Automobile:
According to
the IRS if you use your car in your business,
you can deduct car expenses. If you use
your car for both business and personal use, you
must divide your expenses based on actual
mileage.
Visit the
IRS website
to learn more about Car Expenses.
- Fuel
-
Maintenance
- Keep
Track of Vehicle Mileage
Cost of Goods
Sold:
The cost of goods
sold includes raw materials, freight, storage,
direct labor cost, factory overhead, etc.
According to the IRS if you include an expense
in the cot of goods sold, you cannot deduct it
again as a business expense. Visit the
IRS website
to learn more about the Cost of Goods Sold.
Depletion: This is for
businesses involved in minning, quarrying,
cutting timber or drilling for fuel (natural
resources). You get a deduction for the
amount of a product's reserve that are reduced.
Visit the
IRS website to learn more
about Depletion expenses.
Depreciation: This includes,
computers, copiers, machinery, furniture, etc.
According to the IRS if property you acquire to
use in your business is expected to last more
than 1 year, you generally cannot deduct the
entire cost as a business expense in the year
you acquire it. You must spread the cost over
more than 1 tax year and deduct part of it each
year on Schedule C. This method of deducting the
cost of business property is called
depreciation. Visit the
IRS website tolearn more
about Depreciation expenses. Also, see
depreciation calculation explanation from
WikiHow.
Employee Pay:
This includes all
wages paid to employees for services performed
(awards, bonuses, sick pay, vacation pay, etc..
According to the IRS you cannot deduct your own
salary or any personal withdrawals you make from
your business. As a sole proprietor, you are not
an employee of the business. Visit the
IRS website to learn more
about the Employee Pay expense.
Interest: This includes
mortgage interest and interest on business
loans. If a
loan is part business and part personal, you
must divide the interest between the personal
part and the business part. Visit
the
IRS website to learn more
about the Interest expense.
Insurance: This includes
fire, theft, flood, car, liability, malpractice,
workers compensation, unemployment insurance,
life insurance, medical, business interruptions,
etc. Visit the
IRS website to learn more
about the Insurance expense.
Legal &
Professional Fees:
This includes Legal,
Consulting Fees, Sales commission, accounting,
tax preparation, etc. Visit the
IRS website to learn more
about the Legal & Professsional Fees expense.
Pension Plans Expenses:
The IRS allows you to deduct contributions you
make to employee pension plans or pension plans
for yourself. Visit
the
IRS website to learn more
about the Pension Plans expense.
Rent: According to the IRS
if you your home and use part of it as your
place of business, you may be able to deduct the
rent you pay for that part. Visit
the
IRS website to learn more
about the Rent expense. Learn more about
business use of yor home.
Startup Cost:
These are cost that
are incurred before the end of your first tax
year in business. They could include
incorporation fees, legal fees, accounting fees,
filing fees, salaries for temporary directors,
etc. See the
IRS website
for more information on Startup Cost.
Taxes: This includes income
taxes,
employment taxes,
self-employment taxes,
excise tax (see
also Publication 510 on excise tax) &
personal property tax. According to the
IRS you can deduct various federal, state, local
and foreign taxes directly attrituable to your
business. See
the
IRS website
for more information on Taxes.
Travel & Entertainment: Expenses include
travel fare, hotel, car rental, meals, dry
cleaning & laundry, business calls while on the
trip, tips, etc. Travel must be away from
your tax home on business. Visit the
IRS website to learn more
about Travel Cost.
There is a 50% limit on
entertainment
deduction. Visit the
IRS website to learn more
about Business Entertainment.
Other: This category
includes anything that is not covered in any of
the other categories. Visit the
IRS
website to learn more about this category.
- Storage - Marketing/Advertising -
Office Supplies - Postage -
Shipping - Utilities
- Facility Repair &
Maintenance - etc.
These
expenses you cannot deduct
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