What is a Qualified Business Expense? | ACCOUNTING

In my last post, I discussed commingling funds and how difficult it can be for a bookkeeper to figure out if expenses are personal, or if they're qualified business expenses.  So that leads to the next question.  What is a qualified business expense? It varies from business to business.  (You didn't think there would be a simple answer, did you?)  Qualified business expenses for an attorney or accountant are going to be very different from those of an electrical business or iron foundry. Per the IRS, qualified business expenses are defined as those expenses that are both ordinary and necessary.  "Ordinary" expenses are those that are "common and accepted" to your specific trade or business.  "Necessary" means they are helpful and appropriate for your business. Not necessarily indispensable, but appropriate and helpful.    Now, not all expenditures are even expenses.  Some are capitalized and should be depreciated instead of deducted. To schedule a call with me, get on my schedule at https://MySimpleBookkeeping.com/contact  Follow Donna on Twitter: https://twitter.com/Donna_H67 Check out our website: http://mysimplebookkeeping.com Follow us on Facebook: https://www.facebook.com/MySimpleBookkeeping    To have Donna speak at your function, please email [email protected]