Common business expenses and its tax deductibility in Singapore

It’s difficult to run your company without making any operating business expenses. This includes expenses related to your day-to-day business operations that are not directly related to production.

Some examples are administrative fees, office supplies, and direct labor costs such as salaries and wages.

Whereas operating expenses are made to ensure that your business can keep running, the cost of goods sold (COGS) refers to the costs of producing your product.

Materials needed to produce your goods, as well as any product transportation costs, are considered COGS.

Opposite to operating expenses, your capital expenses are costs that are not directly related to daily operations. Instead, they are incurred when you’re trying to set up the stage for production and operation.

Buying assets such as company vehicles, for example, is a capital expenditure.

As the name suggests, variable expenses are varied whenever you make them. The amount of expense you’ll have to make can depend on several factors.

For example, commission-based sales compensation is a variable expense that depends on how many sales an individual made.

The opposite of variable expenses, fixed expenses are your recurring expenses that stay the same from month to month.

This would include rent costs and base employee salaries, minus variables like allowances or bonuses. Anything that you pay the same amount each month applies.

While they don’t necessarily have to be a fixed amount each time, recurring expenses happen over and over again over a period of time. This could be daily, weekly, monthly, quarterly, or yearly expenses. They may fluctuate in amount each time or stay the same.

Interest expenses are considered non-operating expenses. They are incurred when you have debt or borrowed funds that you have to pay back with interest.

If you utilize credit cards and don’t clear your repayment in one billing cycle, for example, you’ll be subject to interest charges.

When a business makes incidental expenses, that refers to expenses that the business hadn’t planned for. They’re typically one-off expenses and are usually additional costs on top of other expenses that you’ve accounted for. Examples include baggage handling fees and hotel staff tips during business trips.

Considering that it’s often difficult for businesses to operate without an office space, rent and lease expenses are deemed necessary and ordinary. This means that they are tax deductible in Singapore.

Utility costs are also considered deductible business expenses.

Costs related to employee pay are fully deductible. These expenses could come in the form of wages, salaries, or other employee benefits. You want to be sure that you are aware of what particular benefits are considered tax deductible.

Whatever supplies and consumables that are deemed necessary to run your business are deductible. This includes office stationery such as pens, stamps, papers, and many more.

Depending on the type of business, there can also be other supplies. For restaurants, it can be plates, pans, dish soap, and more.

Advertising and marketing expenses that are tax deductible in Singapore include both online and offline expenses.

This can be digital marketing ads, flyer printing, billboard costs, video production, offline marketing events, and many more. It just needs to be a common marketing expense in your business field.

This includes business expenses that are made for necessary business travel. Included in this category are general transportation or vehicle-related expenses, such as cab fares, plane tickets, parking, or gas.

You can also deduct miles driven with the IRS standard mileage deduction.

These are workshops, seminars, classes, or any other education-related expenses that are made with the purpose of providing training and professional development to your employees.

Expenses within this sphere are considered ordinary and necessary, meaning they are tax deductible.

If you have insurance premiums, they may be tax deductible. This is true if your premiums have your employees as beneficiaries as they are considered employee benefits, which are deductible.

Premiums of keyman insurance and work injury insurance also count.

It’ll be difficult to do business with broken equipment or office spaces. In this case, repairs are considered necessary for your business. This is why your repair and maintenance expenses fall into the tax-deductible category.

Bad debts, or money owed that are no longer recoverable, are tax deductible. However, it should be noted that bad debts that count towards tax deductibility must be trade debts. This can be money owed by a delinquent customer.

While donations aren’t ordinary and necessary, —as business expenses should be—you can still deduct them from your tax liabilities. However, not every donation is deductible.

They need to be made to an approved Institution of a Public Character (IPC) or to the Singapore Government for local communities.

You may find that your assets will depreciate in value over time. This could be true about buildings your business owns along with machinery and equipment.

Depreciation can also happen on patents and copyrights. You may claim capital allowances to offset depreciation.

It’s important to note that not all expenses are fully tax deductible. Some may only be partially tax-deductible or have specific conditions that must be met to be considered deductible.

When filing tax returns, it’s recommended that businesses seek professional advice from IRAS or tax consultants. This ensures that you are in compliance with tax regulations and helps you maximize your tax deductions.

It should go without saying that personal expenses are non-tax deductible. Often, they’re not even considered business expenses as they are not necessary for the company.

However, it’s worth noting that the line between business and personal expenses can be blurry, so it’s best to consult a professional.

At some point you may find yourself making entertainment expenses, whether that’s to entertain your customers or to increase employee satisfaction.

They may be indirectly necessary to maintaining your business relations, but because they’re not directly tied to operations, they’re considered non-deductible.

Capital expenses are made to launch your business during the early days of establishing it. Initial capital won’t come from your sales, but rather from other sources.

As they are made before your business is in operation, capital expenses are typically not considered tax deductible.

Donations that are made to non-charitable organizations are not considered deductible expenses. Some examples are contributions to political parties in the form of a campaign donation.

Only charity donations are deductible when it comes to your taxes.

If you have business capital that you still need to pay back, you may be subject to interest.

Unfortunately, as capital expenses are not considered tax-deductible, interest on capital is also non-tax deductible as it is not directly tied to production.

Considering that penalties and fines generally can be avoided, they don’t meet the criteria of being necessary for business operations.

They don’t qualify as tax-deductible expenses because of that. As a general rule, you also want to avoid having to spend money on these.

While bad trade debts can be considered deductible when filing your taxes, the same isn’t true for provisions for bad debts.

There may be specific instances where it can be deductible, but generally speaking, provision for bad debts cannot be calculated as tax deductible.

Considering the different business expenses examples, it’s clear that when you run a business, you’ll have a lot to think about. Without a budget, your expenses can get out of control really fast.

You want to have a budget for all kinds of expenses to give a clearer idea of how much you can spend.

It’s important that have expense policies in place to ensure that everyone in your organization is aware of what the guidelines are for business expenses. This will include what expenses are allowed and not allowed, how to report expenses, expense request workflows, who to go to for queries, and other necessary information.

Not all expenses are going to be of equal importance. You want to pinpoint which expenses are absolutely necessary and must be made immediately.

On the other hand, if you can delay or cut back on another expense, you’ll be able to manage your cash flow more effectively and control your expenses better.

Often traditional processes like manual data entry or reconciliation can get too tedious to the point where you’re either wasting too much time on them or your expense management gets sidelined.

To ensure neither of these things happens, you want to utilize automation technology. It’ll make managing business expenses faster and more efficient.

Check out our article to take your expense management to the next level. Streamline processes, save time, and gain financial insights with our expert recommendations on expense management automation.



Many companies rely on many different suppliers and subscriptions to run their businesses effectively.

However, due to the sheer amount of subscriptions and contracts you may have, they could end up costing you a lot of money. It’s good practice to regularly evaluate them to determine if there are any you could cut out or renegotiate.

You want people who know what they’re doing involved in your business expense management process. This could be people in your finance team who have years of experience under their belt or you could outsource a consultant.

Either way, you want to seek advice from professionals experienced in finance and expense management.

To determine how much cash you have available for expenses, you’ll need to be monitoring your cash inflows.

Similarly, you also want to track your cash outflows to see how your money is being used so you don’t overspend. Make sure that you’re keeping a close eye on both your cash inflows and outflows.

In large office spaces, you may end up with high utility bills that could put a dent in your cash flow.

If you have many employees who travel or are on the road a lot, you may also end up spending a lot of money on gas. You want to streamline these processes and implement energy optimization strategies.

While having a business expenses list is great for tracking purposes, you also want to actively control your expenses. An expense management solution will be able to provide you with in-built spend controls and automated approval processes.

For example, you can set up a multi-level approval workflow for supplier payment requests.

Considering how difficult and time-consuming managing your expenses without automation can be, looking into expense management software can help streamline your processes.

With features such as automated transaction records, approval workflows, and accounting integrations, you’ll be able to manage your spending more effectively and keep your business expenses under control.

Check out our article on the best expense management solutions to explore the top picks, features, and benefits of some of the best options available. Make informed decisions and streamline your financial processes. 

You’ll want to have a proper system to be able to track your business expenses. It’s important that everyone in your organization is on the same page on what system is to be used in order to track and manage your spending effectively.

One way to do this is by utilizing expense management software.

The best way to ensure that you have an accurate business expenses list is to collect all your receipts. However, doing this in the traditional way manually can get tedious and takes up a lot of space.

Instead, opt for a tool that can help you snap pictures and digitize your expense receipts in an organized manner.

It can get difficult to track your business expenses if you’re presented with just one long list, especially if you have a lot of transactions.

To remedy this, it’s recommended that you create expense categories. This way, employees will be able to select a category for each expense. Filtering through your expenses will be much easier.

Aside from receipt collection, most businesses will also require employees to formally record expense details following a template according to company policies.

Using an expense management solution with mobile accessibility will allow your employees to record and report expenses from anywhere. With the expenses still freshly made, you run into fewer risks of reporting errors.

Make sure that your bookkeeping doesn’t get neglected. You want to reconcile your bank and card statements with the supporting documentation of your transactions.

Doing this regularly will help you identify any suspicious transactions or fraud attempts. An automated expense management solution is the right tool to make the reconciliation much smoother.

With automation tools, getting accurate records of your expenses doesn’t have to be difficult. You want to make the most of this by regularly monitoring and reviewing your expenses through your expense management software.

Analyze what categories you’re spending the most on and if there are any expenses that you can cut.

You want to see how much you spend within a certain time period. It’s a good idea to calculate what your total expenses from different categories are within a month or a quarter.

It’ll give you a better idea of future expense forecasts as well as how much revenue you have to generate to cover those expenses.

By using expense management software to track your expenses, you’ll be able to generate financial statements hassle-free. Make sure that you’re making the most of all your expense data and processing them into different statements.

This could help give you a better perspective on your financial health and aid you in forecasting.

When your expenses are not managed appropriately, you’ll have a hard time controlling what employees are spending. Expenses that are not necessary will end up being made without a second thought.

In the end, that’ll be detrimental to your business' financial health. Having an expense management solution will help you get a better picture of what your financial health looks like in real-time, thus enabling you to implement spend controls that correspond to it.

You could generate as much revenue as possible for your business, but unless you can manage your expenses effectively to balance your income, it’ll be hard to achieve profitability.

With the direct correlation between expense management and profitability, managing your business expenses is necessary to push down your costs and keep them at a manageable level to ensure that you’re not burning through your revenue.

Make sure that everyone in the company knows what expenses are necessary.

To keep your business operations running smoothly from day to day, you’ll want sufficient cash inflow for the corresponding amount of outflow.

Having a business expenses list that you can refer to will give you a good idea of how many expenses you’ll have in the near future.

As a result, you’ll also be able to estimate how much money you need, making your cash flow forecast even more accurate.

Related read: How to increase cash flow in a business?

Any business will want to push down costs as much as they can without compromising on quality or daily operations. If you manage your business expenses well, you’ll have a better chance of reducing costs.

This is because you’ll be able to ensure that employees are only making approved expenses. You can also more easily view what your expenses are and use filters to search through them, enabling you to pinpoint any expenses that can be cut.

Businesses that manage their expenses well inspire trust in stakeholders. Internal stakeholders, for example, will feel assured that the business can run smoothly. Externally, it also gives off the image that your business is credible.

This will enhance the business’ reputation and ultimately satisfy your existing investors. Managing your business expenses well can also garner interest and trust from potential investors, attracting them to invest in your business.

Uncontrolled expenses are risky. For one, you could end up running into undetected fraud attempts.

Making expenses without any clear guidelines could also lead to problems such as overstocking your inventory, which will ramp up your storage and utility costs.

The more expenses you make, the less cash you’ll have reserved for emergency situations, too. Enforcing your policies by using expense management software can mitigate these risks to help you breathe easier.

There’s no need for mountains of paper files. Tracking your expenses is made easy by digitizing the whole process.

Automation tools can allow you to record transactions hassle-free, with additional information easily added from anywhere through the use of a mobile app. You can access your expense data at any time from your software.

The problem with manual data entry is that sometimes it leads to human-made errors, some of which can be fatal during tax and audit seasons.

Luckily, you won’t have to worry about that when you use expense management software. Automation tools will help you ensure that your records are accurate and comply with the regulations.

Navigate the complexities of expense management with our comprehensive article on ensuring expense report compliance. Uncover proven strategies and best practices to maintain accuracy, adhere to policies, and avoid costly pitfalls. Streamline your expense management practices, ensuring seamless compliance and mitigating risks effectively. 

An expense management solution can give you improved visibility over your expenses. With automatic expense records, you’ll get real-time updates on how your money is being spent.

You can even set up alerts and notifications so you know what expenses are being made, which is especially useful for larger transactions.

No matter how good your expense policy is, sometimes it can be hard to enforce them. With an automated expense management solution, however, monitoring your business expenses is a lot simpler.

You can set up your software to automatically flag and notify you of any suspicious or out-of-policy expenses.

Related read: How to design employee expense reimbursement policy?

There may be instances where your employees have to make out-of-pocket business expenses. If your business does a lot of reimbursements, you want this process to be as simple as possible.

There are many expense management software that will allow your employees to easily file claims and automatically notify approvers for review and settlement.

Interesting read: A detailed guide on expense reimbursement

Your expense management dashboard will allow you to search through your expenses and filter your searches as you see fit. You’ll also get a visualization of what your expenses look like.

This way, you can make use of your time analyzing the data you already have on hand, leading to better decision-making.