Be sure to deduct every legitimate expense
Amounts you spend in the course of conducting business are generally deductible from the gross income of that business. This includes any start-up expenses. You can claim amounts spent for items ordinary and necessary in your trade or business as a deduction against your income. Otherwise, the amounts are amortized, depreciated, or expensed depending on the nature of the purchases.
The IRS scrutinizes entertainment and meal expenses more than others because of the potential for abuse. You'll need to keep track of the business that was discussed during these events. Other expenses such as cellular phones, computers, and cars are specially classified as listed property because they can be used for both personal and business use. The IRS requires you to keep written documentation of the business use of your car and computer, plus meals and entertainment expenses, so be sure to keep accurate records.
Expenses must be directly related to your trade or business to qualify as a deduction; amounts spent on items that may help you indirectly do not necessarily qualify. However, to increase your profit, be sure to deduct every legitimate expense that you can reasonably prove. Take advantage of you tax preparer's expertise throughout the year to assist you with tax planning opportunities as they arise.
