At the end of the day, you have to ask yourself an easy question…! Was this expense paid primarily to earn Business Income? If the answer is yes, it is deductible, if the answer is no it is not.
Here, we are often asked by our clients what constitutes a deductible business expense? The answer is quite simple. Yes! A deductible business expense is any reasonable current expense or cost you paid or will have to pay to earn business income or revenue.
The Expenses Deductible for Business Purposes
Now that we have covered the negative examples, here is a comprehensive list of the types of expenses that are deductible for business purposes.
Advertising, Allowance on eligible capital property, Bad debts, Business start-up costs, Business taxes, fees, licenses, dues, memberships and subscriptions, Business-use-of-home expenses, Capital cost allowance, Current or capital expenses, Delivery, freight, and express, Fuel costs, Insurance, Interest, Legal, Accounting, and other professional fees, Maintenance and repairs, Management and Administration fees, Meals and entertainment, Motor vehicle expenses, Office expenses, Prepaid expenses, Property Taxes, Rent, Salaries, wages and benefits, Supplies, Telephone and Utilities, Travel.
This is a very long list and if you follow all the links, you’ll see that properly accounting for your business expenses is at times difficult. But not to worry that’s our job.