Business Expense
A cost incurred in the ordinary course of running a business. Deductible business expenses reduce taxable income.
Business Expense Definition
A business expense is any cost that is ordinary (common in your industry) and necessary (helpful and appropriate for your business). The IRS uses this two-part test to determine if an expense is deductible.
Common Business Expenses
Capital Expenses vs. Operating Expenses
How to Track in QuickBooks
Every expense should be categorized to the correct expense account. Use bank feed rules to auto-categorize recurring expenses. Your P&L report organized by category IS your expense summary for tax time.
FAQ
Q: Can personal expenses ever be business expenses?
A: Only the business-use portion. For example, a phone used 70% for business — 70% of the bill is deductible. Keep documentation of the split.
Related Terms
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Related Terms
Equity is the owner's claim on business assets after all liabilities are subtracted. In simple terms, it's what the business is worth to its owners—total assets minus total debts. You'll also hear it called owner's equity, stockholders' equity, or net worth depending on the business structure.
Revenue is the total income your business earns from its primary operations — selling goods, providing services, or both. It's the "top line" on your income statement, before any expenses are deducted. Revenue is different from profit: revenue is what comes in; profit is what's left after costs.
Segment reporting breaks down a company's financial results by business segment, geography, or product line — showing which parts of the business are profitable and which aren't.
An uncollectible account (also called a bad debt) is an accounts receivable that you've determined will never be collected. Despite your best efforts — follow-up calls, payment plans, collection agencies — the customer can't or won't pay. At some point, you must write off the debt as a business loss
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