![]() It is important to understand and track them to take full advantage of the deductions they offer. ![]() Some business expenses are never deductible, such as lobbying, political donations, and of course, any illegal activity, but most others are deductible. Instead, it offers the general rule that any expense that is ordinary and necessary for running your business is deductible.Ĭommon deductible business expenses include: The IRS does have a comprehensive list of all allowable business deductions. At the very minimum, make sure to keep receipts for any item that is partially or fully deductible as a business expense. Whenever possible, buy separate items for business and personal use, even if it means purchasing duplicates. Ideally, you should open a business bank account and credit card. It might be convenient, but you risk losing out on valuable tax deductions.įor tax purposes, it is important to keep a clear record of all business expenses, whether the expenses are fully or partially related to the business. That's why it's so crucial to avoid mixing business and personal expenses by using the same checking account or credit card for both purposes. You can't use personal expenses to reduce business income. Business expenses are deductible, so they can lower your taxable income and reduce the amount of tax you owe. For small business owners, understanding the difference between business and personal expenses is crucial.
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