Is indirect service a business expense?
I'm starting a membership business where members pay to support specific activities. For example, members might vote to have me go buy ice cream for 100 random people. None of the members get the ice cream, they aren't paying for the ice cream, they are paying for me to go buy the ice cream and give it to other people. So if 100 members pay $5 per month, then I have $500, and let's say I spend $400 on buying and distributing the ice cream, so I have $100 left. Would the $400 be a deductible business expense? So then my profit would be $100 and I would be taxed just on the $100 and not all $500? Note: This isn't what my business actually does, but the model is the same. Because my members pay for my business to do different activities, I want to make sure the cost of the activities (which is the core service my business provides) are deductible business expenses. If I am paid $500 and taxed on $500, but it costs me $400 to produce the activities, then I will lose money.
