Generally, if something is a true business expense, it is probably a legitimate small business tax deduction. Below are some common business expenses that can be deducted:
- Rent or home office
- Employee wages and other compensation
- Utilities, Internet, and Cell Phone (estimate the business-use percentage)
- Advertising
- Auto expenses
- Travel expenses
- Meals while traveling or with client(s) or prospect(s)
- Professional fees
- Business licenses, permit fees, and professional membership dues (no country clubs, sports clubs, or recreational memberships)
- Business supplies and equipment
- Accountant, tax preparation, and attorney fees related to the business
- Educational expenses (must be related to the business)
- Repairs
- Bad debts (i.e., customer fails to pay for service or product)
- Interest on business purchases
- Moving expenses
- Software
- Charitable contributions
- Business taxes
- Financial institution fees
- Parking fees and public transportation costs
- Publications related to the business
- Casualty and theft losses
- Postage and shipping fees
- Health care insurance cost–if neither spouse is covered employer-provided healthcare insurance
- Startup expenses in the first year for a new business
Expenses related to Entertainment are not allowed.