What Expenses are Deductible for a Company?

In the United States, companies have deductible expenses which can be subtracted from the taxes payable on the tax return. All of them are related to the performance of any business and must justify their validity by means of an invoice and presented in a timely manner.


Certified public accountant, James Liggett CPA indicates that business expenses are the costs of running or operating a trade or business. These expenses are generally deductible if the business is operating for profit.

Here, Liggett CPA will share what expenses are deductible.


What kinds of expenses can be deducted?

The Internal Revenue Service in the United States (IRS) provides the option to request a tax deduction through a list of deductions, including:

 

Cost of goods sold

In the event your business manufactures products or purchases them for resale, you will generally need to evaluate your inventory at the beginning and end of each tax year to determine the cost of goods sold. James Liggett CPA, who serves as a managing director at  Liggett, Melzer & Joshi CPAs P.C., indicates that the cost of goods sold is deducted from your gross income to calculate your gross income for the year.

 

Capital expenditures

There are some deductible costs that are part of your business investment and are called capital expenditures. According to the experienced certified public accountant James Liggett CPA, these are considered assets in your business and are generally costs to start a business, to buy business assets or to make improvements.

 

Business expenses

These expenses are generally deductible if the business operates for a profit. To be deductible, a business expense must be ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business, while a necessary expense is one that is helpful and appropriate for your trade or business.


James Liggett CPA, who has a vast experience in public accounting, shares that there are other types of deductible business expenses such as employee wages, retirement plans, rentals, taxes, and insurance. Knowing which expenses are deductible will help you better estimate your tax situation and plan for the growth of your business.

There are companies specialized in public accounting that can help you with your deductible business expenses, such as Liggett, Melzer & Joshi CPAs P.C. James Liggett CPA has been providing corporate advisory, accounting and tax services for more than two decades to companies.

We invite you to contact James Liggett CPA to help you with the proper management of your company's accounting.

Comments

Post a Comment

Popular posts from this blog

How Limited Liability Companies (LLCs) Are Taxed

Image
Limited Liability Companies, better known as LLCs, are the simplest and least expensive business structures in the United States. This legal structure combines the tax advantages of a company with the protection of personal responsibilities enjoyed by corporations. Unlike a sole proprietorship, an LLC is a completely separate entity from its owner or owners. In this way, business owners are protected from personal liability. However, according to James Liggett CPA , who has years of experience in assisting taxpayers and small businesses with taxes in the state of New York, when it comes to filing taxes, an LLC works much like a sole proprietorship. Here, James Liggett CPA answers the most frequently asked questions about how LLCs are taxed. What taxes must an LLC pay? For tax purposes, the IRS treats a member's LLCs as sole proprietorships. Liggett CPA explains that this means that the LLC itself does not pay taxes and you do not have to file a return with the IRS. If you are the s...
Read more

Employee Benefit Plan Audits

Image
  The United States Department of Labor (“DOL”) generally requires employee benefit plans (“EBP”) with 100 or more participants to have an audit as part of their annual Form 5500 filing. Employee benefit plan audits are unique in several ways. Most importantly, employee benefit plan audits should do more than support financial statements, EBP plan audits should also evaluate plan operations. These unique attributes of employee benefit plan inquiries require an intimate knowledge of the specific plan being audited, the Employee Retirement Security Act of 1974 (“ERISA”), the disclosure and disclosure requirements of the Department of Labor of the United States, in addition to generally accepted accounting principles and the AICPA audit rules The employee benefit plan accounts represent an area of ​​significant opportunity for auditors. In an article published in April 2020, Accounting Today reported that there are currently more than 83,000 audits of employee benefit plans conduc...
Read more