Understanding what qualifies as deductible can greatly benefit your operations. The IRS stipulates that for an expense to be deductible, it must be both ordinary (common in your trade or industry, like software) and necessary (essential for conducting your business, like supplies).

Here’s a breakdown of typical business expenses that small business owners should know:

This can range from printing business cards to launching digital marketing campaigns.

All fees associated with your business banking, including account maintenance and transaction fees, are deductible.

These are deductible, but commissions related to real estate purchases are not. Instead, they are added to the property’s basis and depreciated over time.

Hiring freelancers or independent contractors is a common practice among small businesses to fulfill labor needs efficiently.

Fees charged for certain credit card transactions can also be deducted.

Costs related to the education and training of your employees, and your own business-related education, are deductible.

Costs for employee benefits and contributions to qualified retirement plans are deductible.

Under an accountable plan, you can deduct reimbursements for business-related expenses like mileage or home office costs.

This includes premiums for business owner’s policy, malpractice, flood insurance on business premises, cyber liability, and business continuation insurance.

Interest paid on business loans is usually deductible.

Fees for accounting, tax preparation, and other professional services directly related to your business operations are deductible.

Generally, you can deduct 50% of qualifying food and beverage expenses related to business operations.

Dues for business-related organizations, such as professional associations or chambers of commerce, are deductible.

Items that enhance your office environment, like décor, music subscriptions, or snacks, are considered office expenses.

This includes gross wages, employer taxes, health insurance premiums, and other benefit costs.

Expenses for commercial leases are deductible; however, home office expenses fall under a different category.

Costs for ordinary repairs and maintenance of business property are deductible. However, improvements that increase the property’s value are usually capitalized and depreciated. There are safe harbor rules that sometimes allow for immediate deduction, which your tax advisor can detail.

All items purchased for business use, including cleaning supplies for a service or postage for mailing, are fully deductible.

You can deduct certain taxes and the cost of licenses and permits required for your business operations.

Business-related travel expenses, including airfare and accommodations, are deductible. Ensure you have a clear business purpose for these expenses to qualify for deductions.

If it doesn’t neatly fit into other categories but is ordinary and necessary for your business, it’s likely deductible. Keep detailed records to support these claims.

Staying informed about what constitutes a deductible business expense not only helps in reducing your taxable income but also assists in financial planning and budgeting for your business. If you have specific questions about your expenses, reach out to us at [email protected] or visit the IRS website for more detailed information.

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.