Business expenses

Business expenses are those costs of an organization that can be used to reduce the taxable income of the firm for income tax calculation purposes. To be tax deductible, these expenses must be ordinary and necessary. An ordinary expense is one that is commonly incurred within the relevant industry, while a necessary expense is one that must be incurred in order to conduct business operations. Capital expenses must be classified as assets, with only the resulting depreciation being treated as a business expense.