Tax season can be stressful—especially for small business owners trying to make the most of their tax returns. The good news? The tax code is designed to support your entrepreneurial efforts, offering plenty of deductions to offset your expenses. But are you claiming everything you’re entitled to?
From overlooked office supplies to travel expenses, small missed deductions can add up. This checklist ensures you’re not leaving money on the table. Let’s explore the most commonly missed tax deductions and how to leverage them for your business!
What Are Tax Deductions?
A quick refresher—tax deductions reduce your taxable income. The Internal Revenue Service (IRS) allows businesses to deduct costs that are “ordinary and necessary” for running their operations. For example, if you went to a conference to sharpen your skills or paid for software to manage your finances, those expenses could qualify.
Small Business Tax Deductions You Can’t Afford to Miss
1. Home Office Deduction
Do you operate your business from home? If so, the home office deduction is a big one. Whether you rent or own, you can deduct a portion of your housing costs if you have a space used exclusively for business. Calculations are based on the percentage of square footage your office occupies. It covers costs like:
- Rent or mortgage interest
- Utilities (electricity, internet, water)
- Home repairs and maintenance
📝 Tip: Keep detailed records of your home expenses and determine your work area’s actual square footage for accurate deductions.
2. Office Supplies and Equipment
Every pen, notebook, printer cartridge—or even your sleek new office chair—can be written off. These are considered day-to-day operational expenses that directly support your business.
Invested in tech like a laptop, software subscriptions, or cloud storage? Those also qualify!
3. Business Mileage
If you drive your car for business purposes—such as meeting clients, going to a vendor, or attending industry events—you can deduct those miles. The IRS offers two ways to calculate this:
- Standard Mileage Rate (currently $0.655 per mile for 2023)
- Actual Expenses (calculated by tracking fuel, maintenance, insurance, etc.)
📝 Tip: Keep a mileage log using apps such as MileIQ to simplify tracking and ensure accuracy.
4. Education and Training
Want to stay ahead in your industry? Expenses for workshops, training programs, and certifications directly related to your business are tax-deductible. This includes:
- Tuition fees
- Reference books
- Online courses or webinars
📝 Tip: Ensure training is applicable to your job or trade, as personal improvement classes (like a yoga course) won’t qualify.
5. Travel Costs
Whenever travel is necessary for your business, these expenses can be deducted. Eligible costs include:
- Flights and trains
- Hotel stays
- Meals while traveling
- Transportation (such as car rentals or taxis)
📝 Tip: Keep all your receipts and note the purpose of the trip for when the IRS asks for proof.
6. Marketing and Advertising
From Facebook ads to your website domain fee, any effort you make to promote your business is entirely deductible. Common examples include:
- Business cards
- Social media ad spend
- Content creation services
- Marketing software (e.g. email automation tools)
7. Utilities and Internet
If you rent a brick-and-mortar space for your business or pay for a business-specific internet connection, these costs are deductible. Even if you work from home, you can claim a share of these expenses.
8. Professional Services
Have you hired professionals like accountants, attorneys, or consultants to benefit your business? What you pay for these services is tax-deductible. This also applies to freelancers and contractors who perform specific tasks, such as logo design or social media management.
9. Employee Benefits
If you offer health insurance, retirement plans, or other benefits to employees, those costs are deductible. Not only does this save you money, but it also supports your team’s well-being.
10. Startup Costs
Every small business starts with a dream—and some initial investment. From initial research to buying equipment, the IRS lets you deduct startup costs up to $5,000 in your first year.
Key Tips for Maximizing Deductions
- Stay Organized
Use financial software like QuickBooks or Wave to track your spending throughout the year.
- Separate Business and Personal Finances
Open a dedicated business bank account to avoid confusion and make tracking easier.
- Save Receipts
Keep receipts and invoices! The IRS requires documentation to back up your claims.
- Consult with Tax Professionals
Tax laws are complex, and deductions vary based on your unique circumstances. Hiring an accountant can help you identify even more opportunities to save.
Maximize Your Deductions and Build a Stronger Business
Every dollar saved through tax deductions can be reinvested in growing your business. By staying organized, knowing which expenses qualify, and leveraging these insights, you’ll keep more of your hard-earned money.
About The Pomona Chamber of Commerce
At the Pomona Chamber of Commerce, our mission is to keep you up to date with the most relevant developments in business management and administration so you and your company can take advantage of new opportunities.
Contact us by email (info@pomonachamber.org) telephone (909-622-1256), social media, or click on this link to join and start enjoying the benefits of membership today.
