So, my suster and brother-in-law are owner-operators of a large truck, and they haul lumber from the north country to the south.
Last time I was up to see them, they had a new personal truck, and said they ‘wrote some of its expenses off’ as a company vehicle. The implication was that they reduced what they paid for it somehow, and made the vehicle more affordable.
Then there were the friends I went out to dinner with, and they paid for it, and said it was a ‘business espense’ because we talked about film editing for a couple of minutes.
So what does ‘writing something off’ actually mean?
I understand that if you ise a business vehicle for personal use, you have to pay back to the business for that, and vice versa for using a personal vehicle for business use. Likewise you can get reimbursed from the business for dedicating part of your house to business use.
But if I take a hypothetical client to dinner, how does the money paid for the dinner affect my hypothetical business? Does the expense reduce my net profit and hence taxes?