Small Business Tax Deduction Checklist – Part 1

With tax season approaching, you will want to take advantage of any and all deductions legally available to you. And if you aren’t satisfied with this year’s write-offs, you’ll want to start looking ahead next year to ensure you are aware of and actively documenting everything you could be deducting.

Here is a checklist of common small business tax deductions. Not all of them will apply to your individual business, of course, but many will, and you’ll want to be sure you work with your accountant and bookkeeper to be sure you correctly interpret, keep track of, and maximize your deductions.

  1. Business-related travel. Generally, any travel that is necessary for your business is considered deductible. This includes driving to and from client meetings, traveling to trade shows, and even going out on sales calls. You can also deduct the cost of parking fees and tolls associated with your business travels.  You can’t, however, deduct your commute to and from a workplace, so be careful about that.

  2. Business meals. Any meal that is directly related to your business is considered deductible. This includes meals eaten while traveling for work-related purposes, as well as meals eaten at client meetings or during sales calls. You can also deduct the cost of alcoholic beverages consumed during business meals, but only up to 50% of the total cost of the meal. 

  3. Employee benefits and bonuses. Many benefits and bonuses that you provide for your employees are considered deductible. This includes items like health insurance premiums, 401(k) contributions, and holiday bonuses. You can also deduct the cost of fringe benefits provided to employees, such as parking fees and transportation costs. 

  4. Cost of Goods Sold. Typically, any item that is purchased for the purpose of reselling is considered a “good sold.” This includes items like inventory, materials, and supplies. You can also deduct the cost of shipping and handling fees associated with the sale of goods. 

  5. Commissions paid. Commissions are payments made after the completion of specific tasks, both to employees such as salesmen and to third parties such as real estate agents. Typically you will have to withhold taxes for employees, but not to third parties unless they are subject to backup withholding.

  6. Repairs and maintenance. Generally, any expense incurred in order to keep your property running in good condition is considered a repair or maintenance expense. This includes expenses like labor costs, parts replacements, and cleaning services. 

  7. Office supplies and furniture. Any purchases you make to furnish or equip your office are considered an office supply or furniture expense. This includes things like desktops, chairs, printers, and paper. 

  8. Utilities. Expenses incurred to provide your business with heat, electricity, water, or telecommunications service are considered a utility expense

  9. Insurance premiums. Expenses incurred in order to purchase or maintain insurance coverage for your business are considered insurance premium expenses. This includes expenses like premiums for health, dental, and vision coverage, as well as premiums for property and casualty coverage.

  10. Software. Generally, any expense incurred in order to purchase or license computer software is considered a software expense. This includes things like the purchase price of software licenses, subscription fees for online services, and even installation charges. 

  11. Interest expenses. Expenses incurred in order to borrow money for your business are typically considered an interest expense. Some examples are loan origination fees, late payment penalties, and credit card interest charges. 

  12. Legal fees. If you have had to obtain or maintain legal counsel for your business, that is considered a legal fee expense. This includes expenses like attorney’s fees, paralegal fees, and court costs. 

  13. Advertising or marketing expenses. When you incur costs to promote or sell your products or services, it can be deducted as an advertising or marketing expense. This includes expenses like the cost of printing flyers or brochures, the price of radio or television advertising time, and the cost of website design or optimization services. 

  14. Employee education. To take advantage of this deduction, it is important that you have issued a written employee assistance plan. If so, you can deduct things like tuition, books, supplies, and certain travel costs. The deduction is currently limited to $5,250 for each employee.

  15. Janitorial and cleaning expenses. Any cleaning and janitorial costs you incur for maintaining your business are deductible, including labor, as long as the workers are not already salaried employees or the company. This includes cleaning supplies purchased by your company as well as any used by a third-party service.  


That’s a lot of deductions to track and benefit from, but it’s only the half of it. Check back next week for part 2 of the checklist.