Small Business Deductions Checklist: 15 Write-Offs Owners Might Miss

Running a small business means keeping track of more than sales. Everyday costs, from software subscriptions to business mileage, may also matter when it’s time to file your taxes.

Use this small business deductions checklist to spot expenses worth reviewing. A cost is not deductible just because it was paid from a business account: it generally must be ordinary and necessary for your business, and personal-use portions usually don’t qualify. Rules also depend on your business structure and circumstances. Keep records and check with a qualified tax professional before claiming a deduction.

15 small business deductions to review

1. Home office expenses

If you use part of your home for business, you may be able to deduct eligible costs. Generally, the space must be used regularly and exclusively for business, and meet other IRS requirements. A simplified method may be available, but not every home workspace qualifies. See the IRS guidance on business use of your home.

2. Business rent and utilities

Rent for a separate office, storefront, or workspace may be deductible when it’s for business use. Eligible utilities and related occupancy costs may also count. If a space is used for both business and personal purposes, you’ll generally need to separate the business portion.

3. Vehicle expenses and business mileage

If you use a car or truck for business, you may be able to deduct eligible costs using either the standard mileage method or the business-use share of actual expenses, depending on the rules and your situation. Commuting is generally personal. Keep a mileage log showing the date, destination, business purpose, and miles driven. Check the IRS’s car and travel expense guidance for recordkeeping and method details.

4. Business travel

When business takes you away from your tax home, qualifying travel expenses may include transportation, lodging, and other costs directly related to the trip. Keep receipts and note the business purpose. Personal expenses and the personal portion of a mixed business-and-personal trip generally aren’t deductible as business travel.

5. Business meals

Some business meals may be deductible, but limits apply. A qualifying meal is generally subject to a 50% deduction limit. Record the date, amount, location, attendees, and business purpose. Entertainment is generally not deductible, and meal costs should be separately identified when bundled with entertainment.

6. Startup and organizational costs

Before opening, you may pay for market research, advertising, training, or other setup activities. These costs may have special tax treatment: some might be deducted or amortized over time rather than fully written off in the year paid. Keep pre-opening expenses separate from routine costs and ask how they should be handled.

7. Advertising and marketing

Advertising, business cards, and many ongoing promotional expenses may qualify as business costs. Website hosting and routine upkeep may also be deductible, but larger development costs or purchased assets could be treated differently. Keep invoices and note what each campaign or service was for.

8. Software and online subscriptions

Accounting tools, scheduling apps, cloud storage, and other business-use subscriptions can be easy to overlook. If you also use a service personally, track and deduct only the business portion when applicable. Save invoices and review recurring charges periodically.

9. Professional services, licenses, and training

Fees for bookkeeping, tax preparation, legal advice, payroll services, and business consulting may qualify when connected to current business operations. Business licenses and professional dues may also be worth reviewing. Training that maintains or improves skills in your existing work may qualify, while education to enter a new trade or business is generally treated differently.

10. Business insurance

Premiums for qualifying business coverage (such as liability, property, or workers’ compensation insurance) may be deductible. Keep policy documents and payment records, and check how to handle coverage that spans multiple periods or includes personal coverage.

11. Phone, internet, postage, and office supplies

The business portion of phone and internet expenses may qualify, along with items such as postage, printing, and routine office supplies. If a service or item has both personal and business use, document a reasonable allocation. Small purchases may be treated differently from larger equipment.

12. Employee wages and contractor payments

Eligible wages and certain employee benefits can be deductible. Payments to independent contractors may also qualify when they’re for business services. Keep contracts, invoices, and payment records, and make sure worker classification and any required tax forms are handled correctly.

13. Bank fees, payment processing, and business-loan interest

Business account fees, credit-card processing charges, and certain banking costs may be deductible. Interest on money borrowed for business may qualify, but loan principal is not a deductible expense. Keep statements and records showing how borrowed funds were used.

14. Equipment and other assets

Computers, tools, machinery, furniture, and some improvements may be recovered over time through depreciation or other tax rules. In some cases, an immediate deduction may be available. The result depends on the asset, how it’s used, when it was placed in service, and the rules in effect for that tax year. Save purchase records and track business versus personal use.

15. Deductions for self-employed owners

Some deductions apply on an owner’s individual tax return rather than as ordinary business expenses. Depending on eligibility, these may include the self-employed health insurance deduction, the deductible portion of self-employment tax, and contributions to an eligible retirement plan. These are common tax deductions for self employed people to discuss with a tax professional; they aren’t automatic or available to everyone.

A simple recordkeeping routine

Good records help you and your preparer understand what a cost was for and whether it may qualify. Set aside time each month to:

• Match receipts and invoices to bank or credit-card transactions.
• Separate personal spending from business expenses.
• Keep mileage and travel records as you go.
• Note the business purpose for meals and other expenses that need explanation.
• Flag equipment purchases and startup costs for review.
• Save digital copies of important documents.

The IRS offers more information in its Tax Guide for Small Business and business credits and deductions resources. Requirements and limits can change, so use current guidance for the tax year you’re filing.

A checklist is a starting point, not a guarantee

A deduction depends on the facts, records, and rules that apply to your business. This is especially important if you’re a sole proprietor, independent contractor, or new business owner. Some independent contractor tax deductions may be similar to those available to other small businesses, but eligibility still depends on how the expense was used and documented.

For help reviewing records and preparing an accurate return, BMW Tax Services provides personalized small business tax preparation for individuals and small businesses in Piqua, Troy, Tipp City, Dayton, and nearby Ohio communities. A tax professional can help you sort business costs from personal ones and identify questions to address before filing.