Tax Deductions Small Business Owners Shouldn’t Overlook
As a small business owner, maximizing your tax deductions is key to keeping more of your hard-earned money. However, many business owners miss out on valuable deductions simply because they don’t realize they qualify. By taking advantage of these often-overlooked deductions, you can lower your taxable income and improve your bottom line.
At Simply Balanced Accountants, we help small business owners navigate tax season with confidence. Here are four key deductions you don’t want to overlook:
1. Home Office Deduction
If you regularly and exclusively use part of your home for business, you may qualify for the home office deduction.
💡 What’s Deductible?
✔️ A portion of your rent or mortgage
✔️ Utilities (electricity, internet, water, etc.)
✔️ Home repairs and maintenance related to the business space
📌 How It Works:
Simplified Method: Deduct $5 per square foot of office space, up to 300 square feet.
Actual Expense Method: Deduct a percentage of home expenses based on the size of your office relative to your home.
Tip: Keep records of expenses and photos of your workspace in case of an audit.
2. Business Meals Deduction
Taking a client out for lunch or grabbing coffee while discussing business? You may be able to deduct 50% of the cost of business-related meals.
💡 What Qualifies?
✔️ Meals with clients, partners, or employees for business discussions
✔️ Meals while traveling for business
✔️ Meals at networking events
🚫 What Doesn’t Qualify?
❌ Personal meals
❌ Lavish or extravagant meals
Tip: Keep itemized receipts and make notes about the business purpose (who you met with and why).
3. Vehicle Use & Mileage Deduction
If you use your personal vehicle for business purposes, you can deduct mileage or actual vehicle expenses.
📌 Two Ways to Deduct:
Standard Mileage Rate (2024): 67 cents per mile driven for business.
Actual Expense Method: Deduct gas, maintenance, insurance, and depreciation based on business use percentage.
💡 What Counts as Business Miles?
✔️ Traveling between offices or job sites
✔️ Meeting clients or attending business-related events
✔️ Driving to pick up supplies
🚫 What Doesn’t Count?
❌ Commuting from home to your primary office
Tip: Use an app like MileIQ or QuickBooks Self-Employed to track mileage.
4. Self-Employed Retirement Contributions
One of the best ways to lower your taxable income and build wealth is by contributing to a self-employed retirement plan.
💡 Retirement Plans for Small Business Owners:
✔️ SEP IRA – Contribute up to 25% of compensation (max $69,000 for 2024).
✔️ Solo 401(k) – Employee deferrals up to $23,000 + employer contributions, with a $69,000 total limit ($76,500 if 50+).
✔️ SIMPLE IRA – Employee deferrals up to $16,000, plus employer match.
Tip: Contributions reduce your taxable income and grow tax-deferred until retirement.
Bonus: Other Overlooked Deductions
✅ Business Insurance Premiums – Protecting your business isn’t just smart, it’s deductible.
✅ Professional Development – Training, courses, and industry conferences qualify.
✅ Marketing & Advertising – Website costs, online ads, and print materials.
✅ Software & Subscriptions – Accounting tools, tax software, and CRM subscriptions.
Don’t Leave Money on the Table!
Missing deductions can cost you thousands in taxes. At Simply Balanced Accountants, we specialize in maximizing deductions for small businesses. Let us help you keep more of what you earn!
📞 Call us: 517-897-2144
📧 Email us: connect@simplybalancedaccountants.com
🌐 Visit our website: www.simplybalancedaccountants.com
Tax season is here—don’t pay more than you have to! Let’s create a strategy that works for you. 🚀
