Common sense - you know, that's the commodity your mother wished you had - would tell you that business expenses are the costs you incur to run your business - the money you must spend in order to make money. Take a look at these three ways to expand your thinking.
1. Define your business as broadly as you honestly can. The more multi-faceted and inclusive your field of endeavor the more wide-ranging your expenses and thereby the less taxes you'll end up paying!
A photojournalist can deduct a more extensive variety of expenses than can a wedding photographer.
A technological consultant's expenses will be more diverse than those of a computer repair person.
2. Look with a different perspective at your activities.
Don't be so sure that there is a well-marked difference between work and family and play and chores. The business life of an indie like yourself is intertwined with your personal life. And the two two can get pretty tangled. If you're dropping off your children while delivering products to clients, or struggling to find time for your new independent venture while holding down a full-time job, the interplay of your business and other interests can be intricate.
A visual artist attends a Broadway performance and scrutinizes the sets and costumes. She deducts the cost of the ticket as a business study expense.
The designer of hand-made all-cotton clothes for children deducts, as a publication expense, every magazine she purchases that has any clothing, kids, or fabric industry trends in it.
3. Review your relationship to the people you spend your time with.
Anyone who has a connection with your business may be primarily a business associate even though in some cases he or she may also happen to be a college classmate, friend, parent, child, or spouse. Friendship with a business associate is not necessarily fatal to a deduction. You'll just have to show that the predominant motive for the activity that warranted the expense was business-related.
Faye Fabrique deducts not only the fabric paints that she buys, but also the expense of dining out with her husband. Why? Because during the meal she gets his advice on questions of scheduling, picks his brain about various proposals, and tests his reaction to her brochure. She could not have had this business discussion at the family dinner table with her three children in attendance and so the gift given to her brother as thanks for baby-sitting while she was at this dinner is also a business expense.
