10 Tax Deductions Every Small Business Owner Should Be Claiming
If you’re a small business owner, tax season can be overwhelming—but it’s also an opportunity.
The tax code is full of deductions designed to help entrepreneurs lower their taxable income and keep more money in their pockets.
The problem? Many small business owners miss out on deductions they’re entitled to because they simply don’t know about them. Don’t let this be you. Whether you’re a solopreneur or running a growing team, knowing which expenses you can deduct can make a big difference in your bottom line.
Here are the key tax deductions every small business owner should be claiming.
1. Home Office Deduction
If you use part of your home exclusively for business, you may qualify for the home office deduction. This deduction allows you to claim a portion of your rent, mortgage, utilities, and other household expenses based on the size of your home office.
The Rules:
The space must be used exclusively and regularly for business.
Choose between the simplified deduction (a flat $5 per square foot, up to 300 square feet) or itemizing your actual expenses.
For more information, visit the IRS Home Office Deduction page.
Pro Tip: Keep detailed records of your utility bills, mortgage/rent payments, and other expenses to simplify the deduction process.
2. Business Vehicle Expenses
If you use your car for business purposes, you can deduct vehicle expenses such as mileage, gas, maintenance, insurance, and even depreciation.
How It Works:
Use the standard mileage rate set by the IRS (for 2024, it’s $0.67 per mile) or itemize your actual expenses.
Keep a mileage log that separates business use from personal use.
Use tracking apps like MileIQ or QuickBooks Self-Employed to automatically log your trips and calculate deductions.
Check the IRS Publication 463 for the latest details on vehicle deductions.
3. Office Supplies and Equipment
Everything from pens and paper to computers and desks is fully deductible if it’s used for your business. Even remote workers can claim these essential expenses.
Examples of Deductible Items:
Computers, monitors, and printers.
Software subscriptions, such as Adobe, Canva, or QuickBooks.
Office furniture like ergonomic chairs and standing desks.
Pro Tip: Use cloud-based tools like Ramp and Brex to track and organize your receipts.
4. Marketing and Advertising Costs
Promoting your business is essential—and 100% deductible. Whether you’re running Facebook ads or building a website, these expenses can reduce your tax burden.
Examples of Deductible Marketing Costs:
Social media advertising campaigns.
Domain registration and hosting fees with platforms like Bluehost or Squarespace.
Business cards, brochures, or branded merchandise.
Need more guidance? Check out the IRS guide on advertising expenses for further details.
5. Professional Services
Hiring experts like accountants, attorneys, or consultants can save you time and money—and their fees are fully deductible.
Examples of Deductible Services:
Tax preparation with platforms like TurboTax or consultation with a CPA.
Legal fees for contract reviews or business formation.
Business coaching or consulting services.
Pro Tip: Investing in Fractional CFO services like SoloCFO often pays for itself by helping you avoid costly mistakes.
6. Employee Salaries and Benefits
If you have employees, their salaries, bonuses, and benefits are deductible. This includes employer contributions to health insurance and retirement plans.
Deductible Items Include:
Employee wages and bonuses.
Employer contributions to 401(k) plans.
Health insurance premiums paid on behalf of employees.
Self-employed? You can still deduct your own health insurance premiums—learn more on the IRS self-employed health insurance deduction page.
7. Business Meals
Taking clients out for lunch or discussing deals over coffee? Business meals are deductible, with some limitations.
The Rules:
The meal must have a clear business purpose.
Typically, only 50% of the meal’s cost is deductible, but some restaurant meals may qualify for 100% under specific IRS rules.
Stay updated with the IRS guidelines on business meals.
Pro Tip: Use AI-first accounting platforms like Kick and Digits to auto-categorize and track meal expenses.
8. Travel Expenses
If you travel for business, those costs—including flights, hotels, and rental cars—are deductible.
Examples of Deductible Travel Expenses:
Airfare, train, or bus tickets.
Lodging costs from platforms like Booking.com or Airbnb.
Rental cars or rideshare services like Uber or Lyft.
Learn more about travel expense deductions from IRS Publication 463.
9. Education and Training
Investing in your skills isn’t just smart—it’s also deductible.
Deductible Education Expenses:
Online courses or certifications from platforms like Coursera or Udemy.
Industry-specific conferences and seminars.
Books or trade publications related to your field.
Pro Tip: The education must be directly related to your current business to qualify as a deduction.
10. Startup Costs
If you’re in your first year of business, you can deduct up to $5,000 in startup expenses, such as market research, legal fees, and initial advertising.
Examples of Startup Costs:
Incorporation fees or costs to set up an LLC (try using tools like LegalZoom).
Initial branding and logo design.
Market research or consulting fees.
For more details, visit the IRS guide on startup costs.
Final Thoughts: Don’t Leave Money on the Table
Claiming the right tax deductions can save your business thousands of dollars each year—but it all starts with understanding what’s available and keeping your records organized.
Tools like QuickBooks or Xero (or newcomers like Kick and Digits) can make tracking expenses easier, and consulting with a CPA ensures you’re maximizing your savings.
Remember: Every dollar you save on taxes is a dollar you can reinvest into growing your business.
Start leveraging these deductions today and make tax season work in your favor!
