The core rule that settles most debates

A business expense generally needs to be ordinary and necessary for your business.

In plain language:

• Ordinary means it makes sense for your type of business.
• Necessary means it helps you run or grow the business.
• You must be able to document it.

If you cannot explain the business purpose clearly and prove it with basic records, treat it as personal.

1) Meals: not everything is deductible, and not always 100%

Meals are one of the most common write offs people get wrong.

Usually deductible (often only partially):

• Meeting a client or potential client
• A business development meal with a clear purpose
• Meals while traveling for business

Usually not deductible:

• Your normal lunch while working locally
• Meals that are mostly personal and you happened to talk about work

What to document:

• Who was there
• The business purpose
• Date and location
• Receipt

Practical tip: add a quick note in your bookkeeping app or on the receipt. One sentence is enough. 50% of most meals can be deducted rather than 100% like it was in the past.

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2) Travel: a “business trip” is not a vacation with one meeting

Travel can be deductible when the primary purpose of the trip is business.

Often deductible:

• Flights and lodging for a trip that is primarily business
• Ground transportation related to business activities on the trip
• Conference fees

Common problems:

• Extending the trip for personal days and trying to deduct everything
• Bringing family members and deducting their costs
• Calling it business because you answered emails

Practical tip: keep a basic itinerary and save the agenda or meeting details. If the trip is mixed, deduct the business portion and pay the personal portion personally.

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3) Home office: the “exclusive use” rule is the deal breaker

The home office deduction is real, but it is specific.

To qualify, the space must generally be used:

• Regularly
• Exclusively
• For business

If it doubles as a guest room, workout space, or kids area, it usually fails the exclusive use test.

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If you qualify, you may be able to deduct a portion of:

• Rent or mortgage interest
• Utilities
• Home insurance
• Certain repairs and maintenance

Practical tip: a dedicated room is the cleanest approach. You can estimate the amount quickly using $5 per square foot up to $1,500 or calculate it exactly as a percentage of your home expenses.

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4) Vehicle deductions: commuting is not deductible

This is a big one for owner operators.

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Not deductible:

• Driving from home to your main workplace and back (commuting)

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Often deductible:

• Driving from your office to a job site
• Driving to meet a client
• Driving between business locations

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Recordkeeping matters here more than almost anywhere else.
If you do not track mileage, this deduction is easy to lose.

Practical tip: use a mileage tracking app, or keep a written log. Consistency beats perfection.

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5) “I bought a truck so I can write it off”

People hear about special depreciation rules and assume a vehicle purchase wipes out taxes.

Reality:

• Deductions depend on business use percentage
• Vehicles have specific rules and limits
• Personal use reduces the deduction
• The purchase still costs real money

Practical tip: never buy a vehicle just for the write off. Buy it because it makes business sense, then claim what you legitimately qualify for.

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6) Clothing: if you can wear it outside of work, it is usually personal

This surprises many business owners.

Usually not deductible:

• Normal clothing you could wear anywhere, even if you only wear it for work

Sometimes deductible:

• Required uniforms
• Protective gear used for the job

Practical tip: if it is suitable for everyday wear, assume it is not a business deduction.

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7) Cell phone and internet: most owners should not deduct 100%

Many owners use their phone and internet for both business and personal life.

If it is mixed use, a reasonable split is usually more appropriate than taking the full amount.

Practical tip: if you want a cleaner deduction, consider a dedicated business phone line.

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8) “My business paid for it, so it must be deductible”

This is one of the most costly misunderstandings.

Paying from the business account does not automatically make something a business expense.

Examples that commonly cause problems:

• Personal groceries and household expenses
• Family vacations
• Personal subscriptions
• Kids activities

Practical tip: keep one business bank account and one business credit card, and keep personal purchases off them.

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9) Education and coaching: it needs to relate to your current business

Education can be deductible when it maintains or improves skills used in your current business.

Often deductible:

• Training to improve what you already do
• Continuing education for your trade
• Coaching tied to current operations

Often not deductible:

• Education that qualifies you for a brand new line of work

Practical tip: if the education is for a different career path, treat it as personal unless your tax pro confirms otherwise.

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10) The real key is documentation, not cleverness

Most write offs stand or fall based on records.

A simple documentation standard:

1. Receipt or invoice
2. Business purpose in one sentence
3. Proof it was paid (card or bank record)

If you can do those three consistently, you are far ahead of most small business owners.

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