WHEN AN EXPENSE IS BOTH BUSINESS AND PERSONAL - WHAT YOU CAN DEDUCT

As a business owner, it’s completely normal to have expenses that serve both personal and business purposes. The challenge comes when figuring out what portion is actually deductible. Handled correctly, these deductions can reduce your taxable income and save you money. Handled incorrectly, they can raise red flags during tax season. Here’s how to navigate the most common mixed-use expenses with confidence:

🏠 Home Office Costs: If you have a dedicated workspace in your home used exclusively for business, you can deduct a percentage of household expenses like rent or mortgage interest, utilities, internet, and insurance. The deduction is usually based on the square footage of your office compared to your entire home.

📱 Mobile Phone & Internet Bills: Phones and internet are often used for both personal and business reasons. You can deduct the percentage that directly supports business activity — such as calls, emails, or research. Example: If 70% of your usage is business-related, then 70% of the bill is deductible. Keep detailed records or usage summaries in case of an audit.

✈️ Travel Expenses: When travel includes both business and personal activities, only the business-related portion qualifies for a deduction.

Example: airfare to attend a conference is deductible, but personal vacation days or sightseeing are not. Meals and lodging are deductible only for the days spent working.

🚗 Vehicle Expenses: If your car is used for both personal and work purposes, you can only claim the business portion. The easiest way to track this is by keeping a mileage log or calculating the percentage of business vs. total miles driven.

💻 Equipment & Software: Purchases like laptops, tablets, or software can often serve dual purposes. You can deduct the percentage of use tied to your business. Example: If you use a laptop 80% for work and 20% for personal use, only 80% of the cost is deductible. Keep receipts and document how you calculated your usage percentage.

🔌 Utilities & Subscriptions: Shared subscriptions — like streaming services, design tools, or cloud storage — should be allocated based on usage. If Canva, for instance, is used solely for your business, it’s fully deductible. But if you also use it for personal projects, only the business percentage applies.

📂 Keep Good Records: Mixed-use expenses can be valuable tax deductions, but only if they’re backed by proper documentation. Keep receipts, logs, and notes on how you determined business usage. Clear records protect you and make tax time a breeze.

Do you need help sorting it all out? Let’s take the guesswork out of your finances. We’ll review your books, organize your accounts, and help you build a simple, reliable system for tracking and maximizing your business deductions — stress-free.