A cost incurred to run your business, such as software, travel, or equipment, that is generally deductible from taxable income.
A business expense is a cost you incur to run your business — software subscriptions, a laptop, mileage to a client, professional insurance, your website hosting. Legitimate business expenses are generally deductible, meaning they lower your taxable income as write-offs.
For sellers, tracking expenses isn’t just tidiness — it directly cuts your tax bill and shows the true health of your business. The IRS standard is that an expense be “ordinary and necessary” for your line of work; a designer’s font licenses qualify, a lavish vacation doesn’t. Mixed-use costs like a phone or home office are deductible only for the business-use portion. For buyers who hire contractors, their fees are a deductible expense for you.
The habit that saves you at tax time is separating business and personal spending from day one — a dedicated card and account make every expense easy to find. Our guide on separating business finances covers the setup. When an expense sits in a gray area, confirm it with a tax professional rather than guessing.