You will learn

• ✅ 7 types of expenses recorded for household businesses
• ✅ Conditions for expenses to be tax deductible
• ✅ How to allocate shared expenses (housing + business)
• ✅ How to calculate depreciation of fixed assets and tools and equipment

1. What are deductible expenses?

Distinguish between "expenses" and "deductible expenses"

For example

• You buy goods from an acquaintance, pay cash, and don't receive a receipt → This is an expense, but it is NOT deductible .
• You purchased the goods from the company and received a full invoice → This is a deductible expense.

Conditions for expenses to be deductible

1. ✅ Directly related to business operations
2. ✅ Valid invoices and supporting documents (or statements if required)
3. ✅ Corresponding to revenue during the tax period

2. Seven types of expenses are recorded.

Overview

3. Details of each type of cost

1. Rental costs

Include:

• Shop and showroom rent
• Warehouse rental fees
• Office rent

Required documents:

• Lease agreement
• Invoice or receipt
• Payment documents (bank transfer if > 20 million)

Special case: Home-based business

If you run your business from your own home (not a rented one):

• The area used for business and the area used for living need to be separated.
• Electricity and water costs should be allocated proportionally to the area.

Example: A 100m² house, using 30m² as a shop → Business occupancy rate = 30%

2. Labor costs

Include:

• Salaries, wages
• Allowances and subsidies
• Bonus
• Insurance premiums (if any)

Required documents:

• Employment contract (or service contract)
• Time sheet
• Payroll
• Payment voucher

Important note

If you hire seasonal workers without a contract :

• A list of goods and services purchased without invoices (Form 01/TNDN) needs to be prepared.
• 10% personal income tax deduction if payment exceeds 2 million VND per transaction.

3. Electricity costs

How to handle it:

Example of electricity cost allocation

Situation: Home-based business, shared electricity.

Calculation method:

1. List the equipment used for the business (computers, lights, air conditioners, etc.).
2. Calculate power consumption × number of hours used/day × number of days/month
3. Multiply by the electricity price.
4. = Electricity costs for business

Recommendation: It is advisable to install a separate electricity meter for the business area if possible.

4. Water costs

Similarly, electricity costs:

• If there is a separate water meter → Calculate the total amount
• If shared → Allocate proportionally.

Note: Water costs are usually small; if the value is negligible, you may consider not including them in your declaration.

5. Telecommunications costs

Include:

• Internet
• Landline phone
• Mobile phones (business-grade)

How to handle it:

• It is advisable to sign a separate internet contract for the business location.
• Mobile phones: It's difficult to prove the portion used for business purposes, so declarations should be limited.

6. Administrative and selling expenses

Include:

• Stationery (pens, paper, ink, etc.)
• Tools and equipment (computers, printers, desks, chairs, etc.)
• Depreciation of fixed assets (cars, motorcycles, large machinery, etc.)

Distinguishing between tools and equipment and fixed assets.

How to calculate depreciation/amortization

Recipe:

 Example 1: Tools and equipment Chi phí mỗi tháng = Giá trị tài sản / Số tháng phân bổ

• I'm buying a computer for 18 million VND, and I plan to use it for 3 years (36 months).
• Monthly cost = 18 million / 36 = 500,000 VND/month

Example 2: Fixed assets

• Buying a car for 1 billion VND, depreciation over 8 years (96 months).
• Monthly cost = 1 billion / 96 = 10,416,667 VND/month

Note regarding the depreciation period of fixed assets.

The depreciation period must comply with the regulations of the Ministry of Finance:

7. Other expenses

Include:

• Shipping and delivery costs
• Advertising and marketing costs
• Packaging and packing costs
• Conference and hospitality expenses
• Asset liquidation costs
• Outsourcing costs (accounting, consulting, etc.)

Requirements: Invoices/receipts must be provided and related to business activities.

4. In cases where there is no invoice

When should the inventory be compiled?

In some cases, expenses can still be recorded even without an invoice if a detailed list is prepared:

• Buying goods from farmers or households without receiving invoices.
• Hiring seasonal workers
• Buy ingredients in small quantities from the market.

The following information is required:

• Date
• Seller's name and address
• Name of goods/services
• Quantity, unit price, total amount
• Seller's and buyer's signatures

5. Calculate the cost of putting the asset into use mid-month.

Example: Purchased a computer on October 12th

Information:

• Value: 18 million
• Allocation period: 36 months
• Start date of use: October 12th

How to calculate October expenses:

 Chi phí 1 tháng = 18,000,000 / 36 = 500,000 đồng Chi phí 1 ngày = 500,000 / 31 ngày (tháng 10) = 16,129 đồng Số ngày sử dụng tháng 10 = 31 - 12 + 1 = 20 ngày Chi phí tháng 10 = 16,129 × 20 = 322,580 đồng From November onwards: Chi phí 1 tháng = 18,000,000 / 36 = 500,000 đồng Chi phí 1 ngày = 500,000 / 31 ngày (tháng 10) = 16,129 đồng Số ngày sử dụng tháng 10 = 31 - 12 + 1 = 20 ngày Chi phí tháng 10 = 16,129 × 20 = 322,580 đồng

Cost = 500,000 VND/month

Tips

If the asset value is small and the cost is negligible, the cost can be calculated for the entire first month without needing to be calculated daily.

6. Summary of deductible expenses

7. Frequently Asked Questions

Are expenses without invoices deductible?

Principle: No receipt = No deduction.

Exception: In some cases, alternative lists are created (purchases from farmers, hiring seasonal workers, etc.).

Can purchases made with cash exceeding 20 million VND be deducted from the price?

No. According to regulations, expenses exceeding 20 million VND must be paid through a bank to be eligible for deduction.

Are personal living expenses deductible?

No. Only expenses directly related to business operations are deductible.

If a household business calculates taxes based on revenue, do they need to consider expenses?

Yes. Even though taxes are based on revenue (without deducting expenses), you still need to record expenses to:

• Serving internal management
• Serving tax inspection and audit purposes.
• Switch to income-based taxation if you wish.

Checklist: Managing expenses the right way

Every day

• Keep all purchase receipts.
• Request that the seller issue an invoice for every transaction.
• Bank transfer payment for transactions over 20 million VND.

Monthly

• Summary of costs by 7 categories
• Calculate amortization/depreciation costs.
• Compare with accounting records.

End of the year

• Review all costs.
• Ensure you have sufficient documentation.
• Prepare expense reports for tax filing purposes.

Common mistakes

1. Not keeping purchase receipts → Unable to prove the expense.

2. Paying cash for large transactions → Non-deductible expense.

3. Including personal expenses in business transactions → Violation of regulations, may result in penalties.

4. Not allocated when used jointly → Expenses disallowed during tax audits.

5. Incorrect depreciation period → For example, depreciating a car over 3 years instead of 6-10 years.

8. Conclusion

Deductible expenses are not all the money you've spent, but only those directly related to business operations, supported by valid documentation, and meeting legal requirements. Understanding the seven categories of deductible expenses, knowing how to allocate shared expenses, properly depreciate assets, and handle cases without invoices will help businesses avoid having expenses disallowed during tax audits and accurately reflect actual business performance. Whether taxing based on revenue or income, systematic expense tracking and management remains a crucial foundation for sustainable business and greater proactiveness during tax audits. GTG CRM supports sellers in tracking expenses by activity and order, making data aggregation and tax preparation clearer, more consistent, and easier to manage.