Every dollar counts when you’re running a small business. Yet, each tax season, thousands of small business owners unknowingly leave money on the table by missing out on valuable deductions. To help you keep more of your hard-earned income, here are the top 10 tax deductions small businesses often overlook.

1. Home Office Deduction

If you use a dedicated area in your home exclusively for business activities, you may qualify for the home office deduction. You can calculate this deduction based on the percentage of your home that is used for business, covering costs like mortgage interest, insurance, utilities, repairs, and depreciation.

2. Startup and Organizational Expenses

Many small businesses overlook deducting the initial expenses involved in setting up their companies. The IRS allows businesses to deduct up to $5,000 in startup costs and $5,000 in organizational costs during the first year, provided total expenses don’t exceed $50,000.

3. Mileage and Vehicle Expenses

When you use your car for business-related travel, those miles can add up quickly. Small businesses can deduct either actual vehicle expenses—such as fuel, repairs, and maintenance—or use the IRS standard mileage rate (67 cents per mile for 2024). Remember to keep detailed records of your mileage and related expenses.

4. Travel and Eligible Meal Expenses

Business-related travel expenses—including flights, hotel stays, and car rentals—are fully deductible. Meals incurred during business travel or with clients are 50% deductible. Maintain detailed records, including the date, location, attendees, and business purpose of each meal.

5. Health Insurance Premiums

Small businesses that provide health insurance coverage for their employees may qualify for deductions. Additionally, self-employed individuals can deduct health insurance premiums paid for themselves, their spouses, and dependents directly from their taxable income.

6. Education and Training Costs

Investing in yourself or your employees through courses, certifications, seminars, or workshops related to your business is deductible. These educational expenses must maintain or improve the skills required in your current trade or business to qualify.

7. Retirement Contributions

Small businesses often overlook the deduction available for contributions made to qualified retirement plans like SEP IRAs, SIMPLE IRAs, and 401(k) plans. These deductions not only lower your taxable income but also help you plan for your financial future.

8. Marketing and Advertising Expenses

Many small businesses fail to realize how broadly the IRS allows deductions for marketing and advertising expenses. Costs for website design, social media ads, business cards, sponsorships, and promotional events are fully deductible.

9. Cellphone and Internet Expenses

If you use your personal cellphone and internet services for business purposes, you can deduct the portion of these costs that are business-related. For example, if 60% of your cellphone usage is business-related, you can deduct 60% of your cellphone bill as a business expense.

10. Software and Subscriptions

Monthly software subscriptions, accounting tools, cloud storage, and industry-specific software licenses are deductible expenses. Since many businesses now rely heavily on digital tools, this deduction is especially beneficial and commonly overlooked.

Additional Valuable Deductions

  • Section 179 Deduction: Deduct up to $1,250,000 of qualifying property costs in the tax year, including new and used business property and software.
  • Business Insurance: Premiums paid for business insurance like liability, property, and workers’ compensation are fully deductible.
  • Interest Payments: Interest on business loans, credit cards, and other business financing is deductible.
  • Legal and Professional Fees: Fees for attorneys, accountants, and business consultants directly related to business operations are deductible.

How to Ensure You Claim All Available Deductions

Maximizing your deductions begins with proper recordkeeping. Implementing good bookkeeping practices, either through dedicated software or professional accounting services, will ensure you track expenses accurately throughout the year. Staying organized will also simplify your tax preparation process and reduce stress at filing time.

Partnering with a trusted CPA firm, like Accountit, CPA, can help you identify often-overlooked deductions, ensure compliance with the latest tax laws, and maximize your returns. Remember, an investment in professional tax advice can pay for itself by uncovering deductions you might otherwise miss.

This tax season, ensure your small business leverages every available opportunity to save money. Don’t leave valuable deductions on the table!