Common and Industry-Specific Tax Deductions for Small Businesses

Tax season shows up fast when you’re busy running a business. You’re focused on keeping things moving—bringing in work, paying bills, maybe even hiring help. But while you’re doing all that, you’re also spending money. And if you don’t track what’s deductible, you could pay more tax than you need to.

Many small business owners do.

Some are nervous about what they’re allowed to claim. Others just forget. And by the time they sit down to file, it’s too late to fix it.

If you’re trying to determine what expenses you can write off, here’s what you need to know.

What Counts as Deductible Expenses?

Any ordinary and necessary expense to run your business is generally deductible.

“Ordinary” means it’s common in your industry. “Necessary” means it helps operate your business, even if it’s not absolutely essential.

Keep in mind that the IRS won’t come chasing you with a list of things you forgot to deduct. That’s your job or your accountant’s. Either way, knowing what qualifies can help you keep more of what you earn.

Common Tax Deductions for Small Businesses

Here’s a quick look at common expenses you might be able to write off for your business.

1. Advertising and Marketing

Anything you spend to promote your business is generally deductible. That includes digital ads, business cards, email marketing tools, social media ads, and even hiring a freelancer to run your campaigns.

Let’s say you paid for a Facebook ad, printed flyers, and paid someone to build your website; those all count. Just make sure they were used to promote your business and not a personal project.

2. Home Office Expenses

If you run your business from home, you can deduct part of your rent or mortgage, utilities, and even repairs, based on how much of your home you use just for work. The space must be your principal place of business and used only for business purposes, so a shared room like a guest bedroom wouldn’t qualify.

There are two ways to claim this deduction. The actual method lets you calculate the percentage of your home used for work and apply that to your actual home expenses. If you want a simpler option, the IRS also allows a flat deduction of $5 per square foot, up to 300 square feet.

3. Business Use of Your Vehicle

If you drive for work to meet clients or deliver goods, you can deduct the business-related portion of your vehicle expenses. You can either track your actual expenses (gas, insurance, repairs) or use the IRS mileage rate.

Just keep a log showing the dates, purpose, and mileage for each trip. Commuting from home to an office doesn’t count, but driving to a job site or client meeting does.

4. Office Supplies and Software

This covers everything from printer paper and ink to accounting software and Zoom subscriptions. If it helps you run your business, it’s probably deductible.

Big-ticket items (like a laptop or a monitor) may need to be depreciated over time unless you qualify for a Section 179 deduction, which lets you write off the full amount in the year of purchase.

5. Professional Fees

Fees paid to accountants, lawyers, consultants, or tax advisors are deductible. That includes your CPA, who prepares your tax return, or the lawyer who drafted your business contracts.

You can also deduct fees for online tools and platforms that help you manage your business, like QuickBooks, Stripe, or Shopify.

6. Business Insurance

If you have general liability insurance, professional liability (like errors and omissions), workers’ comp, or business property insurance, those premiums are deductible.

Even if your landlord requires you to carry insurance as part of a lease agreement, that counts too.

7. Rent and Utilities

If you lease office space, retail space, or storage, your rent payments are deductible. So are your utility bills like electricity, water, gas, and internet, as long as they’re used for business.

For shared services, like a cell phone plan, only deduct the business-use portion. If you use 70% of your mobile data for work, that’s what you can write off.

8. Employee Salaries and Benefits

If you pay employees (not contractors), their wages, bonuses, and benefits are generally deductible. That includes health insurance premiums, retirement contributions, and paid time off.

Just be sure they’re working in your business, not co-owners or family members doing unpaid help under the table.

9. Travel

Business travel, like conferences, trade shows, or client meetings out of town, is deductible. That includes flights, hotels, rental cars, meals, and baggage fees.

Make sure the trip has a clear business purpose, and keep receipts. Personal side trips aren’t deductible, but if you combine business and personal travel, you can separate out the business portion.

10. Education and Training

Courses, workshops, books, webinars, and certifications that help you improve your skills or maintain your professional standing are all fair game.

If you’re a real estate agent renewing your license or a consultant learning new tools for your clients, you can deduct the cost of tuition and materials.

Industry-Specific Tax Deductions for Small Businesses

Not all businesses are the same. What’s considered “ordinary and necessary” in one field might not apply in another. So aside from the usual write-offs, some deductions depend on your industry.

Here’s a look at some small business deductions broken down by industry:

Freelancers and Creatives

If you’re a writer, designer, coach, or consultant, your biggest costs probably come from the tools you use and the time you spend improving your skills.

Things you can deduct:

• Paid tools and subscriptions (like Canva, Zoom, Notion, or Adobe)
• Your domain, website hosting, and email platforms
• Online courses, workshops, or certifications related to your field
• Client gifts (limit is $25 per person)
• Co-working space fees (if you work outside your home)

Basically, if it helps you do your work better or reach more clients, there’s a good chance you can write it off.

Real Estate Agents and Brokers

Real estate professionals usually spend a lot on marketing and transportation. The IRS gets that, and those expenses are often deductible.

You can usually write off:

• MLS fees and continuing education
• “For Sale” signs, lockboxes, and printed flyers
• Facebook or Instagram ads for listings
• Client meals during showings or closings
• Mileage for driving to properties, closings, or open houses

And yes, if you work from home and don’t have a separate office, you might qualify for the home office deduction too.

Contractors and Skilled Trades

If you’re in construction, plumbing, HVAC, electrical, or anything similar, your tools, gear, and vehicle costs can really add up. The good news is, most of it can be deducted.

That includes:

• Work vehicles and related costs (mileage, gas, repairs)
• Tools and equipment you buy or rent
• Safety gear like boots, gloves, masks, and goggles
• Job-related travel or lodging
• Union dues or trade association memberships

Even if you do most of your work on-site, you can still deduct part of your home expenses if you use your garage or basement for planning, paperwork, or storing gear.

Retail Stores and Online Shops

Whether you run a physical store, sell on Etsy, or manage a Shopify site, you probably have inventory and fulfillment costs, and those are deductible.

What counts as deductions:

• The cost of the items you sell (raw materials, wholesale purchases, etc.)
• Shipping supplies (boxes, labels, packing tape)
• Delivery costs or fulfillment fees (like Amazon FBA)
• E-commerce tools or platforms (like Shopify, Wix, or Etsy seller fees)
• Advertising and product photography

If you attend vendor markets or pop-up events, the travel, booth fees, and related costs are also fair game.

Healthcare and Wellness Providers

Solo-practice therapists, chiropractors, dentists, or physical therapists often have compliance-heavy expenses. Most of it qualifies as a deduction.

That includes:

• Licensing fees and liability insurance
• Booking software or telehealth tools
• Continuing education and required certifications
• Supplies like PPE, linens, and medical equipment
• Rent or utilities for your treatment space

If you run your practice from home or offer online sessions, part of your home internet or office may also be deductible.

Manufacturers and Distributors

This group tends to have high overhead but also some of the biggest deduction opportunities.

Here’s what to look at:

• Equipment and machinery (deductible through Section 179 or depreciation)
• Factory or warehouse rent and utilities
• Inventory software and tracking systems
• Raw materials and packaging
• Employee wages and insurance
• Shipping and delivery costs (both inbound and outbound)
• Fuel and maintenance for delivery vehicles

And if you’re working on new product designs, prototypes, or production improvements, check if you qualify for the R&D tax credit. It’s often overlooked.

Know Your Tax Deductibles

At the end of the day, tax deductions don’t just help you save money, but they make sure you’re not paying the IRS more than you have to. You’re already spending money to keep your business running. You might as well make those expenses work for you.

The hard part is keeping track of everything. If you’re unsure what you can deduct, or you’ve been winging it with your taxes for years, it might be time to get some help. A tax expert can walk you through what counts, help you avoid mistakes, and ensure you’re not missing out on anything.

The more you understand what’s deductible, the easier it gets to keep good records and the more confident you’ll feel at tax time.

Click here to request a free 30-minute consultation, and let’s make sure you’re not leaving money on the table.