Running a business involves numerous expenses, but many of these costs can be deducted from your taxable income, reducing your overall tax burden. Here’s a guide to some of the top tax deductions every business should know.

1. Home Office Deduction

If you use part of your home exclusively for business, you may qualify for a home office deduction. This includes a portion of your rent or mortgage, utilities, property taxes, and home maintenance costs. You can choose between the simplified method, which allows a standard deduction of $5 per square foot of home office space (up to 300 square feet), or the regular method, which involves calculating actual expenses.

2. Vehicle Expenses

Business-related vehicle expenses can be deducted using either the actual expense method or the standard mileage rate. The actual expense method includes costs like gas, oil, repairs, insurance, and depreciation. The standard mileage rate for 2024 is 65.5 cents per mile driven for business purposes. Keep detailed records of all business-related travel.

3. Business Meals

You can deduct 50% of qualifying business meal expenses. These include meals with clients, partners, or employees where business is discussed. Ensure you keep receipts and note the business purpose of each meal.

4. Travel Expenses

Traveling for business can also yield valuable deductions, including airfare, lodging, car rentals, and meals. The travel must be necessary for business purposes, and personal travel expenses cannot be included. Detailed records and receipts are essential.

5. Office Supplies and Equipment

Expenses for office supplies such as stationery, printer ink, and business-related software are fully deductible. Larger purchases, like computers and office furniture, may need to be depreciated over time, but there are provisions for immediate expensing under Section 179.

6. Utilities

Utility costs like electricity, water, and internet services used for business purposes are deductible. For home-based businesses, you can deduct the business portion of these expenses.

7. Salaries and Wages

Salaries, wages, bonuses, and other forms of compensation to employees are deductible, including payroll taxes the business pays on behalf of employees.

8. Insurance

Premiums for various types of business insurance, including liability, property, and workers’ compensation insurance, are deductible. Health insurance premiums for employees are also deductible.

9. Advertising and Marketing

Expenses for advertising and marketing, including online ads, print ads, business cards, and promotional materials, are fully deductible. These costs must be directly related to your business activities.

10. Professional Services

Fees paid to accountants, lawyers, consultants, and other professionals for business services are deductible. Keeping contracts and detailed invoices will help support these deductions.