Latest Facts and News:
- The IRS increased the standard mileage rate for business use to 65.5 cents per mile for 2023.
- The Section 179 deduction limit increased to $1,160,000 for the 2023 tax year.
- The Qualified Business Income (QBI) deduction allows eligible small business owners to deduct up to 20% of their net business income.
Running and growing your small business is a wholesome experience. But the tax season? It can really stress you out.
Paying too much in taxes can worry you as a small business owner. You might not know which expenses you can deduct.
Additionally, every deduction you miss means less cash to put back into your business or save for future expansion. If you don’t have a solid grasp on what you can write off, you could be missing out on thousands of dollars that could have been put back into your business.
The bright side? Many tax deductions fall under IRS-approved business expenses. This can lower your taxable income and help you save money. Figuring out what can you write off as a small business owner is not so tough.
Below is your handy guide on what can you write off as a small business owner and take advantage of focusing on growing your business.
Essential Tax Write-Offs for Small Business Owners
Knowing about small business tax deductions can cut your taxes a lot. Business costs and big purchases alike can be tax deductions that boost your profits. In the following sections, we’ll explain in detail what can you write off for small businesses, so that you can make the most of business expense deductions.
So, here are the key write-offs that every small business owner should be aware of to boost their savings and follow IRS guidelines.
Home Office Deduction
The home office deduction is the most common deduction that comes to mind while figuring out what can you write off for your small business. If you use a portion of your home exclusively for business purposes, you may qualify for the home office deduction.
To be eligible for it, you need to meet two main requirements:
1. Regular and exclusive use: This means that the business use of the home should be regular and done only for business. If your desk is also your kitchen table, that won’t count. You don’t have to use a whole room, but your work area should be clearly defined. It might be a good idea to take pictures of your workspace to keep with your tax records, just in case the IRS wants to check your return.
- Principal place of business: Your home office should be where you spend most of your time doing important business tasks.
Now let’s talk about the two ways to deduct home office expenses:
- Simplified method: You can deduct $5 for every square foot of your home that you use for your business, but it can’t be more than 300 square feet total.
- Standard method: This method involves tracking all the actual costs of running your home, such as mortgage interest or rent, utilities, property taxes, cleaning services, landscaping, homeowners association fees, and repairs. Then, multiply those costs by the percentage of your home you use for business.
Business Vehicle Expenses
You can get a mileage write-off for the business use of your vehicle. However, you can only deduct the costs related to your business, such as meeting clients, attending meetings, or making deliveries. Don’t try to claim a deduction for using your vehicle for personal trips, like driving home from work.
Here are your options for business vehicle deduction:
- Standard mileage rate: Deduct a set amount for every mile you drive for business. As of 2025, The IRS has increased the standard mileage rate for business use to 70 cents per mile.
- Actual expense method: Track vehicle operating costs for the year, such as gas, repairs, insurance, registration fees, and the amount your car loses in value over time. Multiply those expenses by the percentage of miles driven for the business.
Office Supplies and Equipment
You can consider office supplies and equipment used to operate your business for office supply deductions.
Here is the list of deductible items for business equipment write-offs and supplies:
Office supplies:
Furniture, pen, paper, notebooks.
Equipment:
Computer, printer, and accessories.
Softwares:
Payroll software, subscription to business tools and apps.
| Focus CPA’s Insight → If you purchase equipment with a lifespan of more than a year, you should probably depreciate the cost over time instead of deducting it all at once. |
Professional Services
You can consider it under professional fee deductions if you hire an outside expert for guidance like an attorney, accountant, consultant, or coach. If you own a small business, these services are incredibly vital for keeping everything in order, making plans, and running your operations smoothly.
Here are some examples of professional services you can deduct:
- Legal fees for creating contracts or settling disagreements.
- Accounting helps keep track of finances and prepare taxes.
- Consulting costs for business planning, coaching, and developing strategies.
4. Other fees for insurance brokers, call centers, etc.
To successfully deduct these types of expenses, you may need to report the total fees to the IRS via Form 1099. Also, issue this to any person you pay over $600.
Advertising and Marketing Expenses
While considering what can you write off as a small business owner, advertising tax deductions are the best tax breaks. This helps as you grow your business through more brand awareness and have to pay less taxes by deducting their advertising expense.
Here’s what can be included in the marketing expense write-off:
- Print and digital ads on social media, Google Ads, and other online marketing efforts.
- Costs for printing business cards, flyers, and brochures.
- Hiring someone to design the logo.
- Creating websites, registering domains, and paying for hosting services.
How can Focus CPA help you?
Maximizing small business tax deductions requires careful record-keeping and a solid understanding of IRS rules. Doing it all yourself can be overwhelming, often leading to higher taxes that could have been avoided.
DIY tax-saving strategies don’t always work. Reducing your tax burden isn’t easy, but with the right guidance, you can minimize taxes and reinvest more in your business.
At Focus CPA, we’re here to help. Our team of tax professionals can assist with tax return preparation while ensuring you maximize deductions and credits.
Beyond taxes, we offer incorporation services, wealth management, virtual CFO services, and more.
Get in touch today to seize every tax-saving opportunity while securing expert financial support for your business.
While entertainment expenses are no longer deductible, you can still deduct some business-related meal expenses. You can take off 50% of the cost of meals with clients, as long as the meal isn't too fancy. It's essential to keep your receipts and notes to prove these expenses.
If you’re self-employed, you can deduct the cost of health insurance premiums for yourself under self-employed write-ups. You can write off 100% of the expense, even if your family is included in the health insurance plan like your spouse or any dependents.
Depreciation is determined by calculating asset costs, usefulness, and leftover value. The IRS has specific guidelines for various assets like furniture, cars, and tools. For business purchases, depreciation rules suggest spreading costs over the years.
As of tax year 2024, Section 179 deductions offer a maximum deduction of $1,220,000 for new and used business property and software. However, the deduction cannot exceed the business's taxable income.
If you expense these items right away, you get the tax benefits faster. Luckily, the IRS has a few options for business owners to write off the entire cost in just one year.
Yes. New businesses can’t use standard deductions in their first year but can deduct $5,000 of startup expenses from taxable income.
Other costs up to $50,000 can be recovered over 180 months, but they must meet IRS requirements. However, deductible interest, taxes, and research costs don’t qualify as recoverable.
Businesses usually can’t deduct donations, but exceptions exist. Donations of money, property, or cars may qualify.
Sole proprietorships, partnerships, and LLCs must report them on personal tax returns. Keep records and follow IRS rules.
