20 Tax Deductions for Your Small Business


By Amy Thompson

Feb 26, 2023

10 min read

Tax time can be stressful, especially for a small business owner, and it’s important to know possible deductions available to you because every dollar counts— the more you can save with tax deductions, the more cash you have to grow your business! It’s best to speak with a tax professional to learn which deductions are most beneficial for your unique business and how to take advantage of them, but to get you started we’ve put together 20 common deductions for small businesses that may save you money on taxes this year:

Marketing:

Business expenses related to advertising and marketing may be deductible from your taxes. Companies can now deduct much more money than in the past for advertising and marketing as a general business expense. This includes costs related to things like advertising on social media platforms, creating and distributing content such as videos or podcasts, and search engine ads.

Professional Fees:

If you hire an accountant or lawyer to help with your business, those fees may be deductible from your taxes. This includes services like filing taxes or legal advice on contract review as long as they’re related directly to running the company itself.

Business equipment:

Small businesses may be able to take advantage of Section 179 of the IRS Tax Code when purchasing or financing equipment or software, which allows businesses to deduct all or some of the purchase price.

Employee Compensation:

If you have employees, you may be able to deduct their salaries and wages, including bonuses and stock options, from your taxes.

Software subscriptions:

Most businesses utilize several software subscriptions to run their business, including things like cloud storage, POS, and services like Office 365 or Google Drive— all of which may be deductible.

Health insurance premiums:

If you cover health insurance premiums for your employees, then you may be able to include them as a business expense on your taxes. Sometimes these amounts are limited, so ask your tax advisor for details.

Retirement contributions:

Any contributions to a retirement plan for yourself and your employees may be deductible, including contributions to 401(k)s, IRAs, and other types of retirement plans. This is a win for you— getting money back while giving more to your employees.

Contractor and Freelancer pay:

If you hire contractors or freelancers (like designers or writers), those expenses may also be deductible.

Business Travel Expenses:

If you travel for business purposes (even if it’s just once a year), then this one could save you some serious cash at tax time. Whether commuting to a client meeting, visiting a supplier, or attending a business event— remember to keep all your receipts; they add up quickly!

Business-Related Meals:

Taking a client to lunch, a working dinner with employees or brunch with a vendor may all qualify as a deduction. Any reasonable meal consumed while conducting business may be deductible —even if those meals are at McDonald’s!

Employee or client gifts:

Gifts that you give employees or clients for a special event, promotion, or marketing campaign (like t-shirts with your logo on them) may be eligible as business expenses. There is a dollar limit per person, so check with your tax advisor.

Bank fees:

Those pesky fees related to your business bank account or credit cards— you may be able to add them to your expenses and deduct them!

Bad Debt:

Any debt that is owed to you by customers or vendors but cannot be collected may be deductible. It’s a frustrating part of business, but now might be the time to help offset a bit of the loss.

Office supplies:

Pens, paper, staples, paper clips, envelopes, ink… all the things you need to get work done and stay organized in the office— all may be deductible!

Real Estate Taxes:

Owning a business property, like an office or store, may allow you to claim the related real estate taxes as a tax deduction.

Business-Related Education:

This deduction may be available if you’ve paid for classes, seminars, or workshops related to your business. You may even be able to deduct the cost of books and materials as long as they’re directly related to your work.

Utility Bills:

Utilities like water bills, electricity bills, gas bills… anything that helps keep your business running may be an eligible deduction. Just be sure to record each utility bill separately to determine how much goes toward each category accurately.

Internet Expenses:

Whether you run your business from a facility or your home, you may be able to deduct some or all of the costs associated with your internet connection.

Phone Expenses:

If you use your cell phone for work calls and internet access for business purposes, those expenses could also be tax deductible.

Business Rent:

If you rent a building or office space where your business is located, those rental costs may be deductible. There is a yearly limit, so consult your tax advisor.

All this tax stuff can be tricky, so we urge you to speak with a tax pro to ensure you are taking full advantage of all the available deductions for your business. We thrive on seeing small businesses succeed, so we want you to get every dollar you can put back into your business!

*Please contact your tax, legal, or financial advisor/professional for any tax advice or counsel regarding your tax liabilities. Be advised that any material contained herein is for informational purposes only and does not constitute tax, legal, or other professional advice.