The Top 23 Business Expenses List

The average employed person may look at a business expenses list and wonder why anyone will want to start a business if they have this many expenses to operate it. The entrepreneur looks at the same list and thinks about how great it is to have that many deductions to cut their taxes on profits. It is all in the point of view.

As you go through this list, some may apply to your business, some may not, and there will be rules and exceptions, so consult your tax advisor.

  1. Mortgage – If you purchase and finance real estate for your business, you can deduct the mortgage interest. A bonus is your ability to depreciate the structure for a deduction each year for money you did not have to pay out of pocket.
  2. Lease – If you lease your business location, those lease payments are deductible.
  3. Security services – Equipment and monitoring services to protect the business.
  4. Home business space – You can deduct certain costs for a home business space based on the size percentage of the whole home square footage. They include a portion of insurance, utilities, mortgage interest, and more.
  5. Utilities – All utilities consumed in the operation of your business are deductible, including electricity, gas, water, sewer, and trash removal.
  6. Software – Software you buy or lease for exclusive use in your business.
  7. Cell phones – The cost of the phones as well as the service fees are deductible to the extent of business use separate from personal use.
  8. Internet services – These include your broadband service, as well as any ancillary internet-provided services you use in your business.
  9. Postage and shipping – If you mail or ship in the course of business it is a deductible expense.
  10. Office equipment – This includes computers, printers, phones, fax machines, labelers, and any other similar use equipment.
  11. Office supplies – Paper, pens, printer ink or cartridges, cleaning supplies, etc.
  12. Furniture – This would include office furniture, waiting rooms, and store displays.
  13. Employee wages and salaries – All wages and salaries paid to employees, including owners if also employees, are deductible expenses.
  14. Payroll taxes – Payroll taxes on wages and salaries.
  15. Benefits – To get and keep good employees, business owners often provide benefits over and above wages and salaries. These can include discounted inhouse shopping, health insurance, retirement shared contributions, etc.
  16. Marketing and advertising – Everything you purchase or do to promote your business is deductible as a business expense, including:
    1. Print ads
    2. Billboards
    3. Television and radio
    4. Coupons
    5. Websites
    6. Internet ads and pay-per-click marketing
    7. Banner ads
    8. Social site ads
    9. podcasting
  17. Specialty equipment – This can include production or manufacturing equipment as well as production printers, packaging equipment, cleaning equipment, etc.
  18. Vehicle expenses – All expenses required to operate vehicles for business use are deductible. This includes fuel, repairs, maintenance, insurance, licenses, fees, and more. If a vehicle is used for both business and personal use, the expenses must be apportioned based on the percentage of business use by mileage. Easier is the business mileage deduction, $0.56 in 2021. This is deductible for each mile traveled for business.
  19. Meals and entertainment – Both business meals and business entertainment are expenses, but in 2021 the IRS stopped allowing entertainment to be deductible. Meals, if in a restaurant and reasonable for business, are deductible at 100% in 2021.
  20. Taxes – As long as there is government, there will be taxes, and there are a number of them businesses must deal with:
    1. Income tax – Federal and state.
    2. Local taxes – Municipal and other local taxes.
    3. Unemployment taxes – Normally these are state-levied to fund unemployment payments to those who lose their jobs.
    4. Workers’ compensation taxes – These are paid to fund payments to workers hurt on the job.
    5. Self-employment taxes – If you are self-employed, you must pay Social Security and Medicare taxes on your income.
  21. Services and Maintenance – These include landscaping, snow removal, debris removal, and other services to maintain facilities.
  22. Insurance – There are various insurance needs, some depending on the type of business.
    1. Property, casualty, liability – These cover the business for property damage from fire or other causes. Liability covers the business for claims of damages due to negligence or other business related activities.
    2. Disability – This insurance covers owners and some employees to replace income lost due to disability.
  23. Professional fees and memberships – There are fees and memberships related to a business or profession that are legitimate business expenses. They can include:
    1. Association memberships
    2. Co-op buying memberships
    3. Attorney fees
    4. Accounting service fees
    5. Business consultants

Depending on the type of business, there can be more items on this list. You entrepreneurs can just view it as a tax-saving deductions business expenses list.

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