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For small business owners, understanding business vs. personal expenses is crucial. Business expenses are tax deductible, so they can lower your taxable income and reduce the amount of tax you owe. However, personal expenses generally aren't considered tax write-offs against business income.

Large cash expenditures should always come with an itemized receipt for tax purposes. Smaller cash purchases are not required to have as much documentation as the larger expenses.

Whether you take the standard deduction or not, you can still itemize your business expense deductions. The standard deduction only has to do with your W-2 income. Itemized deductions can be either personal or for your business.

If you choose not to itemize your deductions and take the standard deduction instead, you must fill in the correct amount in the tax and credits section of Form 1040. Either way, you are entitled to add the appropriate deduction to your tax return, even if you deduct business expenses on Schedule C.

You can take either the standard deduction or itemized deductions on your tax return. You can't do both. The question is which method saves you more money. Here's what it boils down to: If your standard deduction is less than your itemized deductions, you probably should itemize.

You must complete and file Schedule C with your tax return to itemize your business costs and calculate how much business income is left over after you deduct them. The resulting number from Schedule C is then entered on line 3 of Schedule 1 of Form 1040. This is your taxable income from your business.

An itemized deduction is an expense that can be subtracted from your adjusted gross income (AGI) to reduce your tax bill. Taxpayers can itemize deductions or claim the standard deduction that applies to their filing status.

You can deduct 100% of your business and travel expenses. These can include air travel, business lodging, meals, entertainment, parking fees, car rentals, and gas.