Utilities are an absolute necessity for any functioning business. A modern business that does not have electricity is simply not in business.

This is even more true in the case of any business that interacts directly with the public, as they must maintain running water, functioning restrooms, waste disposal, and any number of other essentials for the comfort and safety of their clientele.

Because of the primary importance of utilities to any business, certain utility expenses can be classified quite rightfully as business expenses.

The government understands quite well that gas bill gas bills, telephone bills, and internet bills are part of the price of participation in commerce. When the time comes to pay taxes, it is only right and fair that these essential expenditures be classified and taxed as business expenses.

Any service utility that provides a necessary service for a recurring cost can be seen as a business utilities expense.

This includes natural gas, electricity, water, waste disposal, sewage, high-speed internet, telephone services, and other similar expenses. This expenditure is calculated by observing the amount spent on it during a specific accounting period and entering it as an operating expense in the ordinary income statement for the business.

There will usually be specific sections in which to enter service utility expenses on the relevant forms. Larger businesses may wish to separate the different utilities into different accounts for tracking, accounting, and taxation.

Small businesses may find it easier to combine several small utility payments onto one accounting ledger. There is no particular need for the greater precision bestowed by separate ledgers when one is only dealing with a few accounts at a few locations.

Paul Petersen