Everyday operating costs
Rent, utilities, phone, internet, software subscriptions and office supplies are the easy ones. The proof is the monthly bill or the card statement line, plus an invoice if the vendor issues one. For anything shared with personal use, such as a phone plan, note the business share and how you chose it.
Recurring subscriptions are where books drift. Review the list twice a year and cancel what you no longer use, so the expense line reflects real activity.
Professional and outside services
Fees for accountants, attorneys, designers and consultants should be backed by an invoice or engagement letter that says what was done. A bare bank line saying Payment to J Smith is weak. If the person is an individual and the total is large enough, you may also owe a Form 1099, so collect a W-9.
Costs connected to forming the business or buying property may be treated differently from ongoing services. Label them clearly and let the preparer sort them.
Advertising, marketing and website costs
Ad platform invoices, printing, sponsorships and web design all fit here. Keep the platform billing history, which typically lists each charge. For a larger website build, keep the contract and invoices, because some development costs are treated in special ways. Ask the preparer.
Gifts to clients and meals are separate categories with their own limits and documentation. Do not bury them in advertising.
Insurance, licenses, bank and card fees
Business insurance premiums, license renewals and merchant fees are routine and well supported by statements. Payment processor fees are often netted out of deposits, which hides them. If your deposits come in net of fees, record gross sales and the fees separately so both lines are correct.
Interest on business loans belongs here too, but only the interest, not the principal portion of the payment.
Costs that need extra support
Vehicle, travel, meals, home office and large purchases of equipment each carry special recordkeeping expectations. Each has its own guide on this site. As a rule, the more personal the item could be, the more detail a record should have: who, what, when, where and the business reason.
A good test is to ask whether a stranger reading the record could tell what the expense was and why the business had it. If not, add a note.
Do not guess; ask
Rules on what is deductible and when change, so rely on your preparer for the tax treatment and on your bookkeeper for clean categories and supporting files. MCC Solutions can help organize the documents, and the final decisions stay with your tax professional.
Ask your preparer for the list of categories they want, then mirror it in your chart of accounts. Write a one-line rule next to each category, such as what belongs there and what proof to attach. A cheat sheet taped near your desk or saved in your accounting file helps whoever codes transactions, whether that is you, a partner or a bookkeeper.
Review the sheet each January, because your business changes and so do the rules. A new service line may need its own category, and an old category you never use can be merged.
Common questions
Do I need a receipt for every purchase?
Keep support for every expense. Smaller routine purchases can sometimes be supported by statements, but certain categories require more detail. Your preparer can say how it applies to you.
Can I deduct something I paid with a personal card?
Often the cost itself can qualify, but the books should show it as a business expense with an owner reimbursement or contribution, backed by the receipt.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.