas Roofing for repairs completed earlier in the month. In fact, any expense that is considered ordinary and necessary for your business is likely a deductible expense. The IRS has defined business expenses as “the cost of carrying on a trade or business,” going on to say that these expenses are usually deductible if the business operates to make a profit.īut what counts as a business expense? A lot more than you may realize. Overview: What counts as a deductible business expense? In this article, we’ll explain what type of expenses are deductible as well as provide you with a list of the most commonly used business expense categories. Some of the most common expense categories include utilities, travel, salaries and other wages, and rental expense, but there are many more that you should be aware of. Are you wondering what business expenses can be deducted from your taxable income? Here's a list of some of the most common small business expense categories.Įducating yourself about the common small business expense categories will make it much easier to determine what is and isn’t deductible at tax time.
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