Business income refers to money you have earned in your business. Business expenses refers to money you have spent on your business. The IRS also defines business expenses as “the cost of carrying on a trade or business.” The IRS also indicates that business expenses must be “ordinary and necessary.” The IRS points out that “an ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.” For more information see IRS Publication 334 – IRS Tax Guide For Small Business.
For a free article "10 Things You Must Know About Taxes, Bookkeeping, and Business Licenses" and for free Excel worksheets just for Etsy shop owners and creative entrepreneurs visit my website.
Stop worrying. Save hours of research online. Check out these Tax, Business, Accounting and Bookkeeping PDF e-book guides written by a CPA and creative entrepreneur just like you. Available for instant download.