Businessmen can generally deduct expenses that are wholly and exclusively incurred for the purpose of the business when computing profit, such as rent, salaries, wages, interest on business loans, repairs, utilities, office expenses, legal/professional fees, advertising, and depreciation on business assets. Expenses that are personal, capital in nature, or not properly connected to the business are usually not allowed.

Common allowed deductions

  • Rent for business premises.
  • Salaries and wages paid to employees.
  • Raw materials and direct production costs.
  • Repairs and maintenance.
  • Utilities such as electricity, water, and telephone.
  • Interest on business loans.
  • Legal and professional fees.
  • Advertising and sales promotion.
  • Depreciation on eligible business assets.

What is usually not allowed

  • Personal expenses.
  • Capital expenditures, except through depreciation where permitted.
  • Expenses not incurred for business purposes.

Practical rule

A simple test is whether the expense was necessary for earning business income and supported by proper records like invoices, receipts, and accounts. If it was only for personal use or creates a long-term asset, it is usually not deductible as a normal business expense.

If you want, I can also turn this into a short exam-style answer or a table of allowed vs disallowed deductions.