Expenses

Expenses are costs meeting the tests of ordinary and necessary given the nature of the business activity.  Expenses is a term customarily referring to overhead types of costs such as rent, utilities, office operations and so forth.   This business term has several variances with its meaning; the articles associated with this tag will enlighten the reader about these different definitions.

Hobbies – Business Perspective and Tax Compliance

Hobbies

Many people turn their hobbies into a business operation.  Not so much to make a living or make big profits, but more to help offset the costs of the hobby.  Whenever you go to one of those community fairs, the vendors at the respective booths are mostly folks selling a product that is direct outcome of their hobby.  The bands that play on stage, they make some money, but never enough to offset the cost of instruments, gear and transportation.  But they enjoy entertaining folks and they hope someday they’ll get discovered. 

This content is for Bronze, Silver, One-Time and Contractor's Diagnostic members only.
Log In Register

Chart of Accounts – Layout

Chart of Accounts

The goal of accounting is to record the economic activity of the business.  This is achieved by entering each economic transaction into a set of books.  The books are formatted to reflect the balance sheet and income statement items.  The chart of accounts is designed to present the information in the prescribed format. 

Internal Revenue Service (IRS) Definition of an Expense

The Internal Revenue Service defines a business expense as ‘ordinary’ and ‘necessary’.  Ordinary expenses are those costs typically incurred in your industry.  So a restaurant would not ordinarily purchase vaccines.  And a medical practice would not purchase 50 heads of lettuce.

This content is for Bronze, Silver, One-Time and Contractor's Diagnostic members only.
Log In Register
Follow by Email
Facebook
Google+
https://businessecon.org/tag/expenses">
Twitter
LinkedIn