Not Every Business Expense is a Tax Deduction! Here’s What You Need to Know

If you run a business, you’ve probably heard that business expenses can be written off to lower your tax bill. But here’s the truth—not every business expense is a tax deduction!

I see this mistake all the time, and I don’t want you to get caught off guard when tax season rolls around. The IRS has very specific rules on what qualifies, and if you’re not careful, you could be claiming deductions that don’t actually count (which is a headache you don’t want!).

Let’s break it down:

What Makes an Expense Deductible?

For an expense to qualify as a tax deduction, it must be both:
✅ Ordinary – Common and accepted in your industry
✅ Necessary – Helpful and appropriate for running your business

That means if an expense is nice to have but not essential, it may not be deductible.

Common Deduction Mistakes

🚗 Mixed-Use Expenses – If you use something for both business and personal purposes (like a car or phone), only the business portion is deductible. Keep clear records to separate the two!

🍽️ Meals & Entertainment – Business meals are only 50% deductible. Entertainment (like concert or event tickets)? Usually not deductible at all.

👕 Clothing – A branded t-shirt or uniform? That might qualify. A full wardrobe for client meetings? Not so much.

🎁 Client Gifts – Gifts over $25? Only partially deductible. Yep, even if you’re feeling extra generous!

How to Stay Compliant & Maximize Your Deductions

• Keep detailed records of your expenses (trust me, your future self will thank you).

• Use separate accounts for business and personal spending.

• Work with a bookkeeping pro (hi, that’s me! 👋) to ensure you’re getting every deduction you actually qualify for—without crossing any IRS lines.

If you’re unsure whether something is deductible, let’s chat! I help business owners clean up their books and make sure they’re tax-ready without the stress. 💡