Running a small business comes with plenty of expenses, but the good news is that many of them are tax-deductible. Understanding what you can and can’t deduct can help you save money and reduce your taxable income. Here are some key tax deductions every small business owner should take advantage of:

1. Home Office Deduction

If you operate your business from home, you may be eligible for a home office deduction. To qualify, the space must be used exclusively for business. The IRS allows you to deduct a portion of your rent or mortgage, utilities, and even home maintenance costs. There are two ways to calculate this:

• Simplified Method: Deduct $5 per square foot of your home office, up to 300 square feet.
• Regular Method: Calculate actual expenses based on the percentage of your home used for business.

2. Business Equipment & Supplies

Office supplies, furniture, and equipment such as computers, printers, and even software can be deducted. The cost of business-related subscriptions, such as cloud storage and accounting software, also qualifies.

3. Vehicle Expenses

If you use your car for business purposes, you can deduct mileage or actual vehicle expenses such as gas, repairs, insurance, and lease payments.

• Standard Mileage Deduction: A fixed rate per mile (set by the IRS).
• Actual Expenses Method: Deduct a percentage of fuel, maintenance, and depreciation based on business use.

4. Marketing & Advertising

Investments in advertising and marketing, such as website costs, social media ads, email marketing tools, and business cards, are all deductible.

5. Professional Services & Education

If you hire accountants, lawyers, consultants, or marketing agencies, their fees can be written off as business expenses. Likewise, costs for business-related courses, seminars, and workshops are deductible.

6. Business Meals & Entertainment

You can deduct 50% of meals when meeting with clients, partners, or employees for business purposes. Always keep receipts and note the business purpose of the meal.

7. Travel Expenses

Business-related travel, including airfare, hotels, rental cars, and meals while traveling, are deductible. The trip must be primarily for business, and personal expenses are not included.

8. Employee Salaries & Benefits

If you have employees, their salaries, bonuses, and benefits (such as health insurance) are tax-deductible. Even if you hire independent contractors, their payments are deductible as long as you issue them a 1099-NEC if they earn more than $600 annually from your business.

9. Retirement Contributions

Contributions to a retirement plan, such as a SEP IRA, SIMPLE IRA, or Solo 401(k), are deductible, helping both you and your business save on taxes.

10. Insurance Premiums

Business insurance policies, including liability insurance, property insurance, and health insurance for yourself and employees, can be deducted as business expenses.

11. Internet & Phone Bills

If you use your phone and internet for business, you can deduct the portion that applies to your business use. Be sure to track personal vs. business usage.

12. Rent & Utilities

If you rent an office or commercial space, the rent is fully deductible. Utilities like electricity, water, and internet for your office space are also deductible.