Expense: Business and Personal

As a business owner, it’s common to have expenses that overlap between business and personal use. The tricky part is figuring out what portion is deductible. Done correctly, this can save you money at tax time. Done incorrectly, it can raise red flags with the tax office. Here are some detailed examples to guide you:

Home office costs

If you use a dedicated space in your home for work, you can deduct a percentage of household expenses such as rent or mortgage interest, utilities, internet, and insurance. The deduction is typically based on the square footage used for business compared to your total home.

Mobile phone and internet bills

Phones and internet are often mixed-use. You can deduct the percentage used for business calls, emails, or work-related activities. For example, if 70% of your phone usage is business-related, 70% of the bill is deductible.

Travel expenses

If a trip combines both business and personal activities, only the business portion counts. Airfare to attend a conference is deductible, but personal vacation days or family activities are not. Meals and accommodation are deductible only for the days you’re working.

Vehicle expenses

If you use your car for both personal and business purposes, you can only deduct the business portion. This is often tracked by mileage or a percentage of total use.

Equipment and software

If you buy equipment or software that you also use personally (like a laptop or design tool), you can claim the portion used for business. For example, if you use a laptop 80% for work and 20% for personal use, you can only claim 80% of the cost.

Utilities and subscriptions

If you share subscriptions such as streaming services, cloud storage, or design software between personal and business use, you can deduct only the business percentage. For example, if Canva is used strictly for your business, it’s fully deductible, but if it’s shared for personal projects, you’ll need to allocate accordingly.

You can deduct the business portion of mixed-use expenses, but you’ll need solid records like logs, receipts, or usage estimates to back up your claims.

Ready to get clarity on your expenses? Let me review your books, organize your accounts, and create a system that makes mixed-use deductions simple and stress-free.