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Remember, we are not accountants nor lawyers! If you doubt this information or have more questions, check with a professional.

We have always advised using a LLC as your legal entity for business. If you do, all your business incomes and expenses will appear on the Schedule C of your personal taxes. All the expenses therefore reduce your taxable income. For example, let’s say you make $50k at a job and $25k on your business, for a total income of $75k. Assuming you have a home business, lots of normal expenses become partial business expenses, or business deductions. Your new computer, half your business dinners, your business travel, your business cell, etc. become deductions. In our example, you may very well have $30k in deductions, meaning you only pay taxes on $45k.

The question, then, is: what is deductible? I made a list of deductible expenses, see below. There are some caveats. Computer and internet programming costs are usually deducted in one year even though you may use them for 2-3 years, IF they are under $250k. Gifts to business friends are allowed but only for under $30 a person…..

Accounting fees - FULLY
Advertising - FULLY more
Auto - Split business (yes) & personal (not) more
Bad Debt for Goods YES, for Services NO more
Bank charges - FULLY
Bribes - Not
Cell Phone - MOSTLY
Commissions and sales expenses - FULLY
Computers - FULLY more
Consultation expenses - FULLY
Continuing professional education - FULLY
Contract labor - FULLY
Contributions - Not more
Credit and collection fees - FULLY
Delivery charges - FULLY
Dues and subscriptions - FULLY

Education more
Employee benefit programs - FULLY
Entertainment - 50% Deductible more
Equipment rentals - FULLY
Expense of starting Business - Mostly more
Factory expenses - FULLY
Gifts - $30 per person
Home Office - Split business (yes) & personal (not)
Insurance - FULLY
Interest paid - FULLY more
Internet subs, domain names, and hosting - FULLY
Laundry - FULLY
Legal fees - FULLY more
Licenses - FULLY
Lobbying - Not
Maintenance and repairs - FULLY
Meals - 50% Deductible

Moving - more
Office expenses and supplies - FULLY
Penalties - Not
Pension and profit-sharing plans - FULLY
Postage - FULLY
Print and copy - FULLY
Professional development and training - FULLY
Professional fees - FULLY
Promotion - FULLY
Rent - FULLY
Salaries, wages, and other compensation - FULLY
Security - FULLY
Small tools and equipment - FULLY
Social Clubs - Not
Software - FULLY more
Supplies - FULLY
Taxes - FULLY more
Telephone - FULLY
Trade discounts - FULLY
Travel - FULLY more
Utilities - FULLY

Small Business and Self-Employed Tax Center
Small Business Forms and Publications
5 Year-end Small Business Tax Tips 

Top Ways to Avoid Small Business Audits

A dozen deductions for your small business
Top 10 Tax Tips for Small and Growing Businesses

Small Business Expenses and Tax Deductions

"Asking to sign an NDA is an indicator
that the founders have no idea what
they are doing."

- Paul Buchheit