It is the beginning of the New Year which means that tax season is just around the corner. Many people find tax season stressful for their personal lives, but for business owners, and new business owners, it can often be an additional time of stress.
When starting a new business, there are many things to keep in mind. Being ethically responsible though is the most important of all. When filling taxes for a business what is classified as a business expense can often find people in trouble. The IRS website states that business expenses “are the cost of carrying on a trade or business.” The most common business expenses that people claim are meals, supplies, travel, fees, etc.,
A business expense is special, and different from any personal expense. Obviously the average business expense is common and related to your business and in how it runs. A necessary expense though is unique and could be thought of as an added “bonus” to your business.
What if you were to go on a business trip to New York in two months? You decide to bring your family with you to add to the business trip. You are being held accountable to “divide the total cost between the business and personal parts.” The IRS website states that you must deduct the business percentage of the trip. The personal expenses are in no way deductible.
Other additional business expenses can be an employees’ pay, a retirement plan for yourself and for your employees, the expenses of the businesses land and rent, interest, state and local taxes, and of course insurance.
The tax season is right around the corner. For more information or questions, the Internal Revenue Service’s website has a lot of helpful information for filing taxes for yourself or for your business.