Tax Deductions for Businesses: Maximize Your Savings

What Are Business Tax Deductions?

Business tax deductions—sometimes called “write-offs”—are expenses that the IRS deems both ordinary and necessary for operating your trade or business.

• Ordinary: Common and accepted in your industry.
  
• Necessary: Helpful and appropriate for your business operations.
  
  

When claimed correctly, these deductions reduce your taxable income and, by extension, your overall tax bill.

Why Tax Deductions Matter

Taxes are typically one of the largest expenses for business owners and founders. By not fully leveraging deductions:

• You pay more in taxes than necessary.
  
• You reduce cash flow, limiting your ability to reinvest in growth.
  
• You miss opportunities to align business expenses with long-term wealth-building strategies.
  
  

The IRS provides clear rules for what qualifies—and staying on top of these opportunities can save thousands each year.

Deductible vs. Non-Deductible Expenses

Deductible Examples:

• Office rent
  
• Employee salaries and benefits
  
• Business insurance premiums
  
• Advertising and marketing costs
  
• Professional development courses
  
• Software subscriptions
  
• Mileage and travel for business purposes
  
  

Non-Deductible Examples:

• Personal living costs
  
• Commuting from home to your primary office
  
• Fines and penalties
  
• Political contributions
  
• Client entertainment (limited after 2017 TCJA rules)
  
  

Top Tax Deductions for Small Businesses

Here are some of the most valuable deductions business owners should consider:

1. Advertising and Marketing Costs

From digital ads to printed flyers and website design, the money spent to promote your business is deductible.

2. Bank Fees and Interest

Monthly maintenance charges, overdraft fees, and business loan interest can all be deducted.

3. Business Meals

Generally 50% deductible when directly related to business operations. Meals during travel or client meetings may qualify.

4. Business Insurance Premiums

Coverage for liability, malpractice, workers’ comp, and property insurance is fully deductible.

5. Business Use of Your Car

Choose between the standard mileage rate or actual expense method. Careful recordkeeping is essential.

6. Home Office Deduction

If you use part of your home regularly and exclusively for business, you may be eligible.

7. Office Supplies and Expenses

Everyday essentials like printer ink, paper, and postage are 100% deductible.

8. Utilities, Phone, and Internet

The percentage of use for business is deductible.

9. Employee Salaries, Wages, and Benefits

Compensation to employees is fully deductible.

10. Professional Services

Accountants, attorneys, and consultants—all deductible if related to your business.

11. Travel Expenses

Airfare, hotels, rental cars, and 50% of meals when traveling for work.

12. Education and Training

Courses, certifications, and seminars to improve skills in your current business.

13. Rent for Business Property

If you lease office, warehouse, or retail space, this is deductible.

14. Depreciation of Business Assets

Large purchases (equipment, vehicles, machinery) can be written off over time or sometimes immediately through bonus depreciation.

15. Startup and Organizational Costs

Expenses incurred before your business officially launches may be deductible.

16. Taxes and Licenses

Business licenses, permits, payroll taxes, and state/local taxes often qualify.

What is 100% Tax Deductible for a Business?

Some expenses are fully deductible with no percentage limits:

• Office supplies
  
• Rent for business property
  
• Salaries and wages
  
• Business insurance premiums
  
  

Mistakes to Avoid:

• Failing to keep receipts or documentation
  
• Mixing personal and business expenses
  
• Incorrectly classifying costs (e.g., meals vs. entertainment)
  
  

The 20% Qualified Business Income (QBI) Deduction

For many small business owners, the QBI deduction is one of the biggest opportunities.

• Who qualifies: Pass-through entities such as sole proprietors, partnerships, S corps, and most LLCs.
  
• What it offers: Up to a 20% deduction on qualified business income.
  
• Limitations: Income thresholds apply, and certain service businesses (like legal or accounting firms) face phase-outs.
  
• Duration: Currently available through 2025 unless Congress extends it.
  
  

How to Maximize Your LLC Tax Deductions

• Separate personal and business finances—use dedicated business accounts and cards.
  
• Track expenses digitally with apps or software.
  
• Use the home office deduction if eligible.
  
• Leverage business credit cards for cleaner expense records.
  
• Keep thorough documentation for an audit-proof strategy.
  
  

Filing Your Business Tax Deductions

Different business structures require different forms:

• Sole proprietors: Schedule C (Form 1040)
  
• Partnerships: Form 1065
  
• Corporations: Form 1120 (C corps) or 1120-S (S corps)
  
  

Best Practices:

• Keep receipts, invoices, and mileage logs.
  
• Stay organized throughout the year, not just at tax season.
  
• Automate where possible with accounting and tax software.
  
  

Non-Deductible Expenses to Watch Out For

Some costs may feel business-related but don’t qualify:

• Personal expenses
  
• Client entertainment (post-2017 limits)
  
• Political contributions
  
• Fines and penalties
  
• Commuting costs (to your primary workplace)
  
  

Expert Tips to Get the Most from Your Business Tax Deductions

• Hire a professional: A CPA can uncover deductions you might miss and ensure compliance.
  
• Plan ahead: Don’t wait until April—tax planning is a year-round activity.
  
• Leverage technology: Use platforms like Gelt to integrate strategy with execution.
  
  

How Gelt Can Help

Maximizing deductions isn’t just about saving a few dollars—it’s about boosting your business’s profitability and growth. Gelt combines AI-powered tools with a dedicated CPA to make sure every possible deduction is uncovered and documented.

With Gelt, you’ll:

• Identify deductions you didn’t know existed.
  
• Automate recordkeeping.
  
• Work with a tax expert to tailor strategies to your unique business.
  

👉 Talk to a CPA and start maximizing your deductions today.