Last time I was telling you a little about good debt and how to use it to make money. I wanted to post the other part yesterday but I couldn’t.
But not to worry, seeing that today is a brand new day with brand new opportunities I will expound a little on what I mean on good and bad expenses. Watch this……..
GOOD EXPENSES
Just like the good debts, good expenses help you increase your wealth (I think that we can safely assume that in the financial world anything good makes you richer). So tax deductible expenses are an entrepreneur’s favourite
To differentiate whether an expense is good or bad I have looked for a few examples. A few good expenses include:
-legal or tax or financial advice is good expense because, even if expensive in the long run it will save you a whole lot in over taxation, unnecessary lawsuits, money mismanagement etc
-Tax deductions- this is where most people should benefit but because of not looking into this they end up paying more taxes.
Remember that the taxman will always take more of you let him- arm yourself with information
Tax deductible expenses can be divided into business expenses and personal expense
Some good business expenses include:
-business startup expenses like transportation, securing premises travel, meals (the three martini lunch)- but dont call it this non your tax return
-the cost of increasing educational expenses like books, seminars, business software like for accounting graphical etc depending on the type of business you are in
-depreciation of business assets like land, machinery etc. I know that in university they include these as bad expenses but it is possible to use them to deduct your tax paid. Depreciation is a good expense as it is a paper loss and it doesn’t necessarily have to cause you to spend money on it. Just use it to decrease your taxable income.
-Some capital losses i.e. let’s say that one of your business assets are stocks that the business bought with the profits and then in the course of the year the stock losses value. This is a capital loss. If in the sale of this stock the cash got is lower than the capital gains this can be filed as a deductible expense.
Some good personal expenses include:
-hobby expenses eg if you like board games them the cost of increasing this collection can be filed as a tax deductible expense
Here are more examples of deductible expenses like renters deductions, lottery winnings deductions etc
If you look at an income statement, first the gross profit is calculated and then expenses are deducted to get the net profit. For most people and businesses this is where the problem comes in; the expenses being more than the gross profit- evidently causing a loss(these are bad expenses).
They include:
-rent paid out to landlords
-salaries
-bad debts
-electricity bills
-water bills and all the other operating expenses of a business
These should be reduced to a bare minimum because they have the potential to kill your business- and this I say from painful experience
The final post will be on good losses
Still you should consult a tax advisor to give you a more comprehensive list on deductible expenses and how to use them. This post if far from exhaustive
What are your additions and reactions on this post? The comments and criticisms are needed 
