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Starting Your Business Business expenses are the costs of carrying on a trade or business.These expenses are usually deductible if the business is operated to make a profit. To be deductible, a business expense must be both ordinary andnecessary. An ordinary expense is one that is common and accepted in your trade orbusiness. A necessary expense is one that is helpful and appropriate for your tradeor business. Important Change for 1999 Standard mileage rate. The standard mile-age rate for thecost of operating your car, van, pickup, or panel truck in 1999 is 32 1 /2 cents a milefor all business miles driven before April 1. The rate is 31 cents a mile for businessmiles driven after March 31. See chapter 5 ofPublication 535 Business Expenses. Health insurance deduction for the self-employed. For 1999, this deduction in-creases to 60% of the amount you paidfor health insurance for yourself and your family. After 2001, the deduction will increaseagain. See chapter 10 of Publication 535Business Expenses. Business use of your home. You may be able to deduct expenses for your home office even if itis not where you perform your most important business activities or spend most of yourbusiness time. See chapter 1 ofPublication 535 Business Expenses. Important Changes for 2000 Standard mileage rate. The standard mile-age rate for the cost of operating your car, van,pickup, or panel truck in 2000 is 32.5 cents per mile for each business mile. Meal expense deduction subject to "hours of service"limits. For 2000, this deduction increases to 60% of the reimbursed mealsyour employees consume while they are subject to the Department of Transportation's"hours of service" limits. Seechapter 16 of Publication 535 Business Expenses. Taxable income limit for certain percentage depletion. For tax years beginning after 1999, percentage depletion on themarginal production of oil or natural gas is limited to taxable income from the propertyfigured without the depletion deduction. Seechapter 13 of Publication 535 Business Expenses. When Can an ExpenseBe Deducted?
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