Every small business owner wants to “write stuff off.” But not everything you buy for your business actually qualifies. And if you’re just guessing, you might be heading straight into audit territory.
You’ve probably heard advice like:
- “Just write off the whole vacation… bring a laptop.”
- “Buy it through the business. It’s all deductible.”
- “Throw it on the card and let your accountant sort it out.”
Some of that might work. Most of it is asking for trouble.
So let’s clear up what actually counts as a business expense, and what raises red flags with the IRS.
First, What Is a Business Expense?
According to the IRS, a business expense must be:
- Ordinary – common and accepted in your trade or industry
- Necessary – helpful and appropriate for running your business
That’s it. Not clever. Not maybe. Not “we’ll just write it off and see what happens.”
If you bought it for the business, and it’s not something you would normally use outside of work, it probably qualifies. But don’t stretch it.
Legit Business Expenses
- Office supplies
- Software or tools used for your work
- Advertising and marketing
- Client meals (50% deductible)
- Business-related education
- Contractor payments
- Equipment and tools
- Business-related travel
- Business mileage (track it or lose it)
- Home office expenses (if your space qualifies)
These are the bread-and-butter deductions. Just keep records and notes on what each expense was for.
The Stuff That Gets Business Owners in Trouble
This is where people get bold… or sloppy.
- Personal meals – Eating lunch alone? Not deductible.
- Clothing – If you can wear it outside of work, the IRS says no.
- Family vacations – Talking shop on the beach does not make it a business trip.
- Amazon hauls – If it’s mixed with home stuff, it’s probably not safe.
- Your entire cell phone bill – Unless it’s a dedicated business line, partial only.
If you are using your business card like it’s a coupon code for your personal life, that is asking for a problem.
IRS Red Flags to Avoid
- Writing off 100% of your internet or phone bill
- Big meal and travel deductions without solid income
- Losing money year after year with tons of expenses
- “Rounded” numbers everywhere (you did not spend exactly $1,000 on ads)
- Calling everything “miscellaneous”
The IRS uses software to compare your expenses to businesses like yours. If your numbers look weird, you are not flying under the radar… you’re lighting it up.
A Good Expense Saves You Money. A Bad One Costs You More.
If it helps your business grow, run smoother or stay organized (and you’ve got proof)… you are probably fine. But if it feels sketchy or “borderline clever,” it probably will not survive an audit.
Need help cleaning up your expenses before the IRS does it for you?
Book a quick expense review and let’s sort what is real from what will raise eyebrows.
