As a tax professional working with business owners for years, I’ve seen too many people leave money on the table by missing out on key deductions. The tax code is complicated, and it’s easy to focus on the obvious write-offs, like rent, payroll, and office supplies, while forgetting about the less obvious ones. But these forgotten deductions can add up to significant savings!

Whether you’re a solo entrepreneur, small business owner, or running a startup, these ten overlooked tax deductions can help you keep more of your hard-earned money.

1. Home Office Deduction

Many business owners mistakenly believe that taking a home office deduction increases their chances of an IRS audit. While that might have been true in the past, today, the IRS provides clear guidelines for claiming it legitimately. And the best part of home office deductions is that by claiming this you can increase your auto deductions as well!

If you use a portion of your home exclusively and regularly for business purposes, you can deduct a percentage of your rent/mortgage, utilities, and home insurance. The IRS even offers a simplified option where you can deduct $5 per square foot of office space (up to 300 square feet).

Tip: Keep detailed records of your expenses, draw up the floorplan, and take photos of your dedicated workspace in case of an audit after you end up moving from the house where your office is.

2. Startup Costs Deduction

If you’re launching a new business, the IRS allows you to deduct up to $5,000 in startup expenses in your first year. This includes costs for:

• Market research
• Business formation fees
• Consultant fees
• Initial advertising and website development

If your startup costs exceed $50,000, the deduction phases out, but you can still amortize larger startup expenses over 15 years.

3. Business Insurance Premiums

Insurance is one of those necessary expenses that business owners often forget to deduct. If you’re paying for liability insurance, commercial property insurance, workers’ compensation, cyber liability, or business interruption insurance, those costs are fully deductible.

Even health insurance premiums for yourself and your employees can be deductible, if your business qualifies.

4. Bad Debt Write-Offs

If you’ve extended credit to a customer or client and they fail to pay, you might be able to deduct that as a bad debt expense. This applies to:

• Unpaid invoices
• Loans you made to clients, suppliers, or employees
• Unreturned advances

To claim a deduction, you must prove that the debt is legitimately uncollectible and that you made efforts to recover it. So be sure to document with all those emails and certified letters, even if you know they aren’t planning on paying you, the paper trail is critical.

5. Business Meals (Even Takeout Counts!)

The IRS allows you to deduct 50% of business-related meals as long as they are:

• Ordinary and necessary (meaning they serve a business purpose)
• Not extravagant (sorry, no $1,000 bottles of wine)
• With a business partner, client, or employee

During 2021 and 2022, business meals from restaurants were 100% deductible, but in 2023 and beyond, they revert back to the 50% rule.

Tip: Keep receipts and note who you dined with and the business purpose of the meal. Even coffee meetings can qualify!

6. Retirement Plan Contributions

Many small business owners delay setting up a retirement plan, but doing so not only helps secure your future—it also provides immediate tax benefits.

If you contribute to a SEP IRA, SIMPLE IRA, or Solo 401(k), your contributions are deductible, reducing your taxable income.

For 2024, self-employed individuals can contribute up to $69,000 in a SEP IRA and up to $23,000 in a Solo 401(k), plus an additional $7,500 if they’re over 50.

Tip: If you haven’t set up a plan yet, some retirement plans can be retroactively funded for the prior tax year before your filing deadline.

7. Education and Professional Development

If you take courses, attend conferences, or purchase books related to your business, those expenses are fully deductible. This includes:

• Online courses
• Coaching programs
• Business books and industry journals
• Membership fees for professional organizations
• Travel costs for attending industry-related events

The key is proving that the education maintains or improves your skills for your current business- not training you for a new career. If you could qualify for a new career entirely after graduation, then this isn’t an educational deduction and the expenses can only be used for educational credits.

8. Software and Subscriptions

In today’s digital world, most businesses rely on software and online subscriptions to operate, yet many owners forget to deduct these costs.

These expenses are deductible, including:

• QuickBooks, Xero, or other accounting software
• Zoom or Slack for communication
• CRM tools like Salesforce or HubSpot
• Marketing tools like Canva, Mailchimp, or SEMrush

Even business-related mobile apps (such as project management tools or mileage tracking apps) count. So be sure to dig through all your credit card statements to check for all those AI tools and softwares you purchased and might have forgotten about.

9. Section 179 Deduction for Equipment

If you purchase business equipment, such as computers, office furniture, or machinery, you can deduct the full cost in the year of purchase under Section 179– instead of depreciating it over several years.

For 2024, the Section 179 deduction limit is $1.22 million, meaning you can write off major purchases immediately instead of spreading the cost over time. Note that 179 is only available for property placed in service in the US, so if you are operating your business internationally this won’t help you.

Tip: Even used equipment qualifies, and vehicles weighing over 6,000 pounds can be partially deducted under Section 179.

10. Research and Development Tax Credits

Many small businesses don’t realize that they may qualify for the Research & Development (R&D) Tax Credit– even if they aren’t in a traditional tech or scientific industry.

Many small business owners assume the R&D credit is only for big corporations, but the IRS allows small businesses and startups to claim it. If you’re doing research on or building new or improved products, processes, software, or inventions– even as a small business or freelancer operating from home- you might be eligible.

Tip: Even if your business isn’t profitable yet, you may be able to apply the credit against payroll taxes to get immediate savings. If you run a small business with innovative work, this is a deduction worth exploring!

Take Advantage of These Deductions!

Taxes are already a burden for business owners, so why pay more than necessary? By taking advantage of these commonly overlooked deductions, you can significantly reduce your tax bill and reinvest those savings into growing your business.

If you’re unsure whether you qualify for certain deductions, keep detailed records and work with a tax professional who understands small business tax strategy. A little planning can mean thousands of dollars in savings each year!

Have questions about maximizing your tax deductions? Let’s chat!