Starting Your Business/Keeping Records
What are Business Expenses
Fees

Legal and professional fees. Legal and professional fees,such as fees charged by accountants, that are ordinary and necessary expenses directlyrelated to operating your business are deductible as business expenses. However, youusually cannot deduct legal fees you pay to acquire business assets. Add them to the basisof the property.

If the fees include payments for work of a personal nature (such asmaking a will), you take a business deduction only for the part of the fee related to yourbusiness. The personal portion of legal fees for producing or collecting taxable income,doing or keeping your job, or for tax advice may be deductible on Schedule A (Form 1040)if you itemize deductions. See Publication529.

Tax preparation fees. You can deduct as a trade or businessexpense the cost of preparing that part of your tax return relating to your that part ofyour tax return relating to your business as a sole proprietor. The remaining cost isdeductible on Schedule A (Form 1040) if you itemize your deductions.

You can also take a business deduction for the amount you pay orincur in resolving asserted tax deficiencies for your business as a sole proprietor.

Licenses and regulatory fees. Licenses and regulatory feesfor your trade or business paid each year to state or local governments generally aredeductible. Some licenses and fees may have to be amortized. See Chapter 12 (Amortization) for moreinformation.

Important References:

Publication 535                  BusinessExpenses
Form 1040 Schedule C    Profit or Loss From Business