Many small business owners pay more tax than they need to simply because they aren’t aware of every deduction available to them. Tax law changes often, and a lot of legitimate write-offs go unclaimed each year because they’re easy to miss without a professional set of eyes on your books.
Here are some of the deductions we see small business owners overlook most often.
Home Office Expenses
If you use part of your home regularly and exclusively for business, you may be able to deduct a portion of your rent or mortgage interest, utilities, insurance, and repairs based on the percentage of your home used for work.
Vehicle and Mileage
Business use of your personal vehicle, driving to meet clients, picking up supplies, or traveling between job sites, can be deducted using either the standard mileage rate or actual vehicle expenses. Keeping a simple mileage log throughout the year makes this deduction much easier to claim accurately.
Startup and Organizational Costs
Costs incurred before your business officially opened its doors, market research, legal fees, and initial advertising, can often be deducted or amortized, even though they happened before you had any revenue coming in.
Professional Services and Software
Fees paid to accountants, bookkeepers, and consultants, along with subscriptions for the software you use to run your business, are generally fully deductible business expenses.
Retirement Plan Contributions
Contributions to a SEP IRA, SIMPLE IRA, or solo 401(k) reduce your taxable income while helping you build long-term savings, an option many self-employed individuals aren’t aware they qualify for.
Health Insurance Premiums
Self-employed individuals can often deduct premiums paid for medical, dental, and qualifying long-term care insurance for themselves and their families, even if they don’t itemize deductions.
Every business is different, and not every deduction applies to every situation. The best way to make sure you’re capturing everything you’re entitled to is to work with a tax professional who knows your business and keeps your records organized throughout the year, not just at filing time.
If you’d like a second look at your return or want to plan ahead for next year, reach out to our team. We’re happy to help.