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Expenses / Deductible Business Expenses

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Definition:

An expense is cost of business necessary to produce revenue. An expense may also be defined as a recurring payment of a business to a vendor for a service or continued use of a product or service. Expenses may also be amounts paid for goods and services that are not capital expenditures.

For example, telephone services, utilities, and rent are common business services. Depreciation is a common non-cash expense, because a portion of the cost of the asset is allowed as an expense on the business tax return each year.

To expense something is to consider it as an expense or to write it off a tax return as an expense. For example, a portion of the cost of an asset is expensed each year.

Although most business expenses are considered to be deductible for tax purposes, some are not. For example, only 50% of the cost of business meals and entertainment expensesmay be deducted.

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