Meals

Meals are considered a business expense under certain conditions. 1st, the meal you are having should be business related where your business is discussed and 2nd it should be with another person. This does not mean a meal with yourself; it has to be with another person. However, if you are traveling away on business then the meal is deductible even if you are only paying for yourself. If you are buying breakfast every morning at McDonalds for yourself that does not count as a business expense. That would be a personal expense. If you buy food for someone else, such as an employee or a client, then that is a business expense. The IRS only allows 50% of the expense to be deducted on your tax return in most cases, so consider that before spending on that lavish meal, it is not 100% deductible. For bookkeeping purposes it is. That is where there is a difference between company books and the tax return for yourself or the company.

There are some other classifications for meals that are expensed under other conditions for people who regularly travel as part of their job which I will not discuss here. However, if you fall under that category as a regular traveler, you will want to look into what is called per diem expenses.

Travel

Travel usually entails for most business owners, things such as going to a seminar or trade show in another city, like Las Vegas, the capital of trade shows. Travel expenses include car rentals, plane tickets, hotel charges, etc. You cannot deduct travel that you are taking for a personal vacation, even if you make phone calls to your business while you are away. The travel has to be for a business purpose. If you travel regularly for business such as sales calls to clients/customers out of town this may be a major expense category for you. Meals are expensed in its own category, not under travel.

Uniforms

Some businesses, especially in the service industries, have employees wear a uniform. Uniforms are great for a business to appear more professional. Uniforms can be expensed as long as it is not just regular clothes that you can use elsewhere. For example, if everyone in your place of business is required to wear jeans and a blue top, this is probably not considered a uniform because you can use jeans and the top anywhere as a normal piece of clothing. However if the top you have is embroidered with a company name and or logo, the cost of the shirt can be considered a uniform expense. Regular clothes that you buy to use at your place of business are not considered a business expense, even if you bought it for a special occasion such as a public speaking engagement. Neither is the cost of dry-cleaning for those clothes deductible.

However, let’s say you are a professional dancer and have to buy costumes for shows. These would be considered a business expense because your work is as an artist and you probably wouldn’t wear that sequined dress or skirt as normal clothing.

Telephone expense

Usually this includes a phone you have in your office. However many people have either only a cell phone, or may have more than one cell phone, one of which is used only for business. If you have a phone in your house it cannot be deducted as a phone expense unless you have a 2nd line that you can claim as a home office or fax line. As for cell phone bills, you need to make a separation between business use and personal use and expense only the business portion on your books. For instance, if your cell phone is used 50% for your business, then deduct that portion of your bill on your books. You may be able to accomplish this by paying one month out of your business account and the following month out of your personal account.

Bank Fees

Because banks can hit you with so many different types of fees, especially with all the recent bank consolidations, it has its own category. This includes monthly bank fees, NSF or returned check fees, copy fees and just about any other type of bank fee. This category does not include the credit card discount fee a bank deducts from deposits to your account, which is a separate category. But it can include the other miscellaneous fees banks charge these days for having credit card deposits which are normally listed in your merchant credit card statement. Also as a reminder you can always try to ask the bank for credit on some of the fees they charge. Many banks will give you a one time or once a year credit. It never hurts to ask.