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Can I charge X to the business?

If you’re wondering whether you can expense rent, food, groceries, travel, etc., to your startup, you’re not alone. Every founder asks this question when they just start out.

This guide will help you think about business expenses practically and ethically, so you can make decisions you’re confident in without getting lost in technicalities.

If you’re asking this question, you likely need to take a step back and change your perspective.

There are no black and white legal rules. Instead, be ethical and practical.

The IRS says you can only expense costs that are “ordinary and necessary” to run your business. On paper, that sounds straightforward. In reality, strict compliance doesn’t fit how early-stage startups operate. If you tried to follow every rule perfectly, you’d end up spending more time doing accounting than building your company.

What matters more is whether you’re making reasonable efforts to do the right thing. The IRS focuses on serious abuse, not honest mistakes made by founders trying to survive and grow.

Materiality and practicality
The IRS cares about whether an expense is significant and whether it makes sense for a real business. Small technical issues usually don’t matter if you’re operating in good faith.

For example, if you accidentally charged a $50 haircut payment to the business, this is not a major problem. But if you accidentally paid $50,000 for your car using company funds and did not make reasonable efforts to correct this, and it somehow lowers taxes you owe, this is a problem.

Traffic law analogy
At every intersection, you’re technically supposed to wait for the green light to cross the street, but in reality, people often jaywalk if it’s safe. Every time you park, you’re supposed to pay for parking down to the minute, but in reality, people often park illegally. The legal penalty for these situations are often small fines.

On the other hand, if you’re speeding at 200m/h on the highway, this is ethically dangerous and completely illegal. You will get a huge fine, potentially go to jail, and should not be in a car anymore.

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Ethical decisions come first

Following the law is important, but it’ll be too much to follow, especially in the early days. Founders need to lean heavily on ethics and judgment to make the right calls.

Traffic law analogy
Even when you technically break a traffic rule, like jaywalking on an empty street, you still make a responsible decision by checking if it’s safe.

Expenses should follow the same spirit: act responsibly and make decisions that help you build a lasting, successful outcome.

The ethical test
Okay, so make expense decisions based on ethics in the early days — but what does this mean? These are good questions to help make this decision:

Are you harming anyone? Are you stealing? Does it help you make your company more successful?

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Make good ethical choices

There’s a real difference between spending company money to build the company and spending it to make your personal life better. Good founders can feel that line instinctively, and they respect it.

Ethical behavior:

  • Paying yourself no salary but expensing rent, food, and basic travel.
  • Expensing things that directly help you build the company, like getting customers or hiring team members.

Unethical behavior:

  • Paying yourself an overly high salary and running personal expenses through the company.
  • Expensing things mainly to lower taxes while keeping salaries unusually low.

Making good ethical choices isn’t about memorizing rules. It’s about treating your company like something bigger than yourself.

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What most startups actually expense

For founders at startups before Series A, they typically expense:

  • Apartment rent when the home doubles as the office.
  • Food and groceries when working.
  • Travel to meet customers, investors, or remote teammates.
  • Legal and accounting fees to set up and operate the business.
With these expenses and little or no salary, founders should NOT be accumulating savings.

Most early-stage expenses are about enabling focus, speed, and survival — not about maximizing personal comfort.

Your job early on is simple: survive, and do it ethically. You won’t have time to follow every technical rule perfectly, but that’s not a license to be reckless. What matters is acting responsibly, making good-faith efforts, and building something you can be proud of.

As your company grows, so will the spotlight. Investors, customers, regulators — they’ll all expect more from you. Over time, the expectation shifts from “reasonable efforts” to “full legal compliance,” and that’s exactly how it should be.

Early vs late stage thinking
When you’re small, it’s about moving fast, making honest decisions, and protecting the company’s future. As you grow, it’s about combining strong ethics with strong legal compliance, because now, everyone is watching.

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Disclaimer

This guide is not legal or tax advice. It’s written by Andy Wang, sharing practical lessons from real startup experiences.

You should never intentionally break the law. Absolutely avoid anything related to fraud, money laundering, or other illegal activities.

Always use your best judgment, and consult a qualified professional when in doubt.