According to the IRS:
Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.
What Can I Deduct?
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
It is important to separate business expenses from the following expenses:
-The expenses used to figure the cost of goods sold,
-Capital Expenses, and
-Personal Expenses.
-Cost of Goods Sold
If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold unless you are a small business taxpayer (defined below). Some of your expenses may be included in figuring the cost of goods sold. The cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense.
The following are types of expenses that go into figuring the cost of goods sold.
-The cost of products or raw materials, including freight
-Storage
-Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products
-Factory overhead
Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities unless you are a small business taxpayer (defined below). Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs.
At King Financial Services in Fort Worth, we can help businesses to identify all expenses that are deductible for their business. Our team works closely with businesses to understand their unique needs and traits, to ensure they are getting the best financial advice and help. Our goal is to help your business succeed and utilize all tax breaks you qualify for. Schedule an appointment with our staff today.
Federal Relief Aid in Fort Worth, TX
At King Financial Services in Fort Worth, TX will be able to work with your company to find and apply for any financial assistance you may qualify for through the government. This has been a difficult time for all of us and should not be made any worse by trying to navigate the complex financial climate on your own. Contact King Financial Services today to learn more about how we can help your company apply for a federal disaster loan.
King Financial Services in Fort Worth
Don’t get lost in the paperwork that comes along with running a business, instead reach out to King Financial Services. Our team of financial professionals understands how overwhelming it can be to you and your staff to keep up with additional tasks and record keeping. This is why we help eliminate the workload that comes with bookkeeping in house by managing all of the additional responsibilities, such as payroll and bookkeeping. Contact us today to learn more about the tax and financial services we offer. Sandra King is an enrolled agent, empowered by The United States Treasury to prepare your personal or business tax filing. While her services are offered nationwide, Sandra King locally serves the greater Dallas-Fort Worth area, including but not limited to Arlington, Bedford, Colleyville, Euless, Fort Worth, Grand Prairie, Hurst, Mansfield, North Richland Hills, and Richland Hills.
King Financial Services Inc
610 S Industrial Blvd. Suite 140
Euless, TX 76040
Phone: (800) 503-1343
https://kingfinancialsvcs.com/
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