One of the more significant expenses for the small business owners is income taxes. Since most small businesses are tax pass through entities, it is beneficial to the business to have the least amount of net income in order to reduce the tax obligations of the owner(s). This is achieved by making sure every dollar expensed is deductible for tax purposes.
Nondeductible expenses refer to those customary business expenses that are not deductible for tax purposes. These include meals at 50%, life insurance premiums paid on behalf of an owner, charitable contributions (pass-through entities), and other types of personal related expenses.