Top Tax Deductions Small Business Owners Overlook

When you’re running a small business, every dollar matters. Unfortunately, many business owners leave money on the table each tax season by missing out on deductions they’re entitled to. The IRS allows a wide range of business expenses to be deducted, but if you’re not keeping up with proper bookkeeping, it’s easy to overlook them. Below are some of the most common, and often missed, tax deductions for small businesses.

1. Home Office Deduction

If you use a portion of your home exclusively for business, you can deduct a percentage of your rent or mortgage, utilities, insurance, and even repairs. Many small business owners skip this deduction because they fear it’s a red flag for audits, but if you qualify, it’s 100% legitimate.

2. Mileage and Vehicle Expenses

Driving to meet clients, making deliveries, or even trips to the office supply store can add up quickly. You can deduct either the actual expenses (gas, maintenance, insurance) or the IRS standard mileage rate. The key is keeping a detailed mileage log throughout the year.

3. Professional Services

Payments made to bookkeepers, accountants, consultants, and even attorneys are fully deductible as business expenses. If you outsource any service to keep your business running, don’t forget to claim it.

4. Education and Training

Courses, workshops, certifications, and even books or online programs that improve your skills or grow your business knowledge are deductible. If it helps you do your job better or expand your business, you can likely write it off.

5. Software and Subscriptions

From bookkeeping software like QuickBooks or Xero to industry-specific tools, project management apps, or even your website hosting and domain fees, these are all considered necessary business expenses.

6. Marketing and Advertising

Business cards, online ads, social media promotions, sponsorships, and even your company website costs all qualify. Marketing is often overlooked simply because business owners see it as “extra,” but the IRS counts it as essential.

7. Meals and Entertainment (with Clients)

Taking a client out for coffee or lunch for business purposes? That’s deductible. Just remember: you’ll need to keep receipts and document who you met with and what you discussed to qualify.

8. Health Insurance Premiums

If you’re self-employed and not eligible for a company health plan elsewhere, you may be able to deduct the cost of your health insurance premiums (including coverage for your spouse and dependents).

9. Retirement Contributions

Contributions to SEP IRAs, Solo 401(k)s, or other retirement accounts for self-employed individuals are tax-deductible, and a smart way to plan for your financial future.

10. Bad Debts

If you’ve invoiced a client who never paid and you’ve made reasonable efforts to collect, you may be able to write off that unpaid amount as a bad debt expense.

Final Thoughts

Tax deductions aren’t about “gaming the system” they’re about ensuring you only pay taxes on your actual profit, not on money you’ve had to spend to run your business. The key to maximizing your deductions is staying organized year-round with your bookkeeping.

When in doubt, keep good records, save receipts, and work with a professional who can guide you. Missing out on these deductions could mean losing thousands of dollars in savings each year.