What Everyone Must Know About Coffee As A Business Expense

You won’t get a speeding ticket unless you get caught… the same is true with bending the rules with business expenses.

However, unlike a speeding ticket if you decide to bend the rules with your small business expenses and get caught it will put a red flag on your account. And this red flag will mean more audits and questions regarding your future tax returns.

Not to mention the fines and penalties.  Facing an audit of having to prove income and expenses from years ago. To say it’s a hassle is an understatement. It’s simply not worth it.

Tricky Business Expense

Coffee is a tricky business expense. There is a lot of misinformation on it. People mean well, but they are giving bad advice.

Can Coffee Ever Be Used As a Business Expense?

Yes, there are many instances when coffee can be used as a business expense.

Coffee CAN be deducted IF you:

• Meet with a client
• Meet with a team member or entire team
• Meet with another business owner to talk strategy
• Bring coffee to your team or a client
• Are meeting with a potential client
• In your home office ONLY IF you are meeting with clients OR have a team that works at your home office 

There are many scenarios when coffee can be used as a business expense. The main theme surrounding whether or not it is an expense comes down to the question of were you alone or were you with someone for your business?  If you were with someone and discussing business then the coffee is a business expense.

When Can I Not Use It As An Expense?

Coffee CANNOT be deducted IF:

•  It is purchased on personal time when you are not working
•  In the home office coffee if you are the only one working in the home office
•  You are working at a coffee shop by yourself

That last one is where there happens to be so much wrong information. I can’t even count the amount of times I’ve seen a small business owner be told by another small business owner, “I work at the coffee shop all the time. It’s great! A nice quiet place and then my food and coffee are a business expense.” 

This is when many small business owners get the wrong information. I’ve heard plenty of people talk about it being a temporary office space rental. Or because they are working it counts as a business expense because they are not at home. It’s simply not true. When you are working at a coffee shop by yourself that is NOT a business expense.

The IRS simply views that as a choice you are making personally on where you want to work that day. Kind of like choosing the clothes you are wearing or the transportation method you choose. It’s more personal than business. Therefore, it’s not considered a business expense when you are by yourself.

What Now?

So while there are many instances when coffee can be used as a business expense, there are also instances where it does not meet the qualifications of a business expense. 

The most common one I see small business owners make, because there is simply bad information floating around, is when they are working at a coffee shop alone.

If you are by yourself. It’s not a business expense.

Does that mean you should not go? Absolutely not. 

Treat yourself. Get re-energized in a different location. Enjoy the quiet and get working on your checklist for the day. Do it! Just don’t use it as a business expense.

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