Tax season is stressful enough without trying to track every expense. However, once you see the number of deductions your small business may qualify for, you’ll realize almost everything you spend can count. Here are 20 ways to save on taxes, applicable for C-Corps, S-Corps, LLCs, partnerships, and sole proprietorships (rules may vary depending on your business type).
1. Rent
If your business pays rent or lease, it’s deductible. For home-based businesses, IRS Publication 587 details what you can claim, including mortgage interest, utilities, repairs, and insurance.
2. Utilities
Electricity, water, trash, phone, internet, and other utilities are all deductible business expenses.
3. Office Supplies
Pens, paper, tissues, light bulbs—basically any office essentials—are deductible.
4. Furniture
Office furniture, such as desks, chairs, and shelving, is deductible.
5. Software
Business-related software can be claimed on your Schedule C tax form.
6. Auto Expenses
Business transportation expenses can be deducted. Keep detailed records or use the IRS standard mileage rate. Rules differ if the vehicle is used for both personal and business purposes (see IRS Publication 463).
7. Travel
Travel outside your tax home for business purposes (overnight trips or longer) is deductible, including airfare, hotels, and meals.
8. Entertainment
Client meetings, networking events, and office parties may be deductible. Keep receipts and note the purpose of each event.
9. Marketing
All marketing-related expenses are deductible, from online ads to business cards to freelance graphic design services.
10. Contract Workers
Payments to freelancers or independent contractors are deductible business expenses.
11. Wages
Salaries, commissions, and bonuses paid to employees are deductible, unless your business structure doesn’t have employees (e.g., sole proprietorships or partnerships).
12. Employee Benefits
Certain benefits like health insurance, education assistance, dependent care, or retirement contributions are deductible. Self-employed individuals may deduct contributions to their own retirement funds on Form 1040.
13. Gifts
Gifts for employees are partially deductible, within IRS limits.
14. Insurance
Business insurance, owner health insurance, liability, property, auto, and workers’ compensation are deductible. Small businesses may also qualify for credits for providing employee health coverage.
15. Taxes
Taxes paid for the cost of doing business are deductible, including employer taxes (unemployment, FUTA, FICA), as well as federal, state, local income, sales, and property taxes.
16. Bad Debt
If your business loaned money that wasn’t repaid, it can be claimed as a bad debt deduction.
17. Interest
Interest paid on business loans from traditional lenders is deductible.
18. Professional Fees
Legal, accounting, and consulting fees directly related to your business are deductible.
19. Startup Costs
Startup expenses are typically considered capital expenses. Deductions may be spread over several years. See IRS Publication 535 for guidance.
20. Inventory
If your business sells products or maintains inventory, the cost of goods sold is deductible. This includes raw materials, storage, factory overhead, and labor.
