What Counts as a Business Expense? A Simple Guide for Small Business Owners
Introduction
If you run a small business or side hustle, you’ve probably heard that you can “write things off.” But what does that really mean? Here’s a simple guide to what counts as a business expense — and what doesn’t.
What Is a Business Expense?
A business expense is something you buy to help you earn money. The IRS says it must be “ordinary and necessary” for your work.
For example:
- A freelance writer’s laptop
- A rideshare driver’s car maintenance
- A baker’s ingredients and packaging
Not every purchase qualifies. If you’d buy it anyway for personal life, it’s probably not a business expense.
Common Deductible Expenses
Here are some expenses many small business owners can deduct:
- Office supplies
- Business phone & internet bills
- Marketing & website costs
- Travel for work
- Meals with clients (50% deductible)
- Software & subscriptions for work
- Professional services (lawyers, tax pros)
What’s Not Deductible?
Some things seem like they should count, but they don’t:
- Groceries for your family
- Personal clothes (unless a required uniform)
- Commuting costs to a regular job
Keep Good Records
Save receipts, invoices, and bank statements to back up your deductions. A notebook or spreadsheet works — or try an app to track expenses.
Why It Matters
Deducting expenses lowers your taxable income — so you pay less tax. But claiming things you shouldn’t can cause trouble with the IRS.
How Wood Tax Advisory Can Help
Not sure if an expense counts? We can review your expenses and make sure you claim everything you’re allowed — and nothing you’re not.
Schedule your free consult today to keep more of your hard-earned money!
