Someone gave me a great tip on business expenses when I asked him jokingly whether I could deduct my pet food. He said, “Sam, everything is a business expense so long as you can justify it.” Interesting!
I’m no accountant, but I have read hundreds of financial statements and understand the basics of maximizing revenue, minimizing costs, and thereby maximizing profits after tax. A company’s expenses are different, depending on industry. The Cost of Goods Sold (COGS) for an individual blogger might be $0, since the individual is writing all his or her own content. COGS is very straight forward.
It’s the operating expenses which gets a little gray. Operating expenses are essentially all expenses that are necessary for you to make profits happen. There are a whole set of rules of what you can and cannot deduct. What I’d like to do is have a open discussion using an example to understand more.
