What Can I Deduct As A Business Expense?

Jul 06, 2021

There is so much confusion around what is deductible for business owners so we are going to try and spend some time outlining it here.

We see questions around allowable business deductions pop up all the time in our Free Facebook Group so if you haven't checked that out yet, join it now.

What Can I Deduct As A Business Expense?

Within the day-to-day life of your small business, you will incur ordinary and necessary expenses that you can deduct when filing your taxes.

What does “ordinary and necessary” mean? 

  • Ordinary
    • Common and accepted in the general industry in which the business owner is working.
  • Necessary
    • Appropriate and required or helpful in operating your small business.

Basically an ordinary and necessary expense means that it is appropriate and helpful for your business. To meet this test the expense does not have to happen often or be a recurring expense (although it can be).

We just recently launched our ebook, The Ultimate List of Business Deductions which is a great download for you to begin getting ideas from. If you have not downloaded it yet, do it now!

How Do I Maximize Business Deductions?

You lose every time you spend AFTER tax dollars that could have been PRE tax dollars.

  • After Tax Dollars - Money you spend have it has been taxed.
    • Think of a W2 employee who buys a desk for their home office using personal funds. They get no deduction for that.
  • Pre Tax Dollars - Spending done prior to being taxed.
    • Take that same example as above but now you have a business owner. They can buy that desk through the business and get a business deduction, prior to those funds being taxed.

Goal: Strategize to find after tax dollars that can be moved to pre tax dollars by having a business purpose.

A Few Notes And Things To Think About

  • This is general advice and not every tax deduction may be allowed for your specific business. Be sure to talk with your tax professional before acting to ensure it’d valid in your line of business.

    • What is a valid tax deduction for one business may not be the same for another.

  • Always have a separate bank account (or credit card) for your business that you are running your business expenses through.

  • Keep great record and receipts - Write directly on the receipt the business purpose and background behind the transaction so it is easy to remember in case you need it down the road.

  • Get Creative! Search through your personal spending and look for way to create those additional pre tax deductions by finding a business purpose for the spending you may already be doing.

Do not forget to download our ebook, The Ultimate List of Business Deductions which is a great place for you to begin getting ideas from. 

The Time Is NOW To Start Paying Less In Taxes. Join TaxElm and start eliminating taxes and growing your wealth!

What you'll get:

  • Tax Savings Blueprint and Training: We’ll provide you with a customized tax plan that is tailored to meet your specific needs and goals. Along with that, you have access to our library of training modules, implementation guides, supporting documents, and more.
  • Unlimited Access to Tax Experts: Got a specific question about a tax strategy? You’ll have access to our team of tax experts to get the accounting and tax answers you need.
  • Annual 1-on-1 Live Consultation: Once a year you get a live meeting with a tax expert to discuss anything tax savings you would like. This is your time to get your questions answered live 1-on-1.
  • Annual Bookkeeping Analysis: Annually you will submit your financials to our team of accountants and we will put together a high level business financials overview report custom to your business.
  • Monthly Group Webinar and Training: Every month, we host a live, virtual training session on a key tax topic. Join us live and bring your questions or view the recording on your own schedule.
  • Partner Directory and Discounts: You get exclusive, members-only rates and access to our expert referral network for accounting, bookkeeping, tax preparation, payroll, financial planning, legal, retirement planning, tax resolution, and more!

It is like having a tax strategist walking with you along this entrepreneurial journey!

Join TaxElm Today!

Stay connected with news and updates!

Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.

We hate SPAM. We will never sell your information, for any reason.