Write Off Guide

• The guide begins by defining a tax write-off as a qualifying ordinary and necessary business expense that can be deducted from your taxable income. It clarifies a common misconception that you need an LLC to write off business expenses. This is not true as you can write off qualified business expenses if you are self-employed, a sole proprietor, or own an LLC, a partnership, or a corporation.
• IRS definitions of ordinary and necessary expenses are provided, with ordinary expenses being common ones in your industry and necessary expenses being those helpful and appropriate for your business.
• The guide also informs about the burden of proof, stating that the IRS requires proof that your deduction is qualified. Receipts, cancelled bills, and checks are usually sufficient for some write-offs. However, others like travel, meals, auto, and home office expenses require additional documentation like mileage logs, meeting minutes/attendance, business purpose, and business use vs. personal use.
• Examples of common tax write-offs in various categories are listed, including advertising & marketing, business travel, banking fees, contractors, cost of goods sold, education, business licenses, office expenses, payroll expenses, qualifying business loan interest, qualifying meals, qualifying taxes paid, and vehicles. It is noted that this is not an exhaustive list and it is recommended to work with a tax accountant to determine which write-offs your business is qualified for.
• The guide ends by mentioning that personal expenses are generally not deductible for business, unless there is a portion of business use related to the personal expense. Other non-deductible expenses include fines & penalties, political contributions, and federal taxes.

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