How to categorize training expenses?

What are training expenses?

Training expenses include any costs related to workshops, seminars, courses, certifications, or internal programs that help employees perform their jobs better. From an accounting perspective, these expenses are part of human resource development and are treated as indirect expenses supporing overall operation and productivity of the business.

How to categorize training expenses

• Record as Operating Expenses on your income statement.
• Use a “Training and Development” or “Employee Education” account in your chart of accounts.
• Classify as Indirect Costs, since training benefits the business as a whole.
• If training relates directly to a specific project (e.g., safety training for a construction job), allocate that portion as a direct cost under project expenses.
• Include associated travel, materials, and registration fees as part of the total training cost.

Examples of training expenses

• Employee workshops, seminars, or conferences.
• Professional development courses or certifications.
• Onboarding and orientation programs for new hires.
• Industry or safety compliance training.
• Online learning subscriptions (LinkedIn Learning, Coursera, Udemy).
• Travel and accommodation costs related to training.
• Guest instructors or external consultants conducting training sessions.

Tax implications for training expenses

• Training expenses are fully tax-deductible as ordinary and necessary business expenses if they maintain or improve job-related skills.
• Educational expenses that qualify employees for a new trade or business are not deductible.
• Employer-provided training that benefits employees is generally tax-free to employees if related to their current roles.
• Businesses can deduct associated travel, lodging, and materials costs when directly related to training.
• Maintain invoices, course descriptions, and attendance records to substantiate deductions.