Chapter 8 Business Expenses You can deduct the costs of running your business. These costs areknown as business expenses. These are costs you do not have tocapitalize or include in the cost of goods sold. To be deductible, a business expense must be both ordinary andnecessary. An ordinary expense is one that is common andaccepted in your field of business. A necessary expense isone that is helpful and appropriate for your business. An expense doesnot have to be indispensable to be considered necessary. TaxTip: If you have an expense that is partly for business and partlypersonal, separate the personal part from the business part. Bad Debts Car and Truck Expenses Depreciation Employees' Pay Insurance Interest Legal and Professional Fees Pension Plans Rent Expense Taxes Travel, Meals, and Entertainment Business Use of Your Home Other Expenses You Can Deduct Expenses You Cannot Deduct