In times of recessions, the number of small businesses explode. If you or someone you know has recently started a business, first of all – congratulations. Small business ownership is what our country was founded on. It’s what made the US strong.
It’s also very different from being a business owner when it comes to a lot of things. You control your business model, your customer relationships, what your business does and how it does it. Plus, you control how much you pay in taxes and when you pay them. There are rules, of course. But as soon as you become a small business owner, you have to look at taxes and deductions in a whole new way.
What’s deductible for your business? Just about anything. There are two things that the IRS wants to see: ordinary and reasonable expenses for your business. What would you spend money on that could help your business? For example, if you have a business that sells cosmetics, your ordinary and reasonable expenses may include fashion magazines, samples, different product lines (for testing), spa trips – anything that helps you learn about your market, sell or fulfill on the product line.
As a CPA, my normal deductions would be more likely along the lines of technology (computer, software), education (to keep up to date on new law) and office equipment and supplies. It’s be much harder for me to take a write-off for a span visit. (But, I am trying to figure out how to do that!)
Some common things that people might take deductions for include: home office deduction, business use of vehicle, travel for business purposes, office equipment, office supplies, meals for business use, and paying kids for work done in the business.
The real answer to “What is deductible?” is really “It depends.” It depends on your business and how you do your business. A better question is really “How can I make this deductible?”