What Counts As An Expense?
I love, love, love this question, because I think that realizing what actually counts as a business expense can be super eye-opening in the best way! When I say business expense, I mean an expense in your business that you can write off on your taxes as, well…an expense. Now again, I am not a tax professional or CPA and I highly recommend that you work with a tax professional when clarifying these things for your business, but I do want to share the things I learned on this subject while working in my business.
Now to the good stuff. Any expense that is associated with your business qualifies as a potential write off. Yep, that’s right, any expense. Now you may not be able to write off the entire expense, depending on the expense, in some cases you may only be able to write off a percentage of the expense, but when it comes to taxes, something to write off is always better than nothing. 😉 You may also have to do some strategizing before you incur the expense to ensure you can take full advantage of a tax write off.
Just to be clear, I’m not saying that you should stretch any expense to get a tax write off, because that’s unethical and not what we do. I’m sharing this info with you because I want you to be able to use expenses and tax laws to your and your business’s advantage, not to break the law!
I also wanted to talk about this because I know that there are some expenses that may not seem like a business expense on the surface, but actually are. Here’san example: When I did a branding photo shoot for my business, and let me be very clear, I did not do a branding photo shoot until my fourth year in business, which doesn't mean I didn't have photos before then, but I hadn’t done a full blown branding shoot before; I had a stylist, a makeup artist along with getting my hair and nails done. All of those were business expenses, because it was a branding photo shoot for my business.
Typically, when I get my hair done, that's not a business expense, but when I am getting my hair done for a branding photo shoot, that is for my business which makes it a business expense. So that’s just an example of something on the surface that doesn't seem like a business expense, but it actually is.
Here are a couple of other examples of business expenses:
Home Office: If you work from home or if your business operates out of your home, you can deduct a portion of your rent or your mortgage as a business expense, because your business is operating out of where you live.
Client Gifts: This includes the gift itself and the shipping.
Contractors
Cell phone: If you use your cell phone for business purposes, you can write off a percentage of that bill.
Computer: If you buy a new computer that you will be using in your business, that is a business expense.
Meals/Dining Out: If you go to dinner with a friend or a colleague and you are talking about a proposal you're getting ready to put together, the meal can be a business expense.
Coaching & Courses: Some of y'all are hesitant in investing in coaching, and what you may not be aware of, is that that is actually a business expense that can be a tax write off. When you invest in a course, or coaching, those are tied to your growth and your business’s growth.
Travel: This is one of the things to talk to your CPA about, but if you’re taking a trip and working during that trip, there's some tax write offs within the expenses of that trip. That's where you talk to your CPA and get very specific details and guidelines for your context, but that's another business expense.
Say you’re going to a conference, note that the conference has to relate to your business for it to be a viable expense, you may be able to write off the price of the conference, your hotel, your flights and your meals.
So, yes, you can write off quite a few things as business expenses, and you’ll want to talk to a CPA to know what’s right for your business, you should always ask! And remember, you can’t just be writing off a trip to Coachella if your business has absolutely nothing to do with Coachella. Please don’t try to write off a ticket to a festival when you have an education consulting business cause Uncle Sam will knock right on your door with a big question mark and a fine for that. When in doubt, contact your CPA or tax professional!
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