What Is a Business Supply & What Is an Office Expense According to the IRS?

The Internal Revenue Services (IRS) allows you to deduct expenses and supplies needed to run your business. You are allowed to deduct expenses that are considered common in your trade. The expenses must be acceptable and helpful for the operation of your business, according to the IRS.

Business Supply

A business supply that is tax deductible and recognized by the IRS is any material used to perform an ordinary and necessary task within your business. For instance, a copy machine, computer, telephone, pens and paper and fax machine are supplies. Also, the packaging used to house anything produced by your business is considered a business supply.

Business Expense

Expenses are the costs that enable your business to operate. The IRS lists heating, insurance, utilities, rent, depreciation, labor, taxes, maintenance and supervision as overhead expenses for a business. Additionally, mileage, education and car expenses are deductible if used for your business operation.

Records

If you deduct business supplies and expenses on your taxes, the appropriate records must be kept. According to the IRS, the acceptable records are sales slips, invoices, bills paid, purchase receipts and cancelled bank checks.

References

• IRS: Business Expenses
• IRS: Deducting Business Supply Expenses
• IRS: How to Figure Cost of Goods Sold
• IRS: Starting a Business and Keeping Records pg 12