300 +

Tax Deductions
For Business Owners
and Self-Employed Individuals

S. BROOKS, CPA
All rights Reserved. No part of this e-book may be reproduced, stored or transmitted in
any form or by any electronic means without written permission from the author.

Please read: While I have done my best to include very beneficial and accurate
information. I cannot guarantee the information is correct or will be appropriate to your
particular situation. Laws and regulation change frequently and are subject to differing
interpretations. It is your responsibility to verify all information and all laws discussed
in this book before relying solely on them. Nothing in this book will substitute for legal
advice and cannot be considered s making it unnecessary to obtain needed advice.
Obtain specific information from the Internal revenue service or a competent person.

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 Introduction
Tax law can be complicated and overwhelming for business owners and self-employed
individuals to understand. If you don’t know me, I am Ms. Business (Read my bio on the
next page). My primary mission is to educate. I want all small business owners and self-
employed individuals to make informed decision about their business transactions. It is
only then, you will be able to scale your business and take advantage of the tax
deductions available to you.

One of the 1st questions I am asked is “How can I pay as little taxes as possible?” Next is
“What can I write off as a business owner?” I work with hundreds of clients and
encounter hundreds more seeking tax advice for their businesses.

To make a complicated topic simple to understand, I have complied over 300+ tax
deductions that you can legitimately use to reduce your taxes. I even put some common
deductions in there that you may have thought you were entitled to but you are not.

The IRS is not going to let you know when you have missed a deduction. That is up to
you to make sure that you are taking advantage of all the many deduction available to
you. Knowing what you can write off in the course of your business will help you plan
accordingly throughout the year.

Disclaimer: The information in this e-book is for general information purposes only.
These tax issues are complicated, and every situation is different, so you should consult
your CPA/tax advisor.

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 Meet the Author

With a flair for business & financial literacy Ms. Business is no novice in the
financial field. My Passion for business came at a young age; growing up working
in a family business. My passion to help others achieve success came as second
nature. Before embarking on my journey to follow my passion, I worked as a real
estate sales agent in NYC for two years while simultaneously obtaining a degree
in Biology/Pre-Med. Making the decision to switch careers paths wasn’t easy,
however passion lead the way. I obtained two bachelor degrees in accounting and
finance.

Directly following college; I entered the accounting field and soon received my
certificate to practice as a certified public accountant (CPA). Landing a position
at one of the most prestigious accounting firms in the country, I began to trail-
blaze in the accounting industry. Earning the coveted CPA certificate was just a
small feet for me, as I never intend on becoming complacent in my da y to day
operations. While moving up at the firm, and mentoring aspiring C PAs in my
spear time; I soon realized my leadership skills, take charge demeanor and keen
sense to educate would lead me to develop Ms. Business.

Through my experience of small business, corporate structure/operations I have

a vast understanding of business. Did you know most business fail within their
first 2 years of commencement?! It’s not because there isn’t a market for their
product or their products are bad. Many businesses are failing because they don’t
understand business formation, business development, budgets, business
operations or how to properly maintain their books. Having th e knowledge, I’m
able to guide my clients on how to properly protect your assets, thus making you
informed on all the tax laws available for you as a business owner. I understand
business; I GET IT!

Contact information: @Ms.Business101 ~ [email protected]

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 300+ Deductions
Accounting Expenses
Tax Preparation, Accounting expenses, auditing expenses, and bookkeeping
expenses are deductible business expenses.

Tax Preparation fees: Tax preparation, including preparing and filing

forms by a CPA, tax attorney, or tax adviser, for tax strategy and are
business deductions.

Accountant/CPA/Financial Adviser
The services of an CPA, accountant, or financial adviser for review of
financial statements or business financial planning.

Bookkeeping Expenses: You can deduct all expenses for bookkeeping,

including those for a bookkeeper, or for bookkeeping and accounting
software to help you or an employee do your bookkeeping.

Auditing
If you are a public corporation, you can deduct fees for an auditing firm.

Expenses for accounting for illegal activities are never deductible. You cannot
deduct the cost of accounting software or the services of a tax preparer, for
your personal tax return. Preparation of your Schedule SE for self-employment
taxes is a personal tax expense, and it can't be deducted as a business expense.
You can't deduct fines and penalties for late filing or for underpaying your taxes,
so make sure you know the tax filing deadlines and that your tax preparer or tax
software is accurate.
Advances
If you pay contractors, suppliers, professionals, and vendors, the advancement can
be deducted
Advertising
Advertising expenses are deductible. Advertising is so broad, so I’ve listed some
categories below:

• Costs of advertising materials: business cards, brochures, and web pages.

• Advertising in media: Ads, Media, Social Media Ad promotion, Pens with your
business logo newspapers, TV, internet, cable, and magazines.
• Marketing activities such as direct marketing.
• Promotional and public relations expenses, and promotional items like mugs,
caps, t-shirts, and pens.

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 • Online advertising such as email newsletters, pay-per-click advertising,
and SEO services
• Costs of advertising events such as a promoters, publicity campaign.

You can deduct the cost of putting an advertisement for your business on your car
(business or personal), but you can't deduct the cost of driving your car around
town as an advertising expense.

Alarms
Alarm systems can be ducted the year purchased. If there are monthly service
fees and alarm rentals, fee is fully deductible.
Amortization
Intangible business assets, like intellectual property, customer base, and licenses,
are amortized. The processes of depreciating and amortizing are basically the
same. The value of the asset is determined, and the life of the asset is calculated
by comparing it to other similar assets.

Intangible assets include:

1. Goodwill
2. Going concern value
3. Workforce in place (that is, current employees, including their experience,
education, and training)
4. Business books and records, operating systems, or any other information
base, including lists or other information concerning current or prospective
customers
5. A patent, copyright, formula, process, design, pattern, know-how, format, or
similar item
6. A customer-based intangible, including customer base and relationships with
customers
7. The value of future purchases due to relationships with vendors
8. License, permit, or other right granted by a governmental unit or agency.
9. An agreement or covenant not to compete or non-compete agreement entered
into in connection with the acquisition of an interest in a trade or business.
10. A franchise, trademark, or trade name
11. A contract for the use of, or a term interest in any item in this list
12. Copyrights and patents, interests in films, sound recordings, books, or other
similar property.
13. Interests in a corporation, partnership, trust, or estate; in land or in certain
financial contracts
14. Sports franchises
15. Some computer software
16. Some corporate transaction costs.

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 Certain intangible assets are NOT considered to be intangibles, and may not be
amortized over 15 years. The IRS has very strict guidelines relating to intangible
assets. You should consult you CPA for specific says you cannot amortize assets in
categories 1 through 8 if you created these assets, unless "you created them in
acquiring assets that make up a trade or business or a substantial part of a trade
or business."

Application Software
Better known as “apps”. If purchased and it relates to business the fee is 100%
deductible.
ATM Fees
Automatic teller Machine (ATM) are deductible.
Attorneys
Attorney fees are deductible. See Professional fees for more detailed description
and exceptions.
Audits
The cost of auditing services or an audit by an accounting firm is deductible. Fees
associated with hiring a CPA or Lawyer to defend your business in an IRS audit is
deductible.
Automobiles
Whether you have a car that has been purchased by your business or you are
using your personal vehicle for business purposes, you need to know which
expenses are deductible. The IRS regulations for deducting business driving
expenses apply to employees and business owners in different ways.
Business driving is a valid business activity. If a business owner drives for
business purposes, the cost of driving is deductible. If the business pays the
driving expenses of its employees, those costs are also deductible to the business.
Before you deduct car expenses, be sure to consult with your CPA/tax advisor to
ensure you are properly deducting this expense.
Awards
You can deduct the cost of employee awards from your business taxes, up to
$400 for awards of tangible personal property (like a watch) for each employee
each year. It includes service awards and safety awards.
Baby Sitting
See Dependent care

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Bad debts
Credit card charges customers refuse to pay and bounced checks are deductible.
Bank Charges
Bank Charges, ATM Fees, bank services, check printing cost, penalties and credit
card fees are all deductible.
Bankruptcy
Cost and related expenses of filing for bankruptcy are deductible.
Barter
There may be a time that you exchange or trade your business goods or services
for someone else’s goods or services; that is called a barter. You are allowed to
deduct the cost of the merchandise you are giving away. However, if you are
trading your services you are not allowed a deduction because you are cannot
deduct the value of your own time.

You must capture the “Fair Market Value” of the goods and/or services you receive
as business income. Fair Market value is what you would have normally paid for
the goods or services in normal course of business.

Billboards
If you are renting or own a billboard you can deduct the expense. Rental cost for
billboards is deductible. Billboards you own can be deducted the year of purchase
or depreciated over time.
Bitcoins
Paying your business expenses in Bitcoin and other digital currencies are
deductible exactly the same as expenses paid in the US dollar. The amount of the
expense is the fair market value of the goods or services you are getting in
exchange for the bitcoin.
Boats
Boats, if needed for your business, can be deducted the year of purchase or
depreciated over several years.
Bodyguard
Bodyguard services is an ordinary and necessary expense of your business, it is a
deductible expense.

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Bonus
Bonuses for employers/owners are a legitimate business expense and can be
deducted under certain circumstances. First, Let’s take a look at bonuses for
owners/shareholders:

• S Corporations can deduct bonuses for shareholders and owners, as long as they
own their shares at the time the bonus is paid.
• C Corporations can only deduct bonuses for shareholders/owners who have a 50
percent or higher ownership at the time the bonus is paid.
• For sole proprietorships, partnerships, and limited liability companies (LLCs),
bonuses are not deductible business expenses because the
owners/partners/members are considered by the IRS to be self-employed. This is
one situation in which having a corporation and being an employee of that
corporation might result in more tax deductions.

Bonuses to employees are considered income and are taxable to the employee.
You must withhold income taxes and FICA taxes on employee bonuses (unless
the employee is over the Social Security maximum for the year. If you decide to
give your employees a bonus, you must give them the opportunity to change their
withholding authorization (on Form W-4) for that paycheck, and change it back
for subsequent paychecks. Many employees like to change their bonus check
withholding, so they receive more of the bonus.

Bookkeeping
Certified Public Accountant (CPA), Bookkeeping, accounting, recordkeeping,
bookkeeping software you purchased are deductible.
Booking agency fees/ Management
For Musicians, artist, entertainers, booking agents fees that are paid out of pocket
are deductible. Books
Books
Books, Magazine, E-Book, Newsletters, newspapers are deductible.
Bounced Checks
Your customer checks bounce; deduct the amount of the check.
Boxes
If you have boxes, packaging materials, cartons, and other containers that holds
the good you sell are considered part of your inventory, therefore this expense is
apart of Cost of goods sold and is deductible.

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Brokers Fee
Broker’s fee to buy or sell real estate is added to the value of the real estate and
depreciated.
Buildings
Buildings that you or your business owns are depreciated over time.
Building Improvements
Building improvements, renovations, renovations, remodeling, and repairs can be
deducted.
Business Assets
Business Assets are possessions you use in your business such as equipment,
machinery, tools, furniture, fixtures, office machines, computers, vehicles,
buildings, Intangible assets (Trademarks, patents, copyrights, etc.) are deductible.
Business Cards
Business cards are deductible
Business Gifts
Your business can deduct no more than $25 of a gift to any one person each year,
including employees.
Business Licenses
Business licenses, registrations, and similar fees are deductible.
Business Trips
Business trips are deductible, but there are many rules and restrictions.
See Travel
Bus
You can deduct the cost of using a bus for business, but with limitation.
See Automobiles

Campaign Contributions
Political contribution is not deductible
Cancellation Penalties
Cancelation penalties are deductible

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Carrying Charges
A carrying charge is a service charge or financing charge for buying something
overtime/installments. Carry charges are treated like interest charges and are
deductible.
Cars
You can deduct the cost of using a car for business, or you can take a standard
mileage rate, but with limitations. See Automobile.
Casualty Losses
Business losses from storm, fire, theft, vandalism, and shoplifting are sometimes
deductible and sometimes not, depending on what was destroyed or stolen. There
are different rules for different types of losses and different types of businesses,
consult your CPA.
Cell Phones
If you use your cellular phone and Smartphone 100% of the time for business; it is
100% deductible. However, if your phone is used partly for business, you are
required to deduct the percentage of the cost used for the business.
Charitable Contributions
You or your business can deduct any of the following:

• Cash contributions
• Gifts of property or equipment (called "in-kind" contributions)
• Mileage and other travel expenses incurred in working for a charitable
organization, based on the IRS-designated standard mileage rate for
charitable work.

You cannot deduct the value of your time or the time of your employees working
as a volunteer for a charitable organization, such as time spent serving on a
nonprofit board.

If you are a sole proprietor, your business taxes are filed on Schedule C of your
personal Form 1040. Your business cannot make separate charitable
contributions because the only way individuals can deduct these contributions is
on Schedule A. That means you must be able to itemize the deductions to take
them. The same is true for a single-member limited liability company since the
single-member LLC files taxes as a sole proprietor.

If the partnership makes a charitable contribution, each partner takes a

percentage share of the deduction on his or her personal tax return. For example,

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 if the partnership has three equal partners and donates a total of $3,000 to
charity in a year, the partners can each claim $1,000 in charitable deductions.

Child Care
See Dependent care

Classes
Many classes and education are deductible. See Education
Cleaning Services
Cleaning and janitorial services for the business premises are deductible. In
addition, clothing used for cleaning and laundry services used exclusively for work
are deductible if the clothing is unsuitable for street wear, such as uniform,
costume or protective gear.
Closing cost
Closing cost include processing fees, broker commission, title, property taxes,
insurance, termite reports, loan fees, transfer taxes, loan fees, points and other
cost are deductible immediately. Others are deductible over a period of years. This
can be complicated, Consult your CPA.
Clothing
Clothing used exclusively for work and unsuitable for street wear is deductible.
Clothing with your company logo, uniform, costumes, protective gear are
deductible.
Clubs
Membership fees and dues for clubs, associations and organizations may or may
not be deductible, depending on the nature of the organization.
Coffee services
For all my Coffee lovers, you will be delighted to know that your coffee services is
a deductible office expense
Commissions & Fees
Commissions that you pay to acquire new customers who sign long-term contracts
may have to be amortized over a period of years. Commissions that you pay to
outside salespeople or companies and commissions paid for referrals, finders fees,
and the like are deductible. Real estate commissions are added to the cost of real
estate and depreciated over the life of the asset.

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Commuting
You are not allowed to deduct commuting expenses from your home to your
regular place of business and back. The IRS allows businesses to deduct expenses
for business travel by owners and employees, but no deductions are allowed for
commuting expenses. The rationale is that everyone commutes (travels to work),
so commuting is not a business but a personal expense.
Compensation
Self-employed people cannot take a deduction for compensation you pay to
yourself. See Paying yourself. Compensation paid to any independent
contractors or other nonemployees is deductible.
Employers compensation to employees is deductible.
Corporations Owners of corporations are employees of their businesses. Your
compensation is treated like any other employee wages.
Computers
Computers, monitors, printers can be deducted the year of purchase or deducted
over the five years.
Condominium
Business Condominium that you rent or lease are deductible. Business
Condominiums that you own are depreciated like any other business building.
Condominium associations, management fees, and other charges are deductible
if business related.
Conferences
Cost of conducting or attending business conferences are deductible. Including
travel and meals. Meals are 50% deductible.
Consultants
Consultant fees are deductible.
Contractors
Contractor fees for new construction of a building is added to the cost of the
building and depreciated.
Contracts
The cost of preparing a contract is deductible if it is not substantial.

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Contribution
Money contributed to your own business is income or expense to your business,
therefore, it is not deductible.
Conventions
Fee for attending a business convention is deductible. Travel and lodging expenses
are deductible; meals are 50% off
Copies
Copies are a deduction
Copyrights
Copyright is amortized over 15 years.
Cost of Good Sold
Businesses can deduct the cost of inventory once the goods are sold.
Courier Service
Deductible!
Credentials
The cost of education to obtain a credential is deductible in some situations.
See Education
Credit Cards
Making purchases for your business on a credit card is 100% deductible. If you
are a sole proprietor or a single member LLC you can deduct purchases made on
your personal credit card. Note, you can not include personal charges.
Partnerships, LLCs, Corporation and S-Corp should have a debit and credit cards
in the business name to maximize tax deductions.
Credits
If you purchase goods/service and you receive a credit to reduce the cost, treat the
credit like a discounted price.
Customer List
A customer list that you purchase is considered an intangible asset, which is
amortized over 15 years.
Customs
Custom duties and all fees and taxes related to importing and exporting can be
deducted.

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Database
A database that you purchase is considered an intangible asset which is amortized
over 15 years.
Day Care
See Dependent Care.
Day care Business: Expenses For running a day care business are deductible like
the expenses of any other business, including meals served. If you operate your
day care out of your home, see Home expenses for deductions allowed.
Debit Cards
Debit & credit card fees and expenses are handled the same.
Decorating
Decorating expenses are deductible.
Delivery Charges/ Shipping
Delivery charges incurred for goods you sell, business assets, weekly delivery
services are deductible.
Demolition
The cost to demolish a building is added to the cost basis of the land. It cannot be
deducted or depreciated.
Dependent Care
You can deduct up to 5,000 a year for child and dependent care for your own
children or dependents. The deduction cannot exceed your net profit from the
business. If you are married, both spouses must have jobs or be looking for jobs,
or one spouse must be a full-time student or unable to care for him/herself.
Employers: Dependent care provided for your employees’ families is deductible.
You can also pay employees money for them to spend on dependent care, tax free
to the employees, up to $5,000/ year. You, the employer, get a deduction. You
can take the deduction for your own family. Only if you offer the same assistance
to your employees.
Child care business: Expenses for running a child care business are deductible
like the expenses of any other business, including meals served to the children. If
you run a child care business out of your home, see home expenses for the child
care deduction allowed.
Deposits
Refundable deposits are not deductible.

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Depreciation

Depreciation is an income tax deduction that allows a taxpayer to recover the cost
of property or assets he/she purchased and “placed in service," meaning it is used
in his trade or business. A fixed asset is an asset that a business or firm will use to
earn income. In this situation, the owner of the business does not anticipate
selling the asset within a year of acquiring it, but rather the asset will still be "in
service" after that period of time and will help produce long-term income.
Residential real estate can also be depreciated.

Examples of depreciable assets include:

• Machinery
• Vehicles
• Computers and software
• Other standard office equipment
• Furniture
• Buildings

Depreciation is contrasted with an expense. Business expenses, which commonly

include cash transactions such as a business office supplies, are fully deductible
in the year in which they were incurred. The expense of purchasing a fixed or
tangible asset can be depreciated and spread out over a number of years.

Businesses have a choice as to how to take a depreciation deduction. They can

either write the cost off as an expense or they can deduct it as depreciation. If the
business chooses to write it off as an expense, they can deduct the entire cost in
the first year. Or, they can depreciate it and write the asset’s value off over its
useful life expectancy. For example, if a business purchases a $70,000 piece of
equipment, it can take the entire $70,000 in year one or deduct $10,000 a year
for seven years.

Various types of property are subject to different periods of time over which they
must be depreciated. Depreciation calculates how much of an asset's value will be
“used up” over these periods of time. For example:

• Manufacturing tools and tractors depreciate over a period of three years.

• Computers, office equipment, light vehicles, and construction equipment
depreciate over a period of five years.
• Office furniture and miscellaneous assets depreciate over a period of seven
years.
• Residential real estate depreciates over a period of 27.5 years.
• Commercial real estate depreciates over a period of 39 years.

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 • Improvements to land depreciate over periods of 10, 15, or 20 years, with
some exceptions.

Design Cost
Most design cost, including brochures, packages, and logos are deductible
Directors’ Fees
Fees paid to directors of corporation are deductible
Disabled Access
Businesses that purchase equipment or devices, modify equipment or devices, or
modify buildings or parking areas to make them more useable for disabled people
are eligible for a Disabled Access Tax Credit.
Discounts
Discounts are not shown as an expense deduction. The lower sale price of your
item is what is reported on the business tax return.
Dividends
When corporations distribute their profits to shareholders, these distributions are
called dividends. Dividends are not considered business expenses and are not
deductible. Cost associated with distributing dividends are deductible such as
broker and bank fees.
Domain name
Expenses associated with acquiring, registering and keeping a domain name are
deductible.
Donations
Only Corporations are allowed a deduction for donations to charities or
community organizations, at least in the “Charitable” category. If the donation
results in favorable publicity for the business, and therefore a likelihood of
increased sales, many businesses deduct the donations, not as charitable
contributions but as a promotion expense.
Downloads
Downloaded music, apps, software and publications, if for your business, are
deductible.
Driveways
You can deduct the costs of maintain a private road or driveway on your business
property.

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Drones
Drones used for businesses can be deducted the year of purchase or depreciated
over 7 years.
Drop shipping
Drop shipping is a business arrangement where your business contracts with
another business to warehouse and ship products to your customers for you. The
drop shipper may be the manufacturer, importer, or wholesaler of the products,
selling the products to you but shipping them to your customer for you; or the
drop shipper may be simply a warehouse and shipping service.
Goods that you have drop shipped for you are considered inventory event though
you never have them in stock. You include the cost of the goods as part of cost of
goods sold. Warehousing and shipping fees are also part of cost of goods sold.
Drug Testing
Drug test that are required by law, “Ordinary and “Necessary” are deductible
Dues for organizations

You may deduct costs for dues to professional organizations, and those
organizations which you can show are necessary to conduct your business. For
example, your dues to the Chamber of Commerce are deductible if you can show
that your Chamber membership allows you to promote your business.

You may deduct dues you pay to:

• Boards of trade
• Business leagues
• Chambers of commerce
• Civic or public service organizations, like Kiwanis or Rotary
• Professional organizations such as bar associations and medical associations
• Real estate boards
• Trade associations
• Personal or hobby clubs

You cannot deduct dues for these types of clubs:

• Entertainment activities or facilities

• Recreation or sport, including golf clubs, country clubs, health and fitness clubs
• Airline or hotel clubs (like the airline clubs at airports)
• Any club with a social purpose

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Education expenses

Self-employed business owners can deduct costs for their education, subject to
certain limitations in the same way as individual taxpayers. You are self-
employed if you own a business that is not a corporation.

To be deductible, you must be able to show that the education:

• "Maintains or improves skills required in your present work."

• It is required by law or regulations for maintaining a license to practice,
status, or job. For example, professionals can deduct costs for continuing
education.

Education expenses are not deductible if:

• The education is needed to meet the minimum educational requirements

of your present trade or business. For example, you can't deduct the cost of
obtaining a license to practice if you don't already hold such a license.
• The education is part of a program of study that will qualify you for a new
trade or business.

Many employers provide educational benefits for employees. Some of these

benefits are for continuing education, to maintain professional licenses, or to gain
new skills, credentials, or degrees to benefit both the employee and
employer. Self-employed business owners also may be able to deduct education
expenses.

Education expenses are legitimate business expenses. But there are still some
qualifications that must be met before these expenses are fully deductible to your
business. As usual with the IRS, this issue is complicated. Consult your CPA.

Electricity
Electricity & Other utilities are deductible
Electronics
Electronic equipment and devices are considered business assets, which can be
deducted the year of purchase or depreciated over 5 years.

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Employee Business Expenses
If you reimburse your employee for out of pocket business expense, you are
entitled to take a tax deduction for the expenses. There are strict rules
surrounding employee reimbursement, consult your CPA.
Employees
Wages and benefits you pay to your employees are deductible.
Employment Agencies
As an employer, if you pay an agency to find you employees you are allowed to
deduct the fees associated with the service.
Energy
The cost of using energy in a business is deductible in most cases.
Entertainment & Meals
The major change in business expense deductions in the tax law is the
elimination of entertainment expenses, effective with the 2018 tax year. No more
deductions for taking a client to a sporting event, concert, or resort.

Meal expenses are still deductible, with some changes.

• Meals during entertainment events are deductible if they can be separated

out .
• Meals for employees while traveling, for all-employee events, or business
meals, in general, are still deductible at 50 percent.
• Meals for employees at your location (think cafeteria or break room) are
no longer deductible at 100 percent, but only at 50 percent).

Equipment
Equipment can be deducted the year of purchase or depreciated over fiver years or
seven years, depending on the type of equipment.
Estimated taxes
The IRS requires Sole proprietors, Owners of LLCs, business owners to pay
income and self-employment taxes in advance If the estimated combined taxes
are $1,000 or more. C Corporations make quarterly tax prepayments if estimated
federal income tax for the year is $500 or more. These estimated tax payments
are not deductible expenses.
Exporting
All duties, tariffs, fees, and taxes related to exporting can be deducted.

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Exterminator services
Deductible.
Family
A spouse or a parent on your payroll is treated like any other employee, expect a
spouse and parents are not subject to Federal Unemployment (FUTA) Tax.
If you hire your children, if they are under the age of 18, they may be exempt
from income and payroll taxes.
Finance Charges
Finance charges are usually deductible but there may be limitations. Consult your
CPA.
Finder Fees
Finder Fees and commissions are deductible.
Fines
Fines and penalties for violations of the law are not deductible. Penalties relating
to not meeting contract requirements, and any other fines and penalties that does
not require breaking the law are deductible.
First Aid
Medical and emergency supplies are deductible.
Fixed Assets
Fixed assets are machinery, equipment, furniture, fixtures, and any other assets
owned by the business are depreciable assets.
Fixed Cost
Fixed cost relates to the overhead expenses and all the various large and small
expenses you pay whether you are generating income or not.
Fixing-up Expenses
Minor repairs to business property, building, and equipment are deductible as
current expenses.
Fixtures
Shop, Store, and building fixtures can be deducted the year of purchase or
depreciated over seven years.
Flexible spending accounts
A flexible spending account is an employee fringe benefit and is deductible.

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Flowers
Did you know? Yes, flowers are deductible for your office, the store, secretary,
client or customer.
Food
Food samples available to the public are fully deductible. Food served at business
related events are deductible. Meals are partly deductible, see Meals
Free Agents
Free agents are another term for independent contractor and their fees are
deductible.
Freelancers
Fees charged by freelancers and other independent professional are deductible.
Freight
Freight cost on goods you sell are deductible.
Fringe Benefits
Employers can deduct the cost of employee fringe benefits.
Fuel
All fuel costs are deductible. Fuel cost for cars and light trucks are deducted
differently than large trucks and heavy-duty equipment. See Automobiles
Furniture
Furniture can be deducted in the year of purchase or the depreciated over seven
years.
Garbage Services
Garbage services and other utilities are deductible.
Graphic Design
Deduction.
Grooming
Personal grooming expenses are not deductible, except when you’re traveling
away from home overnight on business.

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Guard Dog
The cost of purchasing a guard dog can be deducted the year of purchase or
depreciated over 7 years.
Gun
If having a gun is ordinary and necessary expense of your business, it is
deductible.
Handling Charges
Similar to shipping, handling charges added to a freight bill are deducted.
Heating
Heating and other utilities are deductible.
Home Office
You can take a percentage of allowable home-related expenses, based on the
percentage of your home used for business, including these expenses:

• Casualty losses (with limits)

• Mortgage interest
• Real estate taxes
• Security system
• Homeowner's insurance
• Direct expenses for improving the business area of your home
• Depreciation on your home's value
• Rent, if you don't own your home
• Repairs made to your work area or that benefit your work area
• Utilities

You can't include expenses for the home that have nothing to do with your
business. For example, if you add a patio on the other side of your home, you can't
include that in your deduction calculation.
Importing
All fees and taxes related to importing can be deducted.
Incorporation fees
If you are incorporating an existing business, fees to incorporate the business are
deductible.
Independent Contractors
Independent contractors are not employees and are self-employed and in business for
themselves. The cost of hiring an independent contractor is deductible.

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Individual Retirement Arrangement ( IRA)
IRA is a tax deferred retirement plan for individuals. Contribution to an IRA is
not a deductible business expense.
Installment purchases
When purchasing business assets such as buildings, equipment, vehicles,
furniture, fixtures, and machinery, you can deduct or depreciate the full cost,
even though you haven’t paid all of it yet.
Insurance
Insurance is deductible!

A typical business insurance policy will cover several types of coverage. The cost
of these types of insurance is deductible business expenses. These coverages
include:

• Property insurance, casualty insurance, and general liability insurance.

The casualty and liability sections deal with all kinds of employer liability,
commercial auto liability, and general crime insurance.
• Business interruption insurance is often included with overall business
property and casualty coverage. It includes coverage in case you can't carry
on business after an unexpected emergency or natural disaster.

Other types of insurance that you may want to purchase for your business, and
that you can deduct, include professional liability and malpractice insurance. If
you have a service business or you give advice, you may want to consider errors
and omissions coverage, a specific form of professional liability.

• Key person life insurance on company officers and executives. This

assumes that the company is the beneficiary, not someone like a spouse or
other non-business person.
• Workers compensation insurance. Workers compensation is paid by the
business to provide coverage for employees for on-the-job illnesses or
injuries.
• Insurance on business-owned vehicles. You may only deduct the portion of
the insurance premium applicable to business use of the vehicle.

• Group health care insurance coverage for employees, if your business

meets specific qualification requirements.
• Contributions to a state unemployment insurance fund, but the IRS
requires that these payments must be "considered taxes under state law."
• If you have a home-based business, you may deduct a portion of the
property insurance on your home that is related to your home office.

What You May Not Deduct for Business Insurance

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 You may not deduct the cost of life insurance for anyone associated with your
company if you (the owner) are the direct or indirect beneficiary.

Business disability insurance for you as the business owner is tricky. If you
deduct disability insurance premiums for yourself as the owner, then the benefits
paid to you if you are disabled are considered taxable income to you.

As you Can tell Insurance is a complex subject, consult your CPA.

Intellectual property
Intangibles, also called intellectual property, are business assets you cannot see,
such as copyrights, trademarks, patents, and goodwill. Most intangibles are
amortized over a period of years.
Interest expense
Interest paid on business debts, interest on credit card purchases, and interest on
purchases of business assets is deductible.
Internet
The cost of internet access is fully deductible if used only for business.
Inventory

Businesses that sell products need to be familiar with inventory. Keeping track of
inventory is important for your business because:

• Inventory is a valuable business asset. You need to know how much you
have and how much it's worth.
• Costs associated with buying and selling inventory are deductible business
expenses that can reduce your business taxes.
• Reporting inventory correctly can keep you from having problems with the
IRS.
• Cost and gross profit from sales of inventory is a major part of your
business tax return.
• Did you know you can use the value of your inventory as collateral for a
loan.

Businesses have two kinds of inventory:

• Supplies sitting on shelves waiting to be used.

These include office supplies, cleaning supplies, computer supplies and

accessories, and supplies used for specific purposes, but not as part of your
sales process.

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 • Product inventory can be products you purchase at wholesale to sell to
consumers at retail. It can also be component parts or pieces or raw
materials you use to make products to sell.

It's important to keep track of the cost of inventory items, so you know the profit
on sales. This is easier said than done, depending on the type of product.

The most important thing to know about inventory is that it's essential in
calculating the cost of goods sold (COGS). COGS is used to determine gross profit
for a business that sells products, and it's used on every business tax form, for
sole proprietorships, partnerships, LLC's, and corporations.

The Cost of Goods Sold Calculation is:

• Beginning inventory (the value of all inventory at the beginning of a year)

• Plus Net purchases (after discounts and allowances and returns)
• Equals Cost of Goods Available for Sale
• Less Ending Inventory (the value of all inventory at the end of a year).

A few more things you need to know about inventory and taxes:

• You must keep using the same inventory cost method over the years. You
can't keep switching methods for the best tax advantage.
• Most important, remember to keep good track of your business's inventory
to make sure you aren't losing any to theft, pilferage, or bad
recordkeeping.

Janitorial service
Janitorial and cleaning services are deductible.
Land
Land is not deductible until you sell it. For deducting or depreciating the cost of a
building, you separate the cost of a building from the cost of the land. Note, land
improvements such as parking lots and major land scaping can be deducted or
depreciated.
Landscaping
Landscaping, gardening, and lawn care expenses are deductible
Late Charges
Later charges incurred are deductible. However, penalties for late filing of
government forms and tax returns are not deductible.

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Laundry services
Laundry services for clothing used exclusively for work are deductible. Note, the
clothing has to meet the IRS requirements. See Clothing. While traveling away
from home on business, laundry service is deductible.
Lawsuits
The cost of a lawsuit is deductible in some situations and not in others. This topic
is complex and you should consult with your CPA to ensure you are correctly
deducting lawsuit cost correctly.
Money you pay for legal fees or court costs is deductible, as long as the legal
matter is business and not personal. If you agree to pay the plaintiff to settle a
civil suit, that's also a legitimate business write-off. If the government took you to
court, you can write off any remedial or compensatory damages you pay. Fines
and punitive damages are not deductible. Identifying which part of the settlement
falls in which category is important for maximizing your deduction. you can't
claim a business expense until you actually pay the money. A deal signed in
December and paid in January is deductible on next year's taxes.
Lawyers
See Professional services and Attorney.
Leasehold Improvements
Leasehold improvements are components of a building that you are leasing that
are not structural, such as portable air conditioning, fixtures, support for heavy
machinery, partitions, and awnings. If you are a tenant and you are paying for
leasehold improvements, you may be able to deduct them currently or you can
depreciate them over 15 years.
Leases and Rent
Business leases and rentals for buildings, vehicles and equipment are deductible.
Payments made to cancel a lease is also deductible
Car/Automobile Leases
There are limitations on car leases that are 30 days or longer.
Legal Fees
Most legal fees and paralegal fees, filing fees and related expense are deductible.

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Licenses
Business licenses and permits, and licenses for any business property, are
deductible.
Licensing Fees
Fees paid for the rights to use someone else’s work, such as trademark or an
artist’s photograph are deductible.
List
Fees paid to rent or acquire mailing, email, telephone, or other lists are
deductible
Loan Fees
Some loan fees are deductible. See Loans and Interest
Loans
A loan is not income when received and not an expense when paid. Repayment of
a loan is not deductible. Interest, loan fees, and closing cost may be deductible.
Lodging
Lodging is deductible while you’re traveling away from home overnight on
business. See Travel. Corporations; can deduct actual lodging expenses or use a
per diem rate. Non-corporate businesses; cannot use the per diem.
Logo
Cost of creating your company or product logo is deductible. Graphic designs and
package designs are also deductible. Ask your CPA is the cost can be deducted
immediately or has to be amortized over several years.
Losses
Casualty and theft losses are deductible, with some limitations. Business losses,
which is shown as a loss on your tax return, can be used to offset other income
this year and can also be used to offset profits from other years.
Machinery
Machinery can be deducted the year of purchase or depreciated over seven years.
Magazines
Magazines, books, newsletter, newspaper and all print and online publications
that are in any way related to your business are deductible.

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Mailbox store rentals
Mailbox store rents are deductible.
Mailing Lists
Mailing list rentals and purchase are deductible.
Mailing supplies and Expenses
Deductible.
Maintenance
Maintenance and minor repairs are deductible.
Makeup
See Personal Appearance
Management Fees
The fees charges by consultants you hire for management help are deductible.
Marketing
Marketing is a broad term that includes advertising, promotion, news releases,
catalogs, public relations., etc. are deductible.
Market Research
Market research expenditures may be deductible currently, or they may have to
capitalized over time if they are large expenses. If the expense is not substantial,
the fees for market research are deducted when incurred.
Materials and Supplies
See Supplies
Meals
Meal expenses are still deductible, with some changes.

• Meals during entertainment events are deductible if they can be separated out
• Meals for employees while traveling, for all-employee events, or business
meals, in general, are still deductible at 50 percent.
• Meals for employees at your location (think cafeteria or break room) are no
longer deductible at 100 percent, but only at 50 percent).

Taking these deductions is a three-step process:

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 First, you must verify that these expenses are legitimate business expenses. Some
of these expenses are deductible, while others may not be. I'll explain more about
what's deductible and what's not.

Second, you must have the documents to back up the deduction. You don't need
to include these documents in your business tax return, but you will need them in
case of an audit.

Finally, you must determine if you can take the full amount as a deduction or if
the amounts are subject to the "50% rule," which limits the deduction to 50%.

More Guidelines on Deducting Meal Expenses

• The meal costs must be "ordinary and necessary" business expenses

• The costs may not be "lavish or extravagant"
• An employee of your company must be present at the meal
• If the meal is at an entertainment event, the meal must be separately
priced,

Meals as business expenses must meet one of two tests:

• The directly related test applies if you can show that the main
purpose of the activity was business.
• The associated test applies if the expense is associated with (along
with, in conjunction with) a "substantial" business discussion. For
example, if you had a meeting with clients at a restaurant and then
you take the clients to the theater, this might satisfy the
"associated" test.

You cannot deduct costs of meals for personal reasons while traveling. If the trip
is "primarily" business, most expenses will be considered as business expenses. If
the trip is "primarily" personal and you conduct some minimal business, only
those costs directly related to the business you conduct may be deductible.

Because these expenses often happen while you are traveling, it may be difficult
to keep good records, but it's important to record all details about the business
purpose for these expenses. Note the business purpose on receipts, use an app, or
take photos of receipts, and file all receipts so you can show them in case of an
audit.

Medical expenses
Sole proprietors, partners in partnership, member/owners of LLCs, and owners
of S-Corporations are not allowed a deduction for medical expenses for
themselves or families. One exception to this rule is a medical expense or a drug
test required by law for work, which is deductible.

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 Employers are allowed a full deduction for employees’ medical expenses and for
medical expenses of employees’ spouses and dependents.
Meetings
Business Meetings are deductible. Although you are allowed only a 50%
deduction for meals.
Membership Fees
Membership fees/dues and other expenses related to professional organizations,
merchant and trade associations, unions, business leagues, unions, chamber of
commerce and similar business groups are deductible.
Merchandise
Merchandise is another term for inventory, goods for sale. Merchandise cannot
be deducted until sold.
Merchant association
Dues and meetings are deductible.
Messenger service
Messenger service are deductible.
Mileage Allowance
Mileage is deductible but there are rules to deducting mileage. Please read in its
entirety.
There are two methods available for deducting driving expenses related
to business travel, the standard mileage rate or the actual vehicle expenses.

What Is the Standard Mileage Rate?

The first option for deducting driving expenses is to use the standard mileage
rate. In this deduction, you will calculate total miles driven and multiply it by the
standard mileage rate.

Driving for Uber or another ride-sharing company? Driving for your own
business? Driving a truck as an independent? No matter what kind of business
driving you do, you need to know the IRS standard mileage rate for the year, in
order to do your business taxes.

2018 Standard Mileage Rates is as follows:

• 54.5 cents per mile for business miles driven (up from 53.5 cents in 2017)
• 18 cents per mile driven for medical or moving purposes (up from 17 cents
in 2017)
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 • 14 cents per mile driven in service of charitable organizations (fixed by
Congress, never adjusted for inflation).

You can make deductions using standard mileage if:

• You have used the standard mileage rate since you first leased or bought
the car.
• You have leased a car and intend to use the standard mileage rate
deduction for the entirety of the lease
• You use four vehicles or fewer in your daily business operations.

You cannot use the standard mileage rate if:

• You have used the actual expense tax deduction and claimed the
accelerated depreciation deduction in previous years.
• You have claimed a Section 179 deduction on the vehicle.

If you use the standard mileage rate you cannot deduct:

• Lease payments.
• Depreciation.
• Actual auto expenses.

You can still deduct business related:

• Parking fees and tolls.

• Interest if you have a loan on the car.
• Applicable registration fees and any taxes.

You can switch to using the actual expense method in later years even if you first
began using the standard mileage rate.

Another option available for deducting driving related expenses is the actual
expenses method. You can use this method if you are not able to use the standard
mileage rate or if you simply choose not to.

You Must Use Actual Expenses If:

• You have a fleet of vehicles (more than four) used simultaneously for your
business activities.
• You lease a car and do not plan on using the standard mileage rate for the
entirety of the lease.
• You used the actual expense calculation when your vehicle was first used
for business purposes. You cannot switch to standard mileage rate in later
years.

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 Examples of Actual Expenses You Can Deduct:

• Interest on a vehicle loan

• Vehicle depreciation (leased vehicles cannot be depreciated)
• Registration fees and tax
• Parking fees and tolls
• Garage rent
• Lease payments (an income inclusion amount must be subtracted from the
amount you can deduct if the vehicle’s value is above a certain amount.
This amount changes yearly so be sure to check with the IRS or your
accountant.)
• Insurance
• Gasoline
• Oil
• Maintenance
• Repairs
• Insurance
• Tires
• License plates
• Registration fees

Mortgages
Mortgages on business property must be split into its components; Buildings,
land, taxes, insurance, interest. Each component is classified in different
categories.
Motorcycle
The cost of a motorcycle used for business can be deducted the year of purchase or
depreciated over five years.
Moving expenses
You may deduct all the expenses of moving your business from one location to
another. Employers can deduct moving expenses paid to employees or
reimbursed to employees, if the move meets the IRS requirements for distance
and length of the stay.
Musical Instruments & Equipment
If you are a singer, rapper, musician, band, or songwriter, the cost of your
instruments and equipment can be deducted the year of purchase or over seven
years.

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Music System and streaming services
The office music system or subscriptions to streaming services can be deducted
the year of purchase. The cost of music downloads, CD’s, DVD’s are also
deductible.

Net Operating Loss

If your business incurs a loss this year, you will not owe any income taxes on the
business. You may not know that this loss can be used to offset income and
reduce taxes from other years. The loss can be carried back 2 years to offset
income. If there are additional losses remaining you can carry the loss balance
forward to apply to as many as 20 future years.
Networking
Networking usually refers to interacting with people to promote your business.
Networking expenses are deductible, although you want to ensure that the
expenses are not considered entertainment.
Notary Fees
Deductible.
Notes
Promissory Notes and notes payable, like loan payments, are not deductible. The
Interest is deductible.
OASDI
“OASDI” Stands of Old Age, Survivors, and Disability Insurance. OASDI is
another name for the combined Medicare and social security payroll taxes
deducted from every employee’s paycheck and collected from every employer.
OASDI is also known as FICA. OASDI paid by employers on behalf of Employees
is deductible.
Occupational
Occupational licenses, fees, registrations are deductible.
Office
Cost of renting an office is deductible. The cost of an office building you own can
be depreciated.
Office equipment
Office equipment can be deducted the year of purchase or depreciated over five
years.

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Office supplies
Deductible, Deductible, Deductible!!!
Operating expenses
“Operating Expenses” is a general term for the day-to-day cost of running a
business. Various expenses fall under this category, check individual category to
determine if expense is deductible or not.
Operating Losses
Business losses can be used to offset other income in the year incurred and can
also offset profits from other years, See Net Operating Loss
Organizational Cost
This is a tax deduction only available to corporations. Organizational cost are the
legal and accounting services and government filling fees to set up a corporation.
Up to $5,000 of the organizational cost can be deducted the 1st year the business
opens. Expenses in excess of the $5,000 are amortized over 15 years.
Outside Contractors
Outside contractor and independent contractor are the same. Fees paid to outside
contractors are deductible.
Outstanding Checks
Outstanding checks are checks that has been written that have not been deposited
or cashed yet. You can deduct checks in the year they are written.
Overhead
Overhead refers to the fixed cost incurred by the business. Rent, utilities, phone,
insurance, office supplies, Payroll, licenses, equipment and other assets. These
costs cannot be directly tied to a product or service. Most overhead can be
deducted, look up each category for guideline on how to deduct each expense.
Owner’s Draw
The owner of an unincorporated business (Sole proprietorship, partnership, or
LLC) cannot get a tax-deductible salary or wage. Payments to owners are known
as “Draw”
Package Design Cost
Deductible.
Packaging Materials
Packages, bottles, boxes, cartons, packing supplies are deductible.

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Painting
Paint Job is Deductible.
Paralegal Fees
Paralegal fees are deductible.
Parent on Payroll
If you hire your parents, they are considered regular employees subject to all
regular employment and income taxes except federal unemployment tax (FUTA).
Parents are exempt from FUTA tax. This does not apply to corporations. Family
members employed by your corporation are treated like all other employees.
Parking
Parking at your regular place of work Is not deductible. This is considered a
commuting expense. All other business parking cost are deductible.
Parking Lots
You can deduct the cost of maintain a parking lot or parking area on your
business property.
Parking Tickets
Fines for breaking the law are not deductible.
Parties
A company or holiday party where all employees are invited is 100% deductible.
All of your employees do not have to show up but they all must be invited to
deduct the cost. Company parties that all employees are not invited to are
considered entertainment therefore, not deductible.
Partners
Payments to partners in your business is not deductible. See Paying yourself.
Patents
Patent cost are amortized over 15 years.
Paying yourself
If your business is a sole proprietorship, partnership, or LLC, you , the owner (or
co-owner), are not an employee of your business. You cannot hire yourself as an
employee!!!! You cannot pay yourself a wage and deduct it as a business expense.
You do not pay payroll taxes on it and you cannot claim it as a deduction. Your
profit is your wage which is reported on your personal tax return.

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 Corporations: If your business is a corporation you are an employee of your
business. Your salary is a deductible expense of your business. See Wages
Payroll
See Wages
Payroll Services
Hiring a payroll Service to process your payroll a deductible.
Penalties
Penalties for not meeting contract requirements, and any other penalties or fines
that do not involve breaking the law are deductible.
Pension Plans
Pension plans are set up by employers for employees. Many employee pension
plans are deductible, but you should consult your CPA.
Permits
Business Permits and Licenses are deductible. Permits obtained before starting
your business cannot be deducted until the business is operating.
Personal Appearance
Generally, expenses incurred to enhance your personal appearance (Makeup, hair
care, skin care) are not deductible, even if the expenses are incurred solely to
present a business image. However, people who are in the business of selling
makeup can deduct the cost of using those products on themselves, because they
are modeling the product.
This deduction does not extend to clothing. You cannot deduct the cost of
clothing for yourself even if you are in the business of selling clothing, unless the
clothing is a costume, uniform, or clothing with your business name or logo on it.
Photocopies
Deductible.
Plants
Office plants and their upkeep are fully deductible.
Points
Points are loan fees and cannot be deducted immediately, they are spread over
the length of the loan.

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Postage
Postage, post office box rents, and postal permits are deductible.
Post Office Box
Post office box rent and mailbox store rents are deductible.
Presentations
The cost of planning and giving business presentations are deductible.
Prizes
Prizes and awards given to customers that generate sales or publicity for your
business are deductible. There is a difference between prizes and gifts. Business
gifts are limited to $25 per recipient per year. Prizes and awards do not have that
limit.
Professional Services
The IRS specifically lists Certified Public accountants and attorneys under the
category of legal and professional fees, but other professionals can be included.
Such as, independent contractors, appraisers, systems analysts, consultants, and
bookkeepers.

Fees paid to an attorney or accountant as part of the startup of your business

cannot be considered in the category of legal and professional fees. These fees are
part of the cost of business startup, and they must be included in this cost. Some
of the cost of startup may be considered an expense in your first year of business,
but the rest of these startup costs are spread out over several years. Some of these
legal and professional fees for a business startup might include:

• Cost of hiring an accountant or consultant to set up your business

accounting system and recordkeeping system
• Cost for an attorney to help you register your business legal entity with
your state
• Cost for an attorney to set up your corporate records and prepare
your bylaws, if you are starting as a corporation
• Cost for an attorney to write your partnership agreement for a partnership
or operating agreement for an LLC.

Some of these professional fees and costs are specifically not deductible as
business costs, while others may be deductible in other places on your business
tax return.

Fees paid to professionals for personal advice, personal taxes, or personal legal
services are not deductible business expenses. Use your business checking
account or business credit card for the business portion and your personal funds

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 for the personal portion. You may not deduct fees paid to professional lobbyists
to represent your company's interests in a local, state, or federal legislature.

Profit-Sharing Plans
Self-employed people cannot set up a profit-sharing plan for themselves, but they
can have one or more retirement plans. Employers are able to deduct profit
sharing plans for employees.
Promissory Notes
A promissory note is a promise to pay money you owe. The note is not deductible
but the interest is.
Promoter fees
If you are a rapper, singer, musician, artist, or entertainer and you pay promoters
out of pocket it is a deduction.
Promotion
Promotional expenses are deductible. These may include brochure, audio, public
relations, small gifts, greeting cards, or some service.
Protective Gear
Cost of gear is deductible.
Raw Materials
Raw materials are a term used for the parts that go into your manufactured
product. Raw materials are inventory and cannot be deducted until sold.
Real Estate
Real estate is a building and land. Buildings can be depreciated. Land cannot be
written off until sold.
Rebates
Deductible.
Recreation Facilities and equipment
Recreation and athletic facilities and equipment on the business premises that
are open to all employees are deductible.
Referrals
Commissions or fees paid for referrals are deductible.

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Refunds
Money you refund to a customer is deductible.
Relocation Cost
Cost associated with relocating is deductible. See Moving Expenses
Remodeling
See Building Improvements
Rent
Rentals and leases for building, vehicles, and equipment are deductible.
Repairs
Minor repairs to buildings, machinery, and equipment are deductible are a
current expense. Major repairs are deductible and depreciate over a period of
years.
Research
Research and development cost are deductible.
Reserves
As reserves are funds set aside for future use or an unplanned expense or loss, it
is not deductible.
Returned Goods
Refunds on returned goods are deducted from your income in figuring your taxes.
Rewards
Rewards to customers, vendors, and other nonemployees are deductible, within
limits. See Prizes
Roads
You can deduct the cost of maintain a private road or driveway on your business
property.
Robots
If used in your regular course of business, robots can be deducted the year of
purchase or depreciated over seven years.
Royalties
Royalties you pay are deductible.

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Safe
Safe can be deducted the year of purchase or depreciated over seven years.
Safe Deposit Box
Safe deposit boxes are deductible.
Safety Equipment
Safety equipment, first aid kits, fire extinguishers are deductible.
Sales Expenses
Most sales expenses are deductible. See individual expense category.
Sales Refunds
Money you refund to a customer is deductible.
Samples
Samples of your merchandise, given to prospective buyers or to people who might
review or publicize your products are deductible.
Scholarships
Scholarship given to members of the community as a gesture of goodwill may be
deductible as a promotional expense.
Security
Security services and patrols are deductible.
Seminars
The cost of attending seminars and business meetings are 100% deductible.
Service Contracts
Service contracts and extended warranties are deductible.
Service Mark
A service mark is a trademark that applies to a service. Service marks are
amortized over a 15-year period.
Shipping & Shipping Supplies
Shipping and shipping supplies on goods sold are deductible.
Shoplifting Losses
Shoplifting losses are deductible as art of cost of goods sold.

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Showroom
Cost of renting a showroom is deductible. If you are building your own showroom,
you can depreciate over years.
Shows
If you put on a show to promote your business, the costs are deductible.
Sick Pay
You cannot deduct your own sick pay, unless you are an employee of your own
corporation. Your employees sick pay is considered taxable wages; therefore, the
expense is deductible.
Signs
Deductible.
Sponsorships
If you sponsor an event, individual, or team the expense is 100% deductible.
Spouse
Your girlfriend/ boyfriend is not considered a spouse. The IRS defines Spouse as
anyone who is legally married. In many states, spouses are legally considered
equal owners of all property and assets acquired by either spouse while married,
including businesses. Even though one spouse may own the business, the other
spouse can make business purchases and pay business bills. A Spouse is not able
to deduct travel unless he or she is a partner or employee of the business.
Spouse as employee; you can hire your spouse as an employee of your business
and get a payroll deduction like you would for any other employee. See Wages.
Putting your spouse on the payroll will also make your spouse and family
(including you) eligible for employee health insurance and medical expense
coverage, all fully deductible. You will no longer be subject to the self- employed
health insurance limitations.
Startup Costs

New businesses can deduct their costs for starting a business, but there are limits
and restrictions on these costs.

The IRS says that start-up costs are "amount paid or incurred for

• Creating an active trade or business, or

• Investigating the creation or acquisition of an active trade or business."

Costs of starting a business can be separated into two time periods:

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 • costs for investigating and
• costs of start-up.

Business start-up costs are typically considered capital expenditures because they
are for the long-term, not just the first year. That is, they are part of your
investment in the business assets, and investment costs are amortized (spread
out) over several years.

You may deduct up to $5,000 in start-up costs in your first year in business. This
deduction is restricted if you have over $50,000 in start-up costs. If you have
additional start-up costs over the $5,000, you can amortize these costs over 15
years. If you are not going to be profitable in your first year, you may want to
consider another option to minimize your taxes in years where you make more
profit.

Instead of deducting $5,000 in your first year, you may amortize all start-up
costs over 15 years, taking the same deduction each year. For example, if your
start-up costs are $15,000, you could deduct $1,000 a year for 15 years.

The IRS separates general business startup costs and organizational costs.
Organizational costs are those costs involved in forming a corporation,
partnership, or limited liability company (not a sole proprietorship). These costs
must be incurred before the end of the first tax year the company is in business.

In addition to the $5,000 start-up deduction, you can take up to $5,000 in

additional deduction for small business organizational expenses, up to $50,000.

Let's say you have started an LLC in 2017. You have $10,000 in deductible
startup costs and $2,000 in costs to set up the LLC. Here's how the deduction
might work:

• You can deduct the $2,000 in LLC setup costs on your 2017 business tax
return, as organizational expenses.
• You can also deduct $5,000 of your other startup costs on your 2017
taxes.
• The other $5,000 in startup costs must be amortized over the following
few years, as required by the IRS.

Stationery
Stationery, envelopes, and other office supplies can be deducted.
Stock
If you are buying a corporation and acquiring stock you may be able to deduct
some of the cost. This is a complicated tax law and you should consult your CPA.
Storage Cost and facilities

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 Rent of a storage facility is deductible. The cost of a storage facility can be
depreciated over time.
Store
The cost of renting a store is deductible. The cost of a building you purchase can
be depreciated.
Studio
The cost of renting a studio is deductible and the cost of a building you own is
depreciated.
Subcontractors
If you are hiring subcontractors to work with building contractors you are also
hiring, you will deduct the cost the same you do building contractors.
Subscriptions
Subscriptions are deductible.
Supplies
Office supplies and miscellaneous business supplies are deductible.
Surveys
The cost of conducting surveys to get customers opinions is deductible.
SUVs
You can deduct the cost of using an SUV for business. See Automobiles
Tariffs
Tariffs and all fees and taxes related to importing and exporting can be deducted.
Tax Credit
Tax credits are special tax incentives created by congress to stimulate the
economy, to encourage businesses to act in socially or environmentally
responsible ways. Tax credits and tax deducts are different. Tax deductions are
expenses that reduces business profit. Tax credits does not reduce your profit, it
reduces your taxes directly.
Taxes
Most taxes other than federal income tax and self-employment tax are deductible.
Below is a list of taxes that are deductible.

• Payroll Tax
• FICA Tax

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 • City or state gross receipts tax
• State unemployment insurance contributions and contributions to state
disability funds (depending on the state)
• State income tax or state business franchise tax
• State, city, or local sales taxes you paid on business purchases
• Real estate tax or property tax on real estate owned by your business
• State income tax
• State unincorporated business tax
• Tangible and intangible property tax
• Customs, import, or tariff tax

• License tax (for your business license, city license, or other)

• Business vehicle registration tax
• Gasoline tax, depending on how you claim business mileage costs
• Telephone and cell phone taxes
• Taxes on business travel expenses, such as hotel taxes, air travel taxes, meal
taxes, entertainment, laundry, etc.
• Excise taxes and fuel taxes
• Miscellaneous taxes on items like membership dues, stamps, safe deposit box
rental, and others.
• Taxes on membership dues are deductible if the dues themselves are
deductible. Only dues for business-related organizations are deductible.

Tax Penalties
Tax penalties are not deductible. Interest charges on late payments are deductible
for corporations only.
Tax Return Preparation
Fees charged to prepare your business taxes are deducted. If your CPA is
preparing your personal and business taxes ask him/her to separate out your bills
for each service.
Telephone
All business telephone services, fees and taxes for landlines and cell phones are
deductible.
Temporary Help Agency
Fees paid to temp agencies to aid in finding you employees are fully deductible.
Thank you cards
Deductible. It is such a nice touch to add to your product and/or service so now
that you know it is deductible, send out a thank you card to your clients.

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This Books
Yup, save your invoice and deduct it!
Tolls
Vehicle tolls are deductible.
Tools
Inexpensive tools and tools with a life of a year or less are deductible. Expensive
tools are depreciated over seven years.
Tour Bus
If you are staying in a bus while traveling, your travel and living expenses are
deductible.
Touring expenses
See Travel
Tractors
Tractors and construction equipment can be deducted the year of purchase or
depreciated over seven years.
Trade dress
Trade dress is a form of trademark. The cost is amortized over 15 years.
Trademark
The cost of obtaining a trademark, service mark, trade name, or trade dress is
amortized over 15 years.
Trade Show
Admission fees to trade shows are deductible. Travel and lodging/Hotel are
deductible. Meal are 50% deduction.
Trailers
Travel trailers, utility trailers, and movable mobile homes can be deducted the
year of purchase or depreciated over 5 years
Training
Training expenses, seminars, videos, and manuals are deductible.
See educational expenses.

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Transportation
Local transportation expenses are deductible except commuting expenses which
are not deductible. See Commuting.
Travel

If your travel is not commuting but is business travel, you can deduct travel
expenses including:

• Transportation by airplane, train, bus, or car between your home and your
business destination
• Taxi, uber, limo, or shuttle expenses
• Baggage fees or shipping of work-related materials
• Car expenses, for use of your own car or a rental car
• Lodging and meals, if your trip is overnight or long enough that you need to
stop for sleep or rest
• Dry cleaning and laundry expenses

• Business-related phone calls while you are away

• Tips for business-related expenses while you are traveling
• Other business-related expenses while you are traveling.

It's important to keep good records on these expenses so you can show business
purpose.

• Business Trips within the U.S

• Business Trips outside of the U.S
• Business & Vacation Combined
• Deductible Expenses

Trucks
You can deduct the cost of using a truck for business.
Tuition
Some tuition is deductible. See Education
Uncashed Checks
A check mailed or delivered by December 31 can be deducted the year it was
written, even though it was not cashed until the new year.
Uncollectible Accounts
Uncollectable accounts are deductible as bad debts, but only if they were
previously in your income when you made the sale.

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Uniforms
Uniforms used exclusively for work are deductible. This includes costumes and
protective gear.
Unions
Dues and meetings are deductible.
Utilities
Utilities, including electricity, gas, heating fuel, water, sewer service, and garbage
pick up are deductible.
Vacation
Vacation Pay Vacation pay for employees is treated as regular taxable wages.
Vending Machines
Vending machines can be deducted the year of purchase or depreciated over
seven years.
Voided Checks
If you void a check, you are not able to take a deduction.
Wages
The salaries, wages, commissions, and bonuses you have paid to the employees of
your small business are tax-deductible expenses if they are deemed to be:

• Ordinary and necessary

• Reasonable in amount
• Paid for services actually provided, and
• Actually, paid or incurred in the year for which you claim the deduction

Warehouse
The cost of renting a warehouse is deductible. The cost of a building you own can
be depreciated.
Warranties
Extended warranties that cost additional money are deductible if they do not
extend beyond twelve months.
Water
Water and other utilities are deductible

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Website
The cost of designing and setting up a website is deductible.
Work In process
“Work in process” also called “work in progress”, is a manufacturing term for a
product that is partially completed. Work in process is part of your inventory and
cannot be deducted until sold.
Workshop
Cost of renting a workshop is deductible. The cost of a building you own can be
depreciated.

THE END!!!
Hope you’ve found tips in this book to reduce your taxes.

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