Capitalize amount spent at the productions stage and depreciate it over a period of time.
Personal vs. Business
Personal expenses are not deductible.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.
- Car & Truck Expense – Actual vs Mileage rate
- Salaries & Wages – No need for W2 for schedule C or partnership – income subject to self-employment.
- Contract Labor – Employee Vs. Contract Labor – Form 1099-Misc instead of W2 for contract labor
- Rent on business property
- Depreciation – Non cash – one of the reason for real estate investment
- Utilities – Electricity, Water, Trash, Gas
- Taxes – Payroll taxes (940, 941, TWC), Property taxes
- Business licenses and permits
- Meals & Entertainment – typically 50%
- Business use of your home – These expenses may include mortgage interest, insurance, utilities, repairs and depreciation.
- Business start-up costs – State filing fee, Attorney costs
- Cost of goods sold – Inventory
- Telephone charges – % of business use or identify individually
- You child’s salary – There is no social security tax when you hire your child who is 17 or younger and you can deduct the salary as a business expense.
- Social security and schedule C – Form 1120S conversion
- Retirement plan contributions. – SEP, IRA
- Equipment – Computer, Printer, tools etc.
- Furniture – Desk, Chair
- Legal & Professional fees
Expenses you can’t deduct
Federal income tax payments
Penalties & Fines you pay when you break the law