When are expenses deductible?

In general, here is how it works. There is revenue, and there are (deductible) expenses. The difference is your profit. You will pay corporate income tax on this profit.
If your revenue is 100$ and you have 80$ of deductible expenses, your profit is 20$. With a (hypothetical) corporate income tax rate of 30%, you would pay 6$ in taxes. (*)
Deductible expenses are those expenses that specifically relate to your business.
An example: If you operate a barbershop, the shampoo you use on your clients will be a deductible cost. However, if you run a construction company, the same bottle of shampoo will not be deductible.
If a company would be allowed to bring in business-unrelated expenses, no company would ever pay corporate income tax. Let's revert to the example above. If you would "push" the 80$ worth of expenses up to 100$, the remaining profit would be zero. Corporate income tax would also be zero.
What I advise is keeping track of expenses and documenting them well and playing the game according to the rules. If you purchase something that could lead to a discussion, write a short explanation on the invoice. That way, you and your accountant will remember what this expense is about. (Keep in mind that if you would get a government tax audit, this may be months or even years later).
A small example. You buy motor oil for your barbershop. At first, this looks like an expense that is not related to a barbershop and thus not deductible. But it is, so you might want to make a hand note on the invoice that this oil is to grease your barber rotating chairs. That way, the taxman (IRS) does not think this is oil for your motorcycle and, thus, a non-deductible business expense.
In most cases, there is a clear logic in tax legislation. If your actions feel off, they usually are.

(*) Note: keep in mind that every country has its specific accountancy legislation, so this article is to be considered as general information. In another post (Do startups need an accountant?), I advocated that every starter works with an accountant.

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Top 10 about the author; Erik Victor
1. is a serial entrepreneur and started his career in Engineering
2. currently a majority shareholder in corporations in the fields of Industrial Real Estate, Wealth Management & Investment funds, and International Tax Planning
3. has a passion for the dynamics of young businesses and actively endorses several start-ups
4. is an engaged member of several think-tanks and an international conference speaker
5. has a business footprint in six countries
6. speaks five languages
7. personal life - resides in Europe
8. Erik (48) is known as a discrete and private person, a family man
9. loves to spend his limited holidays in the mountains or at sea on his yacht
10. Erik has no social media accounts