Vehicle expenses split into two methods: standard mileage (a single per-mile rate that covers gas, depreciation, and maintenance) or actual expense (every cost tracked separately). The choice in year one usually locks in the rest.
Vehicle expenses split into two methods: standard mileage (a single per-mile rate that covers gas, depreciation, and maintenance) or actual expense (every cost tracked separately). The choice in year one usually locks in the rest.
Travel covers airfare, hotels, rental cars, and ground transit while away from your tax home for business. Meals belong in Meals (50% deductible). Mileage belongs in Vehicle Expense. The commute is never deductible at all.
Training and education go to Training & Education Expense, but the deductibility test is sharper than most articles admit. Owner career-change tuition isn't deductible; CPE for licensed pros always is; conferences split across three accounts.
Shipping splits between COGS and Operating Expense based on whether it ties directly to revenue. E-commerce fulfillment is COGS; mailing checks is OpEx. Misclassifying distorts gross margin, sometimes by 10+ points.
Office Supplies are consumables used up in months: paper, pens, coffee, toner. Office Expenses are recurring operational costs like internet, small repairs, and sub-threshold equipment. The consumption test settles it in five seconds.
Employee benefits go to Employee Benefits Expense, but the employer portion and employee portion hit different accounts. The employer match is expense; the employee deferral is a liability. S-corp owner-employees follow special rules.
Bank fees and interest split into three accounts, not one: Bank Service Charges, Interest Expense, and Merchant Processing Fees. The biggest error is booking net Stripe deposits, which understates revenue every month.
SaaS goes in Software Subscriptions. Memberships and trade publications go in Dues & Subscriptions. Small one-off tools under $50/year go in Office Expenses. Three accounts, one decision tree, no more guessing where Slack goes.
Rent and utilities sit in two separate Operating Expense accounts. Home office allocation usually doesn't get its own COA line, security deposits hit Other Assets (not expense), and CAM charges roll into Rent, not Utilities.
Meals belong in a 50% deductible expense account. Entertainment belongs in a separate 0% deductible account. For TY2026, OBBBA eliminated employer-convenience meal deductions, so team meal categorization changed too.
Marketing and advertising costs go to Marketing & Advertising Expense, combined or split depending on volume.
Contractor payments go to Outside Services or Contract Labor, an Operating Expense account separate from W-2 payroll. The 2026 OBBBA rules raised the 1099-NEC threshold to $2,000, and credit-card payments don't count.