Tax season can feel like a tangled mess of numbers, deadlines, and fine print. It’s no wonder that, in the scramble to get everything squared away, many small business owners miss out on some valuable tax deductions. Sure, you’re probably claiming the usual suspects, like office supplies or internet expenses, but there are plenty of overlooked deductions that could save your business a bundle. Here’s a rundown of the top five, with a touch of humor to lighten the load.
1. Home Office Deduction (Yes, Your Couch Counts!)
If you work from home, your “home office” doesn’t need to be a fancy executive suite to qualify. Whether it’s a corner of your dining room, a section of your living room, or that cozy spot on the couch you call your “desk,” you could be eligible for a home office deduction. As long as the space is used exclusively for business, you’re good to go.
What You Can Deduct:
- A portion of your rent or mortgage interest, utilities, and even repairs.
- The simplified option ($5 per square foot, up to 300 square feet) can keep it straightforward if calculating percentages makes your head spin.
Why It’s Overlooked:
Many people assume you need an entire room for it to count. Nope! As long as it’s dedicated space, it’s fair game.
2. Business-Related Meal Expenses (But Not Your Friday Pizza Night)
If you’re grabbing a meal with a client, partner, or anyone you’re “talking shop” with, that’s a business expense! This one is especially important all business meetings involving food and drinks are 50% deductible.
What You Can Deduct:
- Meals with clients or team meetings at a restaurant.
- Snacks provided at the office to keep your staff fueled. (Yes, coffee counts too.)
Why It’s Overlooked:
Some business owners worry this one will “flag” them. But remember, it’s perfectly legitimate as long as you keep receipts and a brief description of who you ate with and why.
3. Vehicle Expenses (Your Car Is Doing Double Duty!)
Whether it’s for a quick supply run, a client visit, or a trip to the bank, your business might be putting mileage on your car. If you’re not keeping track of your business miles, you’re leaving money on the table.
What You Can Deduct:
- Mileage (currently $0.655 per mile for 2023), which covers gas, maintenance, and wear and tear.
- Or, if you’re good with spreadsheets, you can keep records of actual expenses (like gas and repairs) and calculate based on business use.
Why It’s Overlooked:
Keeping a mileage log sounds like a hassle, but there are apps that make it painless. A few taps and you’re set.
4. Professional Development (Yes, Your “Conference in Hawaii” Counts)
Investing in yourself is a business expense! If you’re attending workshops, conferences, or even online courses to sharpen your skills, you can deduct these costs as long as they’re related to your industry.
What You Can Deduct:
- Conference fees, travel, lodging, and meals while attending.
- Educational materials and course fees.
Why It’s Overlooked:
Sometimes, people don’t realize that these can be deducted because they feel more like “personal growth” than business. But hey, if it makes you better at what you do, the IRS sees it as a business expense.
5. Bank Fees and Interest (Yes, They Get You Coming and Going)
If your business bank charges you monthly fees, ATM fees, or any other kind of fees, you can (and should) deduct them. The same goes for interest on business loans or credit card interest.
What You Can Deduct:
- Fees for your business bank account or credit card.
- Interest on business loans or on purchases you make using a business credit card.
Why It’s Overlooked:
It’s easy to overlook these small, recurring costs, but they add up. You’re being charged, so make it work in your favor come tax season.
Final Word: Don’t Miss Out on These Deductions
Many small businesses miss out on these deductions simply because they’re not aware of them. As a rule of thumb, anything that supports your business can potentially qualify, so keep receipts and take a little time to organize. A small effort now means potentially big savings when you file.
And, if the fine print is too much, remember: hiring a pro is also deductible!