Checklist of 27 Tax Deductions for Small Businesses

You cannot postpone including any payment beyond that tax year. You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. You must report the income in the year the property is received or made available to you without restriction. This section identifies some of the excise taxes you may have to pay and the forms you have to file if you do any of the following.

Methods for Deducting Car and Truck Expenses

Recordkeeping is critical for these types of expenses, so be sure to keep your receipts. Legal and professional fees are payments made to lawyers, accountants, consultants, and the like. Payment of these fees may require that your business file a 1099 to the vendor, so be sure to track these carefully and comply with these requirements.

Office supplies

If you still have questions about small business tax deductions, be sure to read the other free tax resource articles by FreshBooks. Meals, team-building events, staff parties, and other entertainment expenses can be tax write-offs, though many of these deductions are only available for 50% of the actual cost you incurred. You can also deduct costs related to hosting business meetings and conferences, as these fall under ‘entertainment’ in the eyes of the IRS. Advertising costs and promotions are considered miscellaneous business expenses and can be deducted from your small business tax write off checklist taxes as long as they’re considered a reasonable need for your business.

) Office Expenses

There are also some optional education expenses that may be deductible if they help further your career in a way that’s directly related to your current operations. This one tax provision can increase your tax deduction and save you thousands of dollars in taxes. Every contractor’s situation is unique, so the optimal approach can vary. The key is to evaluate your options – sometimes a quick comparison (or a chat with your accountant) can ensure you’re using the method that maximizes your deduction and fits your business needs. Knowing the right forms and documents to claim each credit and deduction is daunting. At Taxfyle, we connect small businesses with licensed, experienced CPAs or EAs in the US.

Auto expenses

Be sure to save those restaurant receipts and deduct them from your taxes when it comes time to file your return. For the tax year 2025, the deduction for business meals is generally limited to 50% of the unreimbursed expenses. This guide from SAL Accounting gives Canadian and U.S. entrepreneurs a simple small business tax deductions checklist.

• If a client refuses to pay for goods or services you’ve already delivered, you can write it off as bad debt.
• 974 if the insurance plan established, or considered to be established, under your business was obtained through the Health Insurance Marketplace and you are claiming the premium tax credit.
• Secondly, your business may be able to deduct charitable contributions if it is incorporated as a C Corporation, which is subject to limitations.
• Food and beverages for a company picnic to show appreciation for your employees?
• But to make the most of them, you’ll need to stay organized, keeping meticulous, accurate, categorized records of your expenses as they’re incurred.
• The goal is to maximize savings without crossing any lines that could trigger IRS penalties or an audit.

To qualify for home office deductions under IRC Section 280A, the space must be used regularly and exclusively for business purposes. This exclusivity requirement proves strict, meaning personal use of the space disqualifies the entire deduction. Research and development expenses offer substantial benefits for businesses engaged in innovation. Under IRC Section 174, qualifying R&D costs must now be amortized over five years for domestic research or fifteen years for foreign research, beginning with tax years after December 31, 2021. This change requires careful planning to optimize the timing of R&D investments. Does your business donate goods, services, or money to a qualified nonprofit?

• The key is ensuring your business structure and revenue sources fit within the QBI deduction rules.
• These deductions reduce both income tax and self-employment tax, making them especially valuable.
• These expenses count as tax deductions and reduce his net self employment income to $54,000.
• If you are a merchant, beginning inventory is the cost of merchandise on hand at the beginning of the year that you will sell to customers.
• This is a common write-off for businesses, as most engage in some form of marketing to acquire new customers and generate demand for their products or services.

Repair expenses must be incurred to keep your property running in normal operating condition. Your deduction depends on if the expense would be considered a repair or a renovation. Basically, if you need it to administer and run your company day-to-day, it’s deductible. This write-off is formally referred to as the Augusta Strategy.

How to Stay on Top of Your Tax Deductions

However, you cannot deduct amounts paid to influence legislation (i.e., lobbying) or sponsor political campaigns or events. Click the links below to skip ahead to a specific deduction, or keep scrolling to learn about them all. Get free guides, articles, tools and calculators to help you Accounting Periods and Methods navigate the financial side of your business with ease.

In other words, you don’t need to spread the deduction out over multiple years. For more details, see our article on how Section 179 works. If you lease equipment or machinery for your business, you may be able to fully deduct these costs. This can include anything from printers and copiers to vans and trucks.

The area you use to figure your deduction is limited to 300 square feet. Bookkeeping vs. Accounting You are an attorney and use a den in your home to write legal briefs and prepare clients’ tax returns. The den is not used exclusively in your profession, so you cannot claim a business deduction for its use. During 2024, you used the car 60% for business and 40% for personal purposes.