Let’s be honest: the US tax code feels like it was written in a different language, designed specifically to confuse hardworking business owners. You spend your year focused on product development, marketing, and sales; you don’t have time to decipher thousands of pages of dense IRS regulations.
As a result, tax season becomes a guessing game. Which receipts matter? Does that client lunch count? Is your home office actually deductible? In the chaos of running a business, it’s incredibly easy for valid deductions to slip through the cracks.
You aren’t losing money because you lack revenue. You’re losing it because the rules are unclear. To help clear the fog, we’ve rounded up the 10 most commonly overlooked write-offs that can simplify your filing and save your bottom line.
Why “Write-Off” Isn’t a Dirty Word
There’s a misconception that taking a write-off is somehow sneaky. It’s not. The Internal Revenue Code allows businesses to deduct costs that are “ordinary and necessary” for their trade.
When you claim business tax deductions, you lower your adjusted gross income (AGI). Since your income taxes are calculated based on that lower number, your final tax bill decreases. It’s just math.
10 Legitimate Write-Offs You Might Be Missing
Let’s look at the specific expenses you should be tracking to keep your business financially efficient.
1. The Home Office Deduction
With the rise of remote work, the home office deduction has become a hot topic in tax planning. Many people skip it because they heard it triggers audits. That fear is largely outdated, provided you follow the rules.
You are eligible for a deduction if a designated part of your house is used strictly and consistently for work duties. If your workspace doubles as a family eating area in the evening, it doesn’t make the cut. However, a spare bedroom or a dedicated corner used only for work does qualify.
You have two ways to calculate this:
- The Simplified Method: You deduct $5 per square foot of your home office, up to 300 square feet, capped at $1,500. This method is easy and requires less paperwork.
- The Regular Method: You calculate the percentage of your home’s total square footage used for business. You then deduct that percentage of your mortgage interest, rent, utilities, and homeowners insurance.
If you are a renter or a homeowner with high expenses, the regular method often yields a higher tax break, but it requires precise recordkeeping.
2. Startup Costs
Did you spend money before you officially launched your business? Many small-business owners forget that the cash they burned on market research, branding, or legal fees before making their first sale is deductible.
You can typically deduct up to $5,000 in startup costs in your first tax year. If your startup costs exceed $50,000, that deduction reduces. These costs include:
- Advertisements for the opening of the business
- Salaries and wages for employees being trained (before opening)
- Travel costs to secure distributors or suppliers
Capturing these early expenses is a great way to offset your initial business income.
3. Professional Services
It feels very meta, but the money you pay to get financial advice is deductible. If you hire a bookkeeper to manage your day-to-day accounts or a tax professional to prepare your tax return, those fees are fully deductible business expenses.
The professional services category also extends to other professionals:
- Lawyers helping you draft contracts
- Consultants helping you streamline operations
- Web designers building your site
Our team at Prithi Daswani, CPA, is committed to helping you understand your financial picture, and the fees you pay for that guidance help lower your bottom line.
4. Software and Subscriptions
We live in a subscription economy. You probably have five or six different tools charging your credit card $20 or $50 a month. These small amounts add up to significant deductible expenses over 12 months.
Review your bank statements for:
- Project management tools (e.g., Asana, Trello, Monday)
- Creative software (e.g., Adobe Creative Cloud, Canva)
- Cloud storage (e.g., Google Drive, Dropbox)
- Accounting software (e.g., QuickBooks, Xero)
- Scheduling apps (e.g., Calendly, Acuity)
If you use the software for your business, it’s a write-off.
5. Continuing Education and Training
Staying sharp costs money. The IRS understands that you need to maintain your skills to stay competitive.
You can deduct the cost of seminars, webinars, and classes related to your current field. If you’re a graphic designer taking a course on the latest 3D modeling software, that’s a write-off. Trade publication subscriptions and books specifically for business growth count too.
However, there is a catch. If the education prepares you for a totally different career path, the IRS won’t let you write it off. For example, a real estate agent cannot deduct the cost of law school tuition.
6. Business Meals
The business lunch is a classic tax deduction, but the rules have shifted over the years. Generally, you can deduct 50% of the cost of food and beverages, provided certain conditions are met.
To qualify, the meal must be business-related. Grabbing a sandwich alone at your desk doesn’t count. You need to be dining with a client, a vendor, or an employee, and the discussion must involve business matters.
Be sure to keep the receipt and make a note of who attended and the purpose of the meeting. Digital tracking apps are excellent for this; simply snap a photo and throw the paper away.
7. Vehicle Expenses
If you drive for work, you have a valuable deduction parked in your driveway. You generally have two options for claiming this:
- Standard Mileage Deduction: You track your business miles and multiply them by the IRS standard rate (which changes annually, often around 65–67 cents per mile). This is simple and covers gas, insurance, and wear and tear.
- Actual Expenses: You track every penny spent on the car — gas, repairs, insurance, registration — and deduct the business percentage of those costs.
Self-employed taxpayers often find the mileage deduction easier to manage. Note that commuting from your home to your main office is never deductible. But driving from your office to a client site? That counts.
8. Advertising and Marketing
Getting the word out is a necessary expense. Most overlooked tax deductions in this category are the small, recurring ones rather than the big ad campaigns.
Commonly overlooked tax deductions for marketing include:
- Website hosting and domain name fees
- Email marketing platforms (e.g., Mailchimp, Flodesk)
- Social media ad spend (e.g., Facebook, Instagram, LinkedIn)
- Business cards, flyers, and swag
Every dollar you spend to put your brand in front of a customer reduces your gross income for tax purposes.
9. Bad Debt
The unfortunate reality of business is that sometimes clients don’t pay. If you have sold goods or services and haven’t been paid, you might be able to claim a bad debt deduction.
Here is the critical distinction: Bad debt usually applies to businesses using accrual accounting (where you record income before you receive it). If you are a cash-basis taxpayer (like most small service businesses), you cannot deduct income you never received because you never reported it as income in the first place. However, you can deduct the direct costs associated with trying to collect that debt or the cost of goods sold that were not paid for.
10. Bank Fees and Interest
These are the silent costs that quietly drain your account. You can deduct:
- Monthly service fees for business checking accounts
- Merchant processing fees (Stripe, PayPal, and Square take a cut — that cut is an expense!)
- Interest on business credit cards
Important: You can only deduct interest if the card is used 100% for business. That’s why experienced professionals always recommend keeping your business and personal finances entirely separate.
The Personal Side: Overlooked Adjustments for Business Owners
For sole proprietors and single-member LLCs, your business taxes and personal taxes flow together on your Form 1040. There are several personal adjustments that self-employment impacts directly.
Health Insurance
If you are self-employed and have a net profit, you may be able to deduct 100% of your health insurance premiums for yourself, your spouse, and your dependents. Health insurance is an “above-the-line” deduction, meaning it lowers your AGI.
Student Loan Interest Deduction
While not a business expense, student loan interest is a deduction you can take on your personal return. You can deduct up to $2,500 of interest paid, depending on your income level. Deducting student loan interests helps lower your total taxable income.
Self-Employment Tax
Being your own boss means you have to cover the Social Security and Medicare contributions that a company would usually split with you. This is the self-employment tax. Fortunately, you can deduct 50% of this tax from your gross income.
Retirement Savings
You can drastically reduce what you owe the IRS by maximizing contributions to retirement accounts such as a SEP-IRA or a Solo 401(k). These contributions are tax-deductible and help you build wealth for the future.
State and Local Taxes (SALT)
Don’t forget about state and local taxes. In this case, though, the IRS forces you to pick a lane: write off what you paid in state income tax or what you paid in sales tax, but never both. If you live in a state with no income tax, deducting sales taxes, especially if you made a large purchase like a car or boat, can be beneficial.
Also, real estate taxes (property taxes) and personal property taxes (e.g., vehicle registration fees based on value) contribute to your itemized deductions.
Strategic Planning
Although tax deductions and benefits contributions are important to reduce your taxes, once the year-end financials are somewhat complete or you have a high-level view of your taxes and what they will look like, it’s important to consider your long-term goals. Reducing your taxes allows you to have access to short-term refunds (if applicable). However, if the goal is to invest in equipment, purchase commercial real estate, or expand through hiring, aggressive tax minimization may actually hurt your ability to secure the necessary financing.
In these decisions, it’s important to consider your financials and taxable situation compared to previous years. A few dollars in refunds is great. A few hundreds of thousands in leverage is better.
Documentation Is Your Best Friend
None of these deductions or strategic planning works if you can’t prove them. The IRS loves documentation.
Moving to digital receipts is the best way to stay organized. Reliable accounting software automates this process: simply scan your receipts, link your bank accounts, and categorize your expenses weekly. This habit keeps you audit-proof and stress-free when tax time arrives.
When to Call in a Pro
Taxes are complex. While this list helps, every business is unique. Factors such as married couples filing jointly, owning a home (and deducting mortgage interest or mortgage points), or claiming the dependent care credit all shift your financial picture.
Trying to navigate IRS instructions alone can be overwhelming. Independent contractors and business owners often benefit from having a second set of eyes on their books.
Our team at Prithi Daswani, CPA, is focused on helping entrepreneurs and small-business owners navigate these challenges. We act as knowledgeable advisors to help you identify valid deductions and keep your business compliant.
Don’t let tax season confuse you. Schedule a discovery call with us today, and let’s get your business finances on the right track.