September 25, 2023

Business Expenses: A Guide to Tracking and Deducting Your Costs

Business expenses / are costs incurred in the ordinary course of business. These expenses can be deducted from revenue to arrive at a company’s taxable net income. Business expenses are also referred to as deductions.

There are two main categories of business expenses:

  • Operating expenses: These are the expenses that are incurred on a regular basis to keep the business running. Examples of operating expenses include rent, utilities, salaries, marketing, and office supplies.
  • Capital expenses: These are the expenses that are incurred to acquire long-term assets, such as equipment, vehicles, and buildings. Capital expenses are not deductible in the year they are incurred, but they can be depreciated over their useful life.

What are some common business expenses?

Some of the most common business expenses include:

  • Rent: The cost of renting office space or a retail location.
  • Utilities: The cost of electricity, gas, water, and other utilities.
  • Salaries: The cost of paying employees.
  • Marketing: The cost of advertising, public relations, and other marketing activities.
  • Office supplies: The cost of paper, pens, computers, and other office supplies.
  • Travel: The cost of travel for business purposes, such as airfare, hotel stays, and car rentals.
  • Entertainment: The cost of entertaining clients or customers.
  • Depreciation: The cost of depreciating long-term assets, such as equipment and vehicles.

How to track business expenses

It is important to track your business expenses so that you can accurately calculate your taxable income and stay on top of your finances. There are a number of ways to track business expenses, including:

  • Using a spreadsheet: This is a simple and easy way to track your expenses. You can create a spreadsheet that lists your expenses by category and amount.
  • Using a business expense tracking app: There are a number of business expense tracking apps available, such as Expensify and QuickBooks. These apps can help you track your expenses, create expense reports, and export your data to your accounting software.
  • Using your accounting software: If you use accounting software, such as QuickBooks or Sage, you can track your expenses directly in the software. This can make it easy to generate reports and track your spending over time.

How to claim business expenses on your taxes

In order to claim business expenses on your taxes, you must first track your expenses and keep accurate records. You will then need to categorize your expenses and determine which ones are deductible. Once you have determined which expenses are deductible, you can claim them on your tax return.

There are a number of different ways to claim business expenses on your taxes. You can either itemize your deductions or take the standard deduction. If you itemize your deductions, you will need to list all of your deductible expenses on Schedule A of your tax return. If you take the standard deduction, you will not be able to claim any business expenses.


Business expenses are an important part of running a business. By tracking your expenses and claiming them on your taxes, you can reduce your taxable income and save money. There are a number of different ways to track business expenses, so choose a method that works best for you.