Your Small Business Tax Deductions Checklist

The not-so-good news? Every business needs to file taxes. The great news? There are many expenses you can apply to your income to help alleviate your tax burden. These deductions will reduce your profits, meaning that you will pay lower overall taxes. While the IRS does not specifically list what you can claim, they do state that if a cost you’ve incurred is “ordinary and necessary” to running your business, then you can deduct it.

We’ve created a checklist below of the most deductions you can claim for your small business. As always, check with your accountant or tax preparer if you have any questions or need clarification. Note that some of the expenses listed below will need to be “depreciated” or expensed over several years. Speak to your tax preparer for more information.

 

Rent, Mortgage, and Utility Tax Deductions

These tax deductions include costs associated with renting a building for business, using part of your home as an office, utility bills, and other factors. 

  • If you have a dedicated building for your office, you can deduct all of your business costs associated with the expenses your business incurs.
  • If you work from home, you can only deduct a proportion of your household bills, dependent upon the percentage of your home used for running your business.
  • The IRS also provides a simplified option for expensing home office costs.

Rent and Mortgage Expenses

  • Rent / leasing costs
  • Mortgage interest
  • Property tax, up to a certain amount

Utility Bills Expenses

  • Broadband
  • Mobile phone
  • Electricity
  • Gas
  • Water
  • Sewage
  • Trash collection

You cannot claim a telephone landline unless it is specifically dedicated to your business. You can claim a percentage of your mobile phone bill depending on how much you use your mobile phone for business.

Office Expenses and Tax Deductions

You can make additional deductions on money you spend for your business office. 

Office Furniture Expenses

  • Desks, tables, and other work surfaces
  • Shelves, filing cabinets, and storage units
  • Office chairs
  • Other office furniture

Office Computer Expenses

  • Desktop computers
  • Laptop computers
  • Tablets
  • Monitors
  • Mice and keyboards
  • Printers

Office Software Expenses

  • Purchase of software applications and programs
  • Periodic subscription payments
  • Website hosting costs

Office Equipment Expenses

  • Specialized equipment not covered elsewhere

Office Supplies and Sundries Expenses

  • Packaging materials
  • Mailing and courier costs
  • Copier paper
  • Toner cartridges
  • Miscellaneous stationery like pens, pencils, staples, elastic bands, paperclips, etc.

Office Maintenance and Repairs Expenses

  • Property repairs on your office
  • Cleaning
  • Repairing equipment
  • Replacing lightbulbs and other consumables
  • Other repairs and maintenance

Employee Expenses and Tax Deductions

If you pay a salary to employees, then you can deduct some of those costs from your business revenue. Employee expenses and taxes can be complex, so we recommend speaking to an accountant or tax preparer to understand what you can deduct.

  • Salaries paid to employees
  • Medical premiums paid for employees like health or dental insurance
  • Benefits paid to employees like bonuses and other areas 
  • Percentages of payroll or self-employment tax
  • Retirement contributions

Freelance, Contractor, and Professional Tax Deductions

You can claim costs for professional services like tax preparation or legal fees, and for paying freelancers or other contractors to complete work for your business.

Accountancy Expenses

  • Professional accounting fees
  • Tax preparation fees
  • Bookkeeping fees
  • Payroll preparation fees

Legal Expenses

  • Legal fees
  • Retainers

Freelance and Contractor Expenses

  • Contractor fees
  • Tradesman fees
  • Freelance work (e.g. graphic design, photography, writing)

Car and Vehicle Tax Deductions

If you use a vehicle in part or exclusively for your business, you can deduct those costs. You can either track everything individually, or use the IRS mileage rates.

  • Gasoline and fuel costs
  • Vehicle insurance costs
  • Vehicle repair and maintenance costs
  • Interest on a vehicle loan
  • Registration fees
  • Property tax for the vehicle
  • Lease and rental payments

Advertising and Marketing Tax Deductions

You can deduct any money you spend on promoting your business.

  • Marketing services and agencies
  • Online advertising like Google AdWords or social media paid ads
  • Media advertising like radio or TV ads
  • Offline advertising like billboards or newspaper ads
  • Sponsorships
  • Promotional design services

Travel and Accommodation Tax Deductions

If you travel or stay away from home for business, those costs are deductible.

  • Airfares
  • Train fares
  • Coach fares
  • Other fares
  • Hotel accommodation
  • Other travel costs
  • Meals when traveling for business, although this may be limited to 50% of the cost

Loan Interest and Bad Debt Tax Deductions

If you have taken out loans for your business, you can deduct the interest.

  • Automotive loan interest
  • Building loan interest
  • Equipment loan interest
  • Business credit card interest
  • Interest on other loans
  • Bad debts due to invoices that will not be paid

Education and Training Tax Deductions

When you provide training to yourself or your staff, those costs can be deducted.

  • Further classroom education
  • Online and virtual courses
  • One-to-one and one-to-many tutorials
  • Skills and vocational training
  • Other education and training costs

Payment and Bank Fee Tax Deductions

Your bank is likely to charge you for business services, and you’ll also pay a fee for accepting charge, credit, or debit cards.

  • Ongoing and one-off bank fees for business services
  • Incoming and outgoing wire transfer fees
  • Payment processing costs for accepting cards

Insurance Tax Deductions

You can deduct insurance premiums incurred by your business:

  • Public liability insurance premiums
  • Professional identity insurance premiums
  • Specialist insurance premiums

Qualified Business Income Tax Deductions

Depending on the type of business you run, and subject to certain limits, you can claim up to 20% of your profits as a tax deduction. Speak to your accountant about this, as it can be a complex area.

Miscellaneous Tax Deductions

Depending on the type of business you run, there are potentially dozens of other areas you can expense. 

  • The cost to attend conferences, seminars, or trade shows
  • Membership fees for professional associations or publications 
  • Specialist tools needed to do your work
  • Business licenses and fees
  • Trademarks and intellectual property costs

We hope you’ve found this small business tax deductions checklist useful. This list is not exhaustive, but it will give you a good starting point for your expenses. As always, talk to a professional tax preparer or accountant about your unique tax circumstances to ensure you’re claiming expenses correctly.

Click here to learn more about funding your small business growth through our community of mission-driven lending partners.

Webinar: Writing a Business Plan

If you are applying for financing, a solid roadmap becomes especially important as it is the best way for a lender to get a feel for you and your business.

Disclaimer:  the information provided on this page is meant for general informational purposes only and may not reflect the most current resources and recommendations available. Please consult with your financial, tax, legal, and other relevant advisors when making decisions about your small business.