Small Business Tax Deductions Checklist: 10+ Write-Offs
As a small business owner, you have to wear many hats — and being your own tax professional is probably one of your least favorite roles.
However, staying consistent with your preparation for tax season will make filing taxes as a business owner significantly easier.
Even better news?
Knowing which tax deductions you qualify for can potentially help you save a significant amount of money on your taxes.
We created this comprehensive small business tax deductions checklist to help entrepreneurs take advantage of all of the tax benefits available to them. Grab a cup of something hot and let’s dive in.
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Your Fail-Proof Small Business Tax Write-Off Checklist
What Are Tax Write Offs for Entrepreneurs?
Tax write offs — otherwise known as tax deductions — reduce the amount of taxable business income and help small business owners save money on certain expenses.
For example, let’s say you made $100,000. If you have $40,000 of tax deductible business expenses, you’d only pay taxes on the remaining non-deductible $60,000. Assuming a hypothetical rate of 20%, you’d owe $12,000 in taxes.
Now, what would happen if you hadn’t been keeping track of your deductible expenses?
In this case, you’d be taxed on that whole $100,000. Assuming the same hypothetical rate of 20%, you’d have to pay $20,000 in income tax instead of $12,000.
In this example, taking advantage of your tax deductions would’ve saved you a whopping $8,000.
This is why it’s important to keep track of your deductible expenses over the course of the tax year.
What Kind of Business Expenses Are Deductible?
Not all business expenses are deductible. The IRS states that only “ordinary and necessary” expenses can be deducted, which begs the question —
What qualifies as an “ordinary and necessary” expense?
Quite a few things do. Use the checklist below to make sure you’re taking advantage of all tax benefits for entrepreneurs.
Are You Taking Advantage of These Small Business Tax Deductions?
Prefer a version you can print out? Download the small business deductions checklist in the PDF format.
Advertising and Marketing
Marketing your small business is an ordinary and necessary expense. To make sales, you need to promote your business and build a name for yourself. Hence, this expense is tax deductible.
Examples of expenses that would fall under this category include:
Email marketing
Social media
Your website
Ads
Brand photography
Print materials, such as brochures or business cards
2. Office Supplies
You can deduct the cost of any supplies in your office that you use to run your business, such as notebooks, calendars, and calculators. These things may seem small…but they add up!
More expensive office supplies, such as ink cartridges, also qualify for a tax deduction. To claim these deductions, keep receipts from the stores where you purchase your office supplies.
3. Meals
Meeting up with your client for lunch? Your restaurant bill is tax deductible.
You can also deduct the cost of the snacks you keep in your office or the food you purchased for your latest team building activity. Any food or meal that's a regular course of business for you is tax deductible.
4. Travel
If you need to travel somewhere for your business, your travel expenses are deductible. Some examples of business travel can include conferences, educational events, and networking events.
Expenses you can deduct from your business travel expenses can include airfare and lodging, transportation, and meals.
5. Home Office
The home office deduction is a great opportunity for business owners who have a place in their house that they dedicate to conducting business.
The IRS offers business owners two ways to calculate their home office deduction.
Under the simplified version, you can deduct $5/square foot for business use of your home. This method comes with a maximum deduction of 300 square feet (or $1,500).
You also have the option of deducting a percentage of deductible home expenses based on the percentage of the home used for business purposes (aka maybe your office is 20% of your entire house).
Home expenses that qualify for tax deductions include:
Utilities (including your internet bill)
Mortgage interest or rent
Insurance
Repairs
Maintenance
Depreciation
6. Telephone
This tax deduction doesn’t only apply to landlines.
You probably use your cell phone to conduct ordinary and necessary business activities, such as using your social media or communicating with clients. The good news is that as long as your cell phone expenses are related to your business, they are deductible.
7. Bank Fees
Banks and payment processing companies can charge steep fees. But at least they’re tax deductible!
For example, if you charge a client $1,000 but your payment processor software charges you $100 for the transaction, you can deduct this expense on your tax return.
8. Independent Contractors and Employees
Did you hire someone to help you run and grow your business?
Whether it was a contractor (for example, a copywriter, a designer, a blog writer…you get the idea!) or a salaried employee, the wages you paid them are tax deductible.
9. Legal & Professional Services
If you hired a lawyer or purchased contracts (including templates), these expenses are tax deductible. This can come as a relief to many small business owners, since legal services and fees can run quite high.
10. Bookkeeping Fees
Monthly bookkeeping helps you build a solid financial foundation for your business and make sure that things don’t fall through the cracks.
Hiring a bookkeeper can make tax season a breeze — plus, these services are tax deductible.
11. Insurance
Depending on your industry and state, you may be required to carry some kind of business insurance. Or you may choose to get one. Either way, you can write it off on your tax return.
12. Business Licenses and Permits
Your business may be required to obtain licenses and/or permits to operate in compliance with the law. The fees that you have to pay to obtain or renew these licenses and permits are tax deductible, but consult with a tax professional to make sure you’re taking all of the required steps to qualify.
13. Gifts
If you send your clients gifts, this expense is tax deductible. However, there is a $25 limit per client that you need to be aware of.
This checklist is not exclusive. To get access to 10+ more deductions, download this small business tax deductions checklist PDF.
Small Business Tax Questions FAQ
Do I Need to Keep Receipts?
This is a very popular tax question for small business owners. You should always keep receipts and other documentation that you’ll need during tax season. If your receipt-keeping system is currently messy and needs improvement, read this blog post.
Which Expenses Are Non-Deductible?
Political contributions, federal tax payments, everyday travel expenses (such as commuting costs), and entertainment are a few examples of expenses that are never deductible. Consult with a tax professional to figure out which of your expenses are deductible and which ones are not.
How Do I File Taxes as a Small Business Owner?
The short answer is that it depends on your business structure. If you run an LLC or a S-Corp, you’ll need to go through a different process than, for example, a C-Corp. Hire a tax professional to have a solid strategy in place come tax season.
Small Business Tax Deductions Checklist PDF
Want to get your hands on the complete small business tax deductions checklist? Download the PDF version here.
