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Starting Your Business/Keeping Tax RecordsWhat are Business ExpensesFeesLegal and professional fees. Legal and professional fees, such as fees charged by accountants, that are ordinary and necessary expenses directly related to operating your business are deductible as business expenses. However, you usually cannot deduct legal fees you pay to acquire business assets. Add them to the basis of the property. If the fees include payments for work of a personal nature (such as making a will), you take a business deduction only for the part of the fee related to your business. The personal portion of legal fees for producing or collecting taxable income, doing or keeping your job, or for tax advice may be deductible on Schedule A (Form 1040) if you itemize deductions. See Publication 529. Tax preparation fees. You can deduct as a trade or business expense the cost of preparing that part of your tax return relating to your business as a sole proprietor. The remaining cost is deductible on Schedule A (Form 1040) if you itemize your deductions. You can also take a business deduction for the amount you pay or incur in resolving asserted tax deficiencies for your business as a sole proprietor. Licenses and regulatory fees. Licenses and regulatory fees for your trade or business paid each year to state or local governments generally are deductible. Some licenses and fees may have to be amortized. See Chapter 9 (Amortization) for more information.
Important References: Publication
535
Business Expenses |