Small Business Tax Deductions: What You Can Write Off (and How to Do It Correctly)
As a small business owner, you want to take advantage of every legitimate deduction available to you. The problem? Some expenses feel like they should be deductible… but aren’t. Others are commonly overlooked, even though they can save you thousands each year.
This guide breaks down some of the most common questions small business owners ask about tax write-offs—and how to make sure you’re tracking them properly.
Home Office Deduction
If you run your business from home, the IRS may allow you to claim a home office deduction. But there are rules: the space must be used exclusively and regularly for business.
You can calculate this deduction in two ways:
Simplified Method:
Deduct $5 per square foot of office space
Maximum deduction: $1,500 (300 sq ft)
Easiest option, but may not yield the highest deduction
Actual Method:
Calculate the percentage of your home used for business
Deduct that percentage of home expenses such as
Rent
Utilities
Insurance
Property taxes
Example:
Your office is 500 sq ft in a 2,000 sq ft home → that’s 25%.
You may deduct 25% of eligible home expenses.
Common Expenses Small Business Owners Can Deduct
Many entrepreneurs work from home, travel for business, purchase office supplies, or invest in training. The IRS allows deductions for expenses that are ordinary and necessary for your business.
Some commonly deductible items include:
Office furniture and equipment
Phone and internet
Advertising and marketing
Education that improves your skills
Depreciation of business assets
Even small items like ink, paper, or software subscriptions can count—as long as they’re strictly business-related.
Vehicle & Mileage Deductions
If you use a personal vehicle for business, you can deduct your business mileage or your actual vehicle expenses.
Standard Mileage Method:
For 2022, the IRS rate was 62.5 cents per mile (second half of the year).
You must keep a mileage log to claim this.
Actual Expense Method:
Calculate the percentage of business use and apply it to expenses like:
Gas
Repairs
Maintenance
Insurance
Depreciation
Example:
If 50% of your vehicle use is business-related, you may deduct 50% of those costs.
Bonus Tip:
Even if you choose the standard mileage rate, you can still deduct:
Parking fees
Tolls
Business travel costs (e.g., hotels, taxis, airfare)
Just remember: personal use is never deductible.
Education & Training Deductions
Education is deductible when it directly improves or maintains skills needed for your business.
Eligible expenses include:
Course tuition
Workshops and seminars
Books or study materials
Conference fees
Think of education as an investment:
It helps you grow your skills and reduces your taxable income.
Why Keeping Good Records Is Non-Negotiable
No matter what you deduct, the IRS expects proper documentation.
Best practices:
Track all business expenses digitally and on paper
Keep receipts (especially anything over $75)
Maintain mileage logs
Separate business and personal finances
Stay organized year-round—not just at tax time
My advice?
Act like you’ll be audited.
If your records are clean and organized, you’ll never have to stress about proving your expenses.
Final Thoughts
Small business owners have access to many valuable tax deductions—from home office write-offs to mileage to continuing education. The key is understanding the rules and keeping accurate records so you can take full advantage of them.
These deductions can save you money, reduce your taxable income, and support the growth of your business.
If you want help tracking deductions, staying organized, or preparing for tax season, a virtual bookkeeper can make the entire process easier and more reliable.
