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Sign into your accountBusiness Expenses You Can't Deduct
February 07 2017
One of the nice things about being a self-employed worker or a small business owner is your ability to deduct nearly all your business expenses. There are some exceptions to this, though. Let's go over business expenses you can't deduct.
What You Can Write Off
If you're self-employed, the IRS allows you to deduct any "reasonable" business expense. This can include almost any expense as long as it's:
- Ordinary and necessary
- Directly related to your business
- For a reasonable amount.
The first requirement means it's common and appropriate for your profession or business. Think of a hammer for a carpenter or office supplies for your small business. Similarly, these expenses must be directly related to your business and can't be for an exorbitant amount.
There is a wide-ranging list of expenses that can fit into this category. This includes advertising costs, bank fees for your business accounts, health insurance costs, license fees, office utilities, wages and benefits you provide to your employees and much more.
Outside of those, there are a few exceptions of expenses you may think are related to your business but the IRS won't let you take a deduction.