Legal Definitions - ordinary and necessary business expense

Definition: An expense that is normal or usual and helpful or appropriate for the operation of a particular trade or business and that is paid or incurred during the taxable year.

Examples:

• Office supplies
• Advertising costs
• Employee salaries and benefits
• Travel expenses for business trips

These examples illustrate how ordinary and necessary business expenses are expenses that are common and necessary for running a business. They are expenses that are directly related to the operation of the business and are incurred during the taxable year. These expenses are tax-deductible, which means that they can be subtracted from the business's taxable income, reducing the amount of taxes owed.