Business Expense Categories Take the Hassle Out of Taxes


Posted 1 year ago in Small Business Tips
by Taylor Larsen

William Shakespeare famously wrote: “To business expense or not to business expense, that is the question.” Just kidding. Don’t believe every quote on the internet. However, the question has probably haunted you more than Hamlet’s father haunted him. What qualifies as deductible and what doesn’t? How do navigate expense categories?

Deductible Expenses

If you’re doing business in any capacity, you have deductible expenses. Every single business has expense categories. The deductible amount will change based on the size and scope of your business.

Now, deductible expenses that fit into expense categories have a few caveats. Each one must be both ordinary and necessary. But don’t let the conditions scare you away from the tax savings.

Let’s take a look at ole Bill Shakespeare’s theatre production company. The paper the company uses for scripts and monologues, lightbulbs for their lighting fixtures, and costumes for their actors could all be grouped together as deductible expenses. But why?

They count as ordinary expenses since other companies in the theatre biz buy similar supplies. Nothing outside the norm on any of the expenses listed above. They also fit the bill as necessary, since the company needs these supplies to keep the business running.

The (Kind of) Comprehensive List

In order to be compliant with any law, a good practice is to find the rules from the body of justice that governs you, and then follow those rules. With deductible expenses, it ain’t so easy.

Finding the exact rules from our dear friends at the IRS is much harder than it should be. Small business owners could be forgiven for wanting to rip their own hair out perusing IRS.gov for a catch-all list of deductible expenses.

Luckily, other websites like Entrepreneur and Bankrate have taken up the slack to help small business owners understand which expenses can be deductible. Some of the categories we pulled from Entrepreneur include:

  • Auto expenses for work vehicles
  • Bad debts that you cannot collect
  • Business travel
  • Computer and tech supplies
  • Continuing education to maintain licensing
  • Depreciation
  • Employee wages
  • Franchise fees
  • Health Insurance
  • Legal fees
  • Maintenance on property
  • Payroll taxes
  • Publicity
  • Rent
  • Subcontractors
  • Taxes
  • Utilities
  • Website Design

And these are just a handful of the 75 they have listed. Once again, they need to be normal and necessary expenses to qualify for the oh-so-prestigious label of deductible business expense.

Get With ZipBooks and Get With the Times

With ZipBooks, there is no need keep receipts in a shoebox to keep track of deductible expenses. Instead, you can upload them via the app or the desktop website. Easy peasy. Grouping together a bunch of similar expenses is easy too.

Consult a tax lawyer a few months before tax season to make sure that your deductible expenses check all of those audit-passing boxes. Because who doesn’t like saving money?

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