Small Business Tax Deductions Checklist

05/05/2024 By: Money Mastery

#1. Startup Costs

Some of the costs associated with starting your business may be tax deductible, including:

Advertising a grand opening
Paying an instructor to train employees
Money spent traveling and establishing relationships with prospective suppliers, distributors, customers, etc.

While these aren’t the only startup costs you may have incurred, anything beyond this list will likely be categorized as capital expenses, which you’ll probably amortize over time, rather than deducting it all at once.

#2. Office Supplies & Furniture

You may also deduct your yearly expenditure on any supplies and/or furniture for your place of business. Make sure you hold onto your receipts and keep track of what you spend on things like:

Desks, tables, and chairs
Filing cabinets
Computers
Printers, ink cartridges, and toner
Paper
Pens and pencils
Paper clips
File folders

and any other supplies or furniture your work space requires.

#3. Rent Payments

If you’re renting the space in which you operate your business, your rent payments may be tax deductible. This includes your base rent, as well as any common area maintenance fees. Other property management, security fees, and other service fees associated with renting may be eligible for deduction as well.

Other kinds of rental payments, such as renting office equipment or furniture, tools, machinery, or other types of equipment are also often tax deductible.

If you are a homeowner running your business out of your home, you may also be able to deduct expenses such as mortgage interest, depreciation, insurance, utilities, and repairs.

#4. Utilities

The cost of utilities paid at your place of business are typically tax deductible as well. Common utilities include:

Electricity
Gas
Water
Sewage
Heating and cooling (if it doesn’t already fall under electricity or gas)
Trash and recycling
Internet
Cable TV
Landline telephone service

If you work out of your home, there may be some restrictions on deducting utilities.

#5. Insurance

The following kinds of insurance for businesses are usually tax deductible:

Business property insurance
Business auto insurance
Business continuation insurance
Health insurance
Liability insurance
Malpractice insurance
Worker’s compensation insurance

#6. Inventory

If your company manufactures or buys products to sell, you may be able to deduct the cost of your inventory. To do this, you must value your inventory at the beginning of the year and the end of the year, then calculate the cost of goods sold.

#7. Software

Whether you purchase a software program outright, or have a recurring monthly or annual subscription, these costs can also qualify for deduction if you’re using them for your business.

#8. Contracted Labor & Professional Services

If your company utilizes independent contractors who receive a Form 1099, the fees for their services may be eligible for deduction. Fees for professional services from a CPA, attorney, etc. may also be eligible.

#9. Employee Salaries, Benefits, & Gifts

You can deduct wages and other compensation paid and reported on Form W-2. You can also deduct any bonuses you pay your employees, and any commission you pay them.

Other costs associated with having employees, such as providing health insurance, paid time off, and other benefits, are also often tax deductible, as they are considered business expenses.

If you give your employees gifts, those are also deductible. You may deduct 100% of the cost up to $25 per year, per employee.

#10. Interest & Bank Fees

You can typically deduct interest paid on things like business loans, business credit cards, and in some cases, fees assessed by your financial institution(s). Fees associated with online payment systems, like PayPal or Shopify, may also qualify for deduction.

#11. Business Travel, Meals & Entertainment

If you’re traveling away from your tax home for more than one business day, you can write off many of the ordinary and necessary expenses you incur during those travels. This includes meals, accommodations & fuel. But bear in mind, there are quite a few stipulations — too many to cover here — so we recommend checking out the whole other blog we’ve already written on the subject.

#12. Education

You can also deduct education or training that allows you or your employees to better perform your job duties or increase your level of expertise. This type of education also falls under the ‘business expense’ category.

Here are a few kinds of education that may be tax deductible:

For-credit and non-credit courses and classes
Seminars
Webinars
Books (either on subjects related to your field, or more general business topics)
Continuing education courses, including those required to maintain a license or certification
Trade publications and journals

#13. Advertising, Marketing, & Promotional Expenses

Money spent on promoting your business can also be tax deductible. Some of these costs include:

Business cards
Billboards and posters
Radio ads
Search engine ads
Social media ads
Television ads
Print ads
Direct mail
Email mass messaging services
Advertising/marketing firm services
Influencer marketing
Printing costs for flyers, signs and other materials
Promotional merchandise (i.e., pens, branded clothing, travel mugs, etc.)
Website domain registration and renewal fees

We hope this small business tax deductions checklist was useful in helping you identify items that you may not have been aware of. It’s worth noting that, while this list is fairly substantial, it’s not 100% comprehensive, since there are often many nuances and special circumstances to account for when doing your taxes. If you want to be totally sure you’re claiming what’s actually eligible and that you’re not leaving anything out (and potentially losing money in the process) you can always come to us for help!