OP, you asked a hot button question.
Anything in the code that is subject to interpretation as to specific circumstances is ripe for abuse, and deductions for ordinary and necessary business expenses under Code Sec 162 is one of those areas. The comments (note I'm not calling it "advice") are accurate in that you have to discuss your individual situation and activities with someone experienced in this area, because there will be areas that are subject to interpretation.
A couple of general thoughts just to add to the discussion -
Regardless of your business form (proprietor, SMLLC, s-corp, etc.), there are several things you should consider that may just seem obvious but are also overlooked by many a starting proprietor:
1. Open and maintain a separate bank account for the business (more about why later).
2. Compartment all of your business activities (revenues from jobs, purchases of products and supplies, and purchases of equipment) in that company account. (stay with me)
3. If a simple proprietor/single member LLC, you can make owner contributions of cash to the company as needed, and you can make "draws" back from the company as available. There is no tax impact to this. What you want to avoid is commingling everything.
4. Therefore, have a debit or credit card for the business. Don't buy non-business stuff with it. Deposit all business revenues into the business bank account FIRST, then take it as a draw if you have more cash in there than needed and ya want to go to the carnival or something.
Here is why I suggest the above. The highest "look at me" flag you can wave to the government is that of a cash-basis Schedule C proprietor. Period. Whether you are profitable, or not. (I'll 'splain why in a sec).
By far the most likely scenario, IF someone is going to get examined (audited to you guys), is via what is known as a correspondence audit. The boys in black sunglasses don't show up at your door. They just send you an innocuous sounding letter that basically says: "We'd like some more information......." And what they will want can range from evidence of your business receipts, purchases, whatever. The detailer who has all of that activity judiciously compartmentalized can respond to those letters efficiently and effectively. The ones who are as honest and upstanding as any American, who kept good records every day, but otherwise lumped everything together with the rest of his life has a tougher climb. I know, that probably sounds obvious, but trust me, it's easy to "slide."
What's the deal about depositing business revenues first, THEN dipping into the cash? Because there are 2 different scenarios that are subject to abuse:
1. The obvious one - deducting whatever you decide to rationalize, ending up with a tax basis loss on Schedule C, and therefore offsetting other income on the return with your loss. Be prepared to receive a correspondence audit, supporting your position. It's no big deal, and the proprietor doesn't need someone like me to answer it (but I damn sure suggest you get at least local pro consultation and advice before launching your answer). Your risk? A loss history is subject to re-characterization by IRS as a "hobby." There ARE in fact a number of other factors that play into that, including the manner in which your business has been conducted, etc. 7 factors actually, which I will not go into here. But 1~4, above, are things that do not lend themselves to retroactively changing 2 years later. Enough on that.
2. The other thing that is subject to abuse is the Earned Income Credit. The credit is a refundable credit based on a handful of factors, but primarily income and dependents. It doesn't take too much "what if" with a computer to see that boosting receipts another $5K (just throwing something out here as example) can sometimes result in more income, but more earned income credit, and a net reduction in tax/increased refund. Bet yer ass that is considered when you get a correspondence examination.
I could write a damn book on how you capitalize your business, method of contributing property, capitalization regs, etc. So, if you are doing this as a business with a profit motive, you NEED to hook up with a local practitioner to get started on the right foot. Do that, and then you (hopefully) only need to see the guy once a year just to go over stuff and knock out a return, or when you have significant purchases (capital assets) or want to expand, etc.
Finally, I'm not going to get into the vehicle regs in a forum post. It would literally take me half the day to summarize the differences between personal vehicle partly used for business purposes, a company owned vehicle used exclusively for business, a company owned vehicle that the owner/shareholder uses sometimes for non-business purposes, etc. That's what yer local pro is for; what's good for detailer A may not be appropriate for detailer B.
In a nutshell - if you are new at managing the business affairs in a "don't bite me in the ass later with #### I don't understand" situation - consider the cost to spend an hour with a cpa well worth it, and you can post a "whoo hoo" to the forum if you some day get a correspondence audit (which MUST be dealt with and will NEVER go away), but you have your stuff all "slam-dunk."
Civdiv99
