Cost-Savings Tips

Running a business comes with many costs, but did you know that some can reduce your tax bill? The IRS allows business owners to deduct certain expenses, which can reduce taxable income and save money. But what exactly qualifies as a deductible expense? Let’s break it down in simple terms!

Please note: Tax laws change frequently, and not all deductions apply to every business. To maximize your savings and stay compliant, consult a tax professional.

What Counts as a Business Expense?

A business expense is any ordinary cost necessary for running your business. “Ordinary” means it’s a common expense in your industry, and “necessary” means helpful and appropriate for your business operations.

Tax-Deductible Business Expenses

Here are some of the most common expenses business owners can write off:

• Pens, paper, printer ink, and other office supplies
• Business software and subscriptions (like QuickBooks, Microsoft 365, or industry-specific tools)
• Business-related postage and shipping costs

Rent & Utilities

• Rent for office space or co-working spaces
• Electricity, water, and internet (for business locations)
• If you work from home, a portion of your rent/mortgage and utilities may be deductible (home office deduction rules apply)

Business Travel & Meals

• Flights, hotels, and rental cars for business trips
• 50% of business meals when dining with clients or traveling for work
• Conference fees and professional networking events

Marketing & Advertising

• Website hosting, design, and domain fees
• Social media ads, Google Ads, and email marketing services
• Business cards, flyers, and promotional materials

Vehicle & Mileage Costs

• If you use your personal car for business, you can deduct mileage (the IRS sets a standard rate each year. Visit the IRS website for the latest rates).
• Gas, maintenance, and insurance costs for business-owned vehicles

Employee & Contractor Wages

• Salaries and wages paid to employees
• Employee benefits like health insurance and retirement contributions
• Payments to independent contractors (be sure to issue a 1099 if applicable)

Professional Services

• Fees for accountants, bookkeepers, and business consultants
• Legal services, such as contract reviews or business formation assistance
• Membership dues for professional organizations

Business Insurance

• General liability insurance
• Professional liability (E&O) insurance
• Workers’ compensation insurance (if required in your state)

Education & Training

• Online courses, workshops, and certifications to improve your skills
• Books and subscriptions related to your business

Loans & Interest

• Interest on business loans and credit cards
• Business mortgage interest (if you own your office space)

What’s NOT Deductible?

Not everything you spend money on for your business can be written off. Here are a few expenses that typically aren’t deductible:

• Personal expenses (anything not directly related to the business)
• Fines and penalties (like parking tickets)
• Political contributions
• Clothing that isn’t a uniform or protective gear for work

Stay Organized & Keep Good Records

Keep receipts, invoices, and records of all business expenses to make tax time easier. Use bookkeeping software like QuickBooks, Wave, or Xero to track everything. The more organized you are, the more you can potentially save!

Final Thoughts & Important Disclaimer

Tax deductions can be a great way to save money, but tax laws can be complex. Not every deduction applies to every business; some have special rules. Always consult a tax professional to ensure you take the proper deductions.

Not sure which deductions apply to your business? A tax professional can help you uncover savings, keep your records in top shape, and make the most of your tax return.