Expenses You May Not Know Are Tax-Deductible

According to the Internal Revenue Service (IRS), business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the company operates with the intention to make a profit.

What Business Expenses Are Deductible?

Cost of Goods Sold

The following are types of expenses that are figured into the cost of running your business:

1. Cost of products or raw materials, including freight

2. Storage costs

3. Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products

4. Factory overhead costs

Capital Expenses

Three types of capital expenses are deductible:

1. Start-up costs

2. Assest

3. Improvements

Personal Expenses

Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal reasons, like your vehicle or a home office, you are allowed to deduct the business portion. Tax forms will help you divide the total cost between the business and personal portion of your home, car, loan, and other shared expenses.

1. Business Use of Your Home: Deduct the business portion of your mortgage, insurance, utilities, repairs and depreciation

2. Business Use of Your Car: Deduct the business portion of car payments, gas, repairs, insurance based on actual mileage

Other Business Expenses Include:

1. Employees' salaries

2. Retirement plans

3. Rent

4. Interest payments

5. Federal, State and local taxes

6. Insurance