You can write off a number of business expenses but you can’t write them all off.
You have to be aware of the tax law and what it entails in order to understand what you can’t get away with. There are a few types of expenses that each company incurs from time to time that are not eligible for claims. The reason why you should be extra careful when it comes to these deductions is that if you try to claim them. Whether you did that by mistake or willingly will not be considered.
If the government obliged you to pay a fine or a penalty for some reason, you cannot claim it. You will have to pay the fine off as quickly as possible to avoid the red eye. After that you should make sure you do not include that amount of money in your tax claims. Remember that even the smallest things can make a big difference. Speeding tickets, parking tickets, etc. also come under this category.
However, it the penalty comes from a private contract, you can file for claim on that amount.
Meeting clients over coffee, having dinner with potential investors, and celebrating a grand occasion with your employees are expenses that will come out of your business account but you can’t fully claim these. According to the tax law, you are only eligible to claim 50% of the entertainment costs. Having said that, you should know that company picnics and costs of hospitality are completely deductible.
This seems obvious but many people tend to overlook it. If you don’t pay your taxes on time, you will have to pay the tax along with interest. There is no tax deduction on the interest you pay.
Incorporated businesses willing to pay dividends to investors must be aware of the fact that dividends cannot be deducted.
These are the major business expenses that you cannot claim. There may be more or less depending on the state you reside in. This is why it is important to check the tax law and abide by it. The tax law is not very harsh in most cases, enabling you to claim a number of expenses. However, there are a few such as those aforementioned that need your attention since you cannot claim these.
While filing taxes you should be very careful because there are a few expenses that you cannot claim. These include dividends, fines from the government, tax deficiencies, and entertainment costs among others. Understand the tax law beforehand to avoid hassle.