Back to Tax Deductions
QUESTION DETAIL
Related User
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Can the salaries an employer pays to his/her employees for their labor be considered a business expense and is therefore tax deductible? If so, how much is deductible? Also, does this apply to a "business" that doesn't actually sell a product or service? For example, if you own a website and employ someone to write articles for that site and you generate revenue from the people viewing ads, would the money you pay your employee for their labor be tax deductible?
ANSWER
The BIDaWIZ Team's Answer:
That's correct. Employee salaries are deductible business expenses as per Internal Revenue Code Section 162(a)(1) and IRS Publication 15. The salaries must be considered reasonable based on the personal services performed. This is also the case for your business as there is advertising or affiliate income intended to be generated now or in the future.
