Separate business and personal use
Ordinary and necessary business expenses may be deductible, subject to specific rules and limits. Mixed-use costs require an appropriate business allocation. A business card payment alone does not establish deductibility.
Document the purpose
Save receipts and record the business purpose while it is fresh. Maintain mileage and travel details; record meal participants and purpose where relevant. Equipment and longer-lived assets may need different treatment from routine operating expenses.
Reconcile consistently
Match records to bank and card activity each month. Label reimbursements and owner-paid costs so expenses are not omitted or counted twice. Keep purchase and disposition records for assets beyond the year you buy them.
A practical example
A phone used for both family calls and client work is not automatically a fully deductible business cost. Keep a reasonable record supporting business use and apply it consistently.
What to gather
- Receipts, invoices, and payment records
- Mileage logs and travel purpose
- Meal details and reimbursement reports
- Asset purchase dates, costs, and business-use records
Official references
General educational information, not individualized tax, legal, or investment advice. Federal rules are summarized; state rules and your circumstances may differ. Check the rules for your tax year before acting.