Every business owner loves deductions, but not all expenses qualify. Understanding what you can and can’t write off saves you from mistakes and ensures you don’t leave money on the table. Let’s break it down in simple terms.
1. What You Can Write Off?
Business expenses must be both ordinary (common for your industry) and necessary (helpful for your operations). These typically include:
Keeping receipts and accurate records is key. Without proof, even valid deductions can be disallowed during an audit.
2. What You Can’t Write Off?
Personal expenses like home groceries, your own clothes, or vacations don’t qualify. Fines, penalties, and political donations are also non-deductible. The IRS expects clear separation between business and personal use — a simple but often ignored rule.
3. Partial Deductions You Should Know
Some expenses are split between personal and business use. For example, if you use your car or phone for both, you can deduct the business percentage. Similarly, if you use part of your home as an office, you can claim a home office deduction — especially if you manage client calls or paperwork there.
Owning property used for your business can provide several tax benefits. You can deduct property taxes, maintenance costs, and claim depreciation. Real estate not only supports your daily operations but also builds long-term value and equity.
Understanding deductions is not about loopholes, it’s about smart planning. Knowing what you can and can’t claim helps your business stay compliant and profitable. When managed well, tax planning, paired with real estate ownership, becomes a strategic advantage for any growing business.