HomeBlogBlogSmall Business Write-Offs: Common Deductions to Claim

Small Business Write-Offs: Common Deductions to Claim

What expenses can a small business write off?

Small businesses can typically write off “ordinary and necessary” costs paid to run the business. The specific deduction depends on how the expense is used, how it’s documented, and whether it’s personal, business, or mixed-use. Good records matter because the same type of purchase (like a phone or vehicle) can be fully deductible, partially deductible, or not deductible at all depending on usage.

Common small business write-offs

Many day-to-day operating costs are deductible, including:

Office expenses: supplies, postage, small equipment, and software subscriptions.
Rent and utilities: lease payments and business portions of electricity, internet, and phone.
Advertising and marketing: online ads, print materials, sponsorships, and promotional costs.
Payroll and contractor payments: wages, employer taxes, and payments to freelancers (with proper forms).
Insurance premiums: general liability, commercial property, and certain professional coverage.
Professional services: legal, accounting, bookkeeping, and consulting fees.
Bank and payment processing fees: merchant fees, transaction fees, and business account charges.

Home office, vehicle, and travel (often partially deductible)

Some of the most valuable deductions require extra care because they’re commonly mixed with personal use:

Home office: may be deductible when a specific area is used regularly and exclusively for business.
Vehicle expenses: business mileage or actual expenses may be deductible when supported by a mileage log and business purpose.
Business travel: airfare, lodging, and local transportation may qualify when the trip is primarily for business.
Meals: sometimes deductible when directly tied to business and properly documented.

Inventory and cost of goods sold

If you sell products, inventory purchases are generally handled through cost of goods sold (COGS) rather than being deducted like a regular expense. Tracking purchases, shipping, and related product costs helps calculate taxable profit more accurately.

Documentation tips that protect deductions

Save receipts and invoices, note the business purpose, and keep separate business banking when possible. For mixed-use items (like a phone), document the business percentage and apply the deduction accordingly. For a deeper breakdown and examples, visit this guide on business write-offs.

FAQ

Can you write off startup costs for a new business?

Many startup expenses can be deducted, but they’re often subject to special rules and may need to be amortized over time. Keep detailed records of costs incurred before opening, such as market research, initial advertising, and legal setup fees.