Is the finance charge on a credit card exclusive to the consulting business a deductible expense?

The finance charge on a credit card used exclusively for a consulting business is considered a deductible expense because it is necessary for the operations of the business. When determining what constitutes a deductible business expense, it is important to focus on whether the expense is both ordinary and necessary for the business to operate.

In the case of finance charges, they serve as a cost of obtaining financing for business expenses, which can include costs for supplies, services, and other operational needs. Since the charge is incurred as a result of using credit to run the business, it directly contributes to the overall functioning of the business, therefore qualifying as a necessary expense.

Other choices suggest that the finance charge could be personal or not allowable as a business expense, but since the charge is exclusively related to business activities, it does not fall under personal expenses. The claim that business expenses cannot include interest charges is inaccurate, as interest on business loans or credit utilized for business purposes is typically deductible. Lastly, while proper documentation is always beneficial for substantiating any deductions, the essential factor in this case is that the finance charge is indeed a necessary part of running the consulting business and meets the criteria for being a deductible expense.