When tax season rolls around, many entrepreneurs focus on the big, obvious write-offs like rent, payroll, and office supplies. But there are plenty of overlooked business deductions that can lower your taxable income and keep more money in your business. Missing these deductions can mean paying more than you owe, and for small and mid-sized businesses, that extra cash could be invested back into growth.

While tax laws can be complex and change frequently, understanding the categories and types of deductions available can help you identify areas to review with your tax professional. Here are some common deductions that business owners often forget to claim.

Home Office Expenses

If you use part of your home exclusively for business purposes, you may be eligible for the home office deduction. This isn’t just for people who work entirely from home, either. If you have a dedicated space where you manage administrative tasks, client calls, or record-keeping, it may qualify.

The deduction can be calculated using the simplified method (a flat rate per square foot) or by tracking the actual expenses related to your workspace. This could include a percentage of your mortgage interest or rent, utilities, homeowner’s insurance, and maintenance costs.

Professional Development

Continuing education expenses related to your field can be deducted, including:

• Training courses and seminars

• Webinars and workshops

• Professional certifications or licenses

Even books, subscriptions, and industry publications can qualify if they directly relate to your work. If you travel for these events, you may also be able to deduct transportation, lodging, and meals associated with the trip.

Startup Costs

If your business is in its first year, you may be able to deduct certain startup costs. This includes expenses for market research, business planning, advertising, and even some legal and accounting fees incurred before you officially opened your doors. The IRS allows you to deduct up to a certain amount in your first year, with the remainder amortized over time.

Retirement Contributions

Business owners sometimes focus so heavily on reinvesting in their operations that they overlook personal financial planning. Contributions to qualified retirement plans, such as a SEP IRA, SIMPLE IRA, or solo 401(k), are deductible and can significantly reduce your taxable income while helping you build long-term savings. There are limits set every year on how much an employee or employer can contribute to these types of plans. It’s well worth considering, even if you do not contribute the maximum amounts. 

Business Use of Your Vehicle

If you use your car for business purposes, you can deduct either the actual expenses (gas, maintenance, insurance, depreciation) or the standard mileage rate set annually by the IRS. The key is keeping detailed mileage logs that note the date, purpose, and miles driven for each trip.

Even if you use your vehicle for both business and personal reasons, you can deduct the percentage of expenses tied to business use.

Health Insurance Premiums

If you’re self-employed and not eligible for coverage through another source, your health insurance premiums, along with those for your spouse and dependents, may be deductible. This can also include dental and long-term care insurance in certain cases. Insurance premiums can be very expensive for self-employed individuals and their families. This could potentially be a huge benefit. 

Office Supplies and Equipment

While most business owners remember to deduct printer paper and pens, larger equipment purchases are sometimes missed. Desks, chairs, computers, monitors, and software purchases may all qualify. Depending on the cost and tax rules, you may be able to expense the full cost in the year of purchase or depreciate it over time.

Marketing and Advertising

Marketing expenses often go beyond traditional ads. In addition to online advertising, printed materials, and sponsorships, you may be able to deduct:

• Website design and hosting fees
• Social media advertising campaigns
• Branded promotional items
• Graphic design and copywriting services

If the expense promotes your business and reaches potential customers, it’s worth discussing with your tax advisor.

Travel and Meals

When you travel for business, you may be able to deduct airfare, lodging, taxis or rideshares, and meals. Meals are generally deductible at 50%, but there are exceptions, such as certain events or promotions, where 100% may apply.

Be sure to track receipts and keep records that clearly show the business purpose of each expense.

Utilities and Internet

If your business operates out of a physical location, your utility bills are deductible. This can include electricity, water, gas, and even trash removal services. If you work from home, a portion of your home utilities may qualify under the home office deduction.

Internet and phone services are also deductible when used for business. For mixed-use services, you can deduct the portion related to your work.

Interest on Business Loans and Credit

Interest on loans taken out specifically for business purposes can often be deducted. The same goes for interest on business credit cards. Just make sure you separate business expenses from personal ones. Those loans and credit cards should be in the business’s name and under the TIN. If that is the same as your personal TIN, then you should be careful to document the use of the loan in case it were ever questioned as a business loan. 

In addition to loan and credit expenses, merchant fees from credit card processors, PayPal, or other payment platforms are deductible. Bank service fees tied to business accounts also qualify.

On that same note, if you’ve made a sale or extended credit and never received payment, you may be able to write it off as a bad debt, provided it was previously included in your income. This is more common for businesses using accrual accounting.

Software Subscriptions

Ongoing subscription fees for accounting tools, project management platforms, design software, and cloud storage services are deductible. These costs often add up over the year but can be easy to overlook if they’re on autopay.

Keeping Records is Key

The biggest reason deductions get missed is a lack of documentation. Even legitimate expenses can be disallowed if you don’t have proper records. Consider:

• Keeping digital copies of receipts
• Using accounting software to categorize expenses as they occur
• Maintaining separate bank accounts for business transactions

Learn More About Commonly Overlooked Business Deductions with Katherine M. Johnson, CPA

Understanding and tracking potential deductions can make a significant difference in your tax liability. Every dollar saved on taxes is another dollar you can put toward growing your business, paying down debt, or increasing your personal financial security.

While this list covers many common and often overlooked areas, every business is unique. Working with a qualified tax professional, like our team at Katherine M. Johnson, CPA, can help you identify all the deductions you’re entitled to and ensure you’re complying with current tax laws. Schedule your consultation today.