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Manjit Singh CPA P.C.

CERTIFIED PUBLIC ACCOUNTANTS

Tax planners not just tax preparers®

 

2841 Hartland Road, Suite 307

Falls Church, VA 22043

 

Phone: 703-280-5656

Fax:     703-280-5666

           703-207-4502

 

Email: msingh@mscpa.us

Email: manny@manjitsinghcpa.com

Website: www.mscpa.us

June 2023

Ordinary and Necessary Business Expenses

Ordinary and Necessary Business Expenses

All businesses can deduct ordinary and necessary business expenses from their tax return. But be careful — it’s not black and white.


ONE SIZE DOESN’T FIT ALL
Deductible business expenses aren’t uniform. An ordinary business expense for a dog walking business certainly wouldn’t be ordinary for a bakery.

Think of it like this. What expenses are unequivocally needed to run your business? A dog walker needs dog treats and leashes. But a bakery doesn’t.


BEWARE OF THE GRAY AREA
Several types of expenses tend to occupy the gray areas. These include business meals, automobile expenses, travel, and capital expenditures. Without clear-cut rules, don’t blur the lines between what’s deductible and what’s not. A lunch with a customer is a business expense. But lunch with your spouse or child likely isn’t. Travel to an industry conference is an ordinary expense. However, a trip to the Maldives, where you spend a few hours planning your company’s future, doesn’t count.


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