Disclaimer: This guide provides general information. Tax laws change and situations vary. Consult a qualified CPA or tax professional for advice specific to your situation.
The average small business owner misses $5,000-$10,000 in deductions annually. This guide covers every major write-off so you keep more of what you earn.
Tax Deduction Basics
A tax deduction reduces your taxable income. If you're in the 22% tax bracket and deduct $1,000, you save $220 in taxes.
To be deductible, an expense must be:
- Ordinary — Common and accepted in your industry
- Necessary — Helpful and appropriate for your business
- Documented — You have receipts or records
Personal expenses are never deductible. Mixed-use items (phone, car, home office) are partially deductible based on business use percentage.
Home Office Deduction
If you work from home, this is one of your biggest deductions.
Requirements:
- Space used regularly and exclusively for business
- Your principal place of business (or where you meet clients)
- Can be a room or defined area (not your kitchen table)
Simplified Method
- $5 per square foot
- Maximum 300 sq ft
- Max deduction: $1,500
- Easy, no complex calculations
Actual Expense Method
- Calculate % of home used
- Deduct that % of: rent/mortgage interest, utilities, insurance, repairs
- Can include depreciation
- Often higher deduction
Example: 200 sq ft office in 2,000 sq ft home = 10%. If housing costs are $24,000/year, deduct $2,400.
Vehicle Deduction
Use your car for business? Two methods to deduct:
Standard Mileage Rate
- 67 cents per mile (2024)
- Track business miles driven
- Simpler record-keeping
- Plus: parking & tolls
Actual Expenses
- Gas, oil, repairs
- Insurance, registration
- Depreciation
- × business use %
What counts as business miles:
- Driving to client meetings or job sites
- Trips to the bank, post office, supply store
- Travel between two work locations
NOT deductible: Commuting from home to a regular office. However, if your home IS your office, trips from home to clients are deductible.
Equipment & Supplies
Fully deductible:
- Computers, laptops, tablets
- Software and subscriptions
- Office furniture (desk, chair, shelves)
- Tools and equipment for your trade
- Office supplies (paper, pens, printer ink)
- Business phone and phone service
- Internet service (business % if mixed use)
Section 179: You can deduct the full cost of equipment in the year purchased (up to $1,160,000 in 2024) instead of depreciating over years. Great for larger purchases.
Professional Services
- Accountant and bookkeeper fees
- Attorney fees (business-related)
- Business consulting
- Tax preparation fees (business portion)
- Payroll service fees
- Virtual assistant or contractor payments
Marketing & Advertising
- Website hosting and domain
- Online advertising (Google, Facebook, etc.)
- Business cards and printed materials
- Signs and vehicle wraps
- Trade show and event fees
- Email marketing software
- Social media management tools
- Logo design and branding
Travel & Meals
Business travel (100% deductible):
- Airfare, train, bus tickets
- Hotel and lodging
- Rental car or rideshare (Uber/Lyft)
- Baggage fees
- Tips related to travel
Business meals (50% deductible):
- Meals with clients discussing business
- Meals while traveling for business
- Team meals during work meetings
Record required: Date, amount, who attended, business purpose discussed. "Lunch with John - discussed website project" is sufficient.
Insurance Premiums
- General liability insurance
- Professional liability (E&O) insurance
- Business property insurance
- Workers' compensation
- Commercial auto insurance
- Health insurance (self-employed can deduct 100% of premiums)
Big one: Self-employed health insurance deduction. You can deduct 100% of health insurance premiums for yourself, spouse, and dependents. This is an "above the line" deduction—you get it even if you don't itemize.
Retirement Contributions
Reduce taxes AND save for retirement:
| Account Type | 2024 Limit | Best For |
|---|---|---|
| SEP-IRA | $69,000 or 25% of income | Simple, high limits |
| Solo 401(k) | $69,000 total | Highest contributions possible |
| SIMPLE IRA | $16,000 | Lower income businesses |
Commonly Missed Deductions
- Bank and credit card fees
- Business license fees
- LLC annual fees
- Professional memberships
- Industry publications
- Education and courses
- Conference registration
- Bad debts (uncollectible invoices)
- Startup costs (up to $5,000)
- Moving expenses for business
- Uniforms and work clothes
- Safety equipment
- Business gifts ($25/person limit)
- Self-employment tax (50% deductible)
Calculate Your Self-Employment Tax
See how much you'll owe in SE tax (and how much you can deduct).
SE Tax Calculator →