Top Small Business Tax Deductions You Don’t Want to Miss
As a small business owner, you wear all the hats—CEO, marketer, accountant, sometimes even janitor. With so much on your plate, it’s easy to overlook one of the biggest perks of being your own boss: tax deductions. Every dollar you save on taxes is a dollar you can reinvest in your business (or treat yourself to a fancy coffee—no judgment here).
In this blog, we’ll cover some of the most common small business tax deductions, how to make the most of them, and tips to keep your tax season stress-free.
Why Small Business Tax Deductions Matter
Tax deductions lower your taxable income, which means you owe less to the IRS. Taking full advantage of these deductions is essential for keeping more of your hard-earned money in your pocket. The key is knowing which expenses qualify and keeping good records.
1. Home Office Deduction
If you’re working from home, you may qualify for the home office deduction. To claim it, you need a space in your home that is:
Used exclusively for business. (No, your kitchen table doesn’t count if it doubles as a snack station.)
Your principal place of business.
You can choose between:
The Simplified Method: $5 per square foot, up to 300 square feet.
The Actual Expenses Method: Deduct a portion of your mortgage, rent, utilities, and maintenance based on the percentage of your home used for business.
Pro Tip: Snap a photo of your dedicated workspace. It’s helpful to have documentation if the IRS ever asks.
2. Business Vehicle Expenses
Do you use your car for business? Whether you’re meeting clients, delivering products, or scouting new locations, you can deduct those miles.
You can choose between:
Standard Mileage Rate: For 2023, it’s 65.5 cents per mile.
Actual Expenses: Includes gas, maintenance, insurance, and depreciation.
Pro Tip: Keep a mileage log! Apps like MileIQ or QuickBooks can make this a breeze.
3. Office Supplies and Equipment
From printer ink to sticky notes to the laptop you’re reading this on—if it’s for your business, it’s deductible. Even big-ticket items like desks, chairs, and software qualify.
For larger purchases, you might consider:
Section 179 Deduction: Lets you deduct the full cost of qualifying equipment in the year it’s purchased, rather than spreading it out over years with some limitations.
4. Advertising and Marketing
Your website, social media ads, business cards, and even the sandwich board outside your shop all qualify as marketing expenses. These costs are fully deductible, so don’t skimp on promoting your business.
Pro Tip: Keep receipts for online ad spend (Facebook, Google, etc.) and track expenses for freelancers or agencies you hire to help.
5. Employee Salaries and Benefits
If you have employees, their salaries, wages, and benefits (like health insurance) are deductible. Even payments to independent contractors are deductible, but don’t forget to file a 1099-NEC for them.
6. Professional Services
Do you work with a lawyer, accountant, or tax advisor? Their fees are deductible. Yes, even the money you pay to someone like me to help with taxes is a tax deduction itself. (It’s like tax deduction inception!)
7. Travel Expenses
Traveling for business? Deduct your airfare, hotel, rental car, and even meals (50% of the cost). Just make sure it’s a legitimate business trip. A "conference" in Hawaii sounds fun, but if you spend more time on the beach than in meetings, the IRS might not buy it.
8. Education and Training
Investing in your skills or your team’s knowledge is tax-deductible. Courses, certifications, seminars, and even books related to your business can qualify.
Pro Tip: Keep those receipts and registration emails handy—documentation is key.
9. Utilities and Internet
Your business’s share of utilities, internet, and phone bills are deductible. If you work from home, these expenses often tie into the home office deduction, but for separate business spaces, they’re fully deductible.
10. Insurance Premiums
Business insurance—like liability, property, or workers’ compensation insurance—is deductible. If you’re self-employed, you can also deduct health insurance premiums for yourself and your family.
Bonus: Miscellaneous Deductions
Here are a few more deductions small business owners often overlook:
Bank and Credit Card Fees: Charges for your business accounts and payment processing (like PayPal or Stripe) are deductible.
Memberships and Subscriptions: Professional memberships, industry journals, and software subscriptions all count.
Start-Up Costs: If you’re just getting started, you can deduct up to $5,000 of qualifying expenses in your first year.
How to Stay Organized
Taking advantage of these deductions is easier if you stay organized throughout the year. Here’s how:
Use Accounting Software: Tools like QuickBooks or Wave can track expenses and generate reports.
Keep Digital Records: Save receipts, invoices, and proof of payments in a cloud storage system.
Consult a Tax Advisor: If you’re unsure whether something qualifies, it’s worth asking a pro (like us!) to avoid mistakes.
Final Thoughts
Tax season doesn’t have to be stressful when you know which deductions to claim. By taking the time to understand your expenses and keeping good records, you can save thousands of dollars and reinvest that money where it matters most—your business.
At Day Tax Advisors, we specialize in helping small businesses like yours maximize tax savings. Whether you need help organizing deductions, filing returns, or creating a long-term tax strategy, we’re here to help.
Contact us today to make sure you’re claiming every deduction you deserve. Because saving money is always in style.