Introduction
As a small business owner, you work hard for every dollar you earn. Yet many entrepreneurs leave money on the table by overlooking valuable tax deductions. In this guide, we'll explore ten commonly missed deductions that could significantly reduce your tax liability.
1. Home Office Deduction
If you use part of your home exclusively for business, you may qualify for the home office deduction. This includes a portion of your rent or mortgage, utilities, and home insurance. The simplified method allows you to deduct $5 per square foot of your home office, up to 300 square feet.
2. Vehicle Expenses
Whether you use the standard mileage rate (67 cents per mile in 2024) or actual expenses, don't forget to track every business-related trip. This includes client meetings, bank visits, and supply runs.
3. Professional Development
Courses, workshops, conferences, and certifications that improve your business skills are fully deductible. This includes online courses, industry publications, and professional memberships.
4. Business Insurance Premiums
Most business insurance premiums are deductible, including:
- General liability insurance
- Professional liability insurance
- Business property insurance
- Cyber liability insurance
5. Retirement Contributions
Contributions to SEP-IRAs, SIMPLE IRAs, or solo 401(k) plans reduce your taxable income while building your retirement savings. These can provide substantial deductionsup to $66,000 for 2024.
6. Health Insurance Premiums
Self-employed individuals can deduct 100% of health insurance premiums for themselves and their families, including dental and long-term care insurance.
7. Software and Subscriptions
Business software, apps, and subscription services are deductible. This includes:
- Accounting software
- Project management tools
- Cloud storage services
- Industry-specific software
8. Bank and Credit Card Fees
Annual fees, merchant processing fees, and interest on business credit cards are all deductible expenses that add up over the year.
9. Startup Costs
In your first year, you can deduct up to $5,000 in startup costs and $5,000 in organizational costs. Remaining expenses can be amortized over 15 years.
10. Bad Debts
If you use accrual accounting and have invoices that went unpaid, you may be able to write off these bad debts as a business expense.
Take Action Today
Don't leave money on the table. Review your expenses with these deductions in mind, and consider working with a professional accountant to ensure you're maximizing every opportunity to reduce your tax burden.
Need help identifying all your eligible deductions? Schedule a free consultation with our team today.