Small Business Tax Deductions

Ordinary and necessary expenses for your business are generally deductible. Common examples include office supplies, software subscriptions, business meals (usually 50%), travel, vehicle mileage, home office space, professional services like accountants or lawyers, advertising, and continuing education. The expense must be directly related to running your business and reasonable in amount.

Yes, if you use part of your home regularly and exclusively for business. You can deduct a portion of your rent or mortgage interest, utilities, insurance, and repairs based on the square footage used for work. The simplified method lets you deduct $5 per square foot, up to 300 square feet ($1,500 max).

You can choose the standard mileage rate (set by the IRS each year) or deduct actual expenses like gas, maintenance, insurance, and depreciation. You must keep a log of business miles, dates, and purposes. Apps like Alpha Finance Tracker can automatically track trips and categorize vehicle expenses so your records are audit-ready.

Yes, most business meals are 50% deductible when they are ordinary, necessary, and not lavish. Meals provided to employees at company events or for the convenience of the employer can sometimes be 100% deductible. Always save the receipt and note the business purpose and who attended.

If you use them primarily for business, you can deduct the business portion. For a phone or internet plan used for both personal and business, estimate the percentage of business use and deduct only that share. Dedicated business software, tools, and subscriptions are usually 100% deductible.

Self-employed people can deduct premiums for medical, dental, and long-term care insurance for themselves, their spouse, and dependents. Solo 401(k), SEP-IRA, and SIMPLE IRA contributions are also deductible and reduce your taxable income, though they have separate limits from the health insurance deduction.

You can deduct up to $5,000 of startup costs in your first year of business. If your total startup costs exceed $50,000, that $5,000 allowance shrinks. Remaining costs must be amortized over 15 years. Organizational costs for forming a partnership or corporation have a separate $5,000 deduction.

Yes. The IRS requires documentation for any expense you deduct. For expenses under $75, a simple written record with the date, amount, vendor, and business purpose can sometimes substitute, but a receipt is always safer. Digital photos of receipts are acceptable. Keep records for at least three years after you file the return.

Use a tracker that captures expenses as they happen. Voice entry lets you log a purchase in seconds by saying something like "Lunch with client, $34." Receipt scanning automatically pulls the amount, vendor, and date. At tax time, export everything as a CSV or PDF organized by category. Alpha Finance Tracker does this for free, with no signup required.

Personal expenses, commuting costs between home and your regular workplace, clothing that can be worn outside work, fines or penalties, and political contributions are not deductible. Mixing personal and business expenses is a common trigger for audits, so keep separate accounts and records whenever possible.