As a small business owner, maximizing your tax deductions is crucial for maintaining healthy cash flow and profitability. However, many businesses leave money on the table by overlooking legitimate deductions. Here are ten commonly missed deductions that could save your business thousands of dollars.

1. Home Office Expenses

If you use part of your home exclusively and regularly for business, you can deduct a portion of your mortgage or rent, utilities, insurance, and maintenance costs. The simplified method allows $5 per square foot up to 300 square feet, while the regular method requires detailed calculations but often yields larger deductions.

2. Vehicle Expenses

Business use of your vehicle is deductible either through the standard mileage rate (67 cents per mile for 2026) or actual expenses including gas, repairs, insurance, and depreciation. Keep detailed mileage logs to substantiate your deduction. Many business owners forget to track short trips to the post office, bank, or supply stores.

3. Professional Development and Education

Courses, seminars, workshops, and professional certifications that maintain or improve skills required in your current business are fully deductible. This includes online courses, industry conferences, and even business-related books and subscriptions. The key is that the education must relate to your current business, not prepare you for a new one.

4. Business Meals (50% Deductible)

Meals with clients, customers, or business associates are 50% deductible when business is discussed. Keep receipts and note who attended and what business was discussed. Restaurant meals provided to employees on your business premises are 50% deductible, while meals provided during company-wide events may be 100% deductible.

5. Startup Costs

You can deduct up to $5,000 in startup costs in your first year of business, with the remainder amortized over 15 years. Startup costs include market research, advertising, employee training, and professional fees incurred before your business begins operations. Many new business owners miss this deduction entirely.

6. Health Insurance Premiums

Self-employed individuals can deduct 100% of health insurance premiums for themselves, their spouse, and dependents. This deduction is taken on Form 1040 and reduces your adjusted gross income, potentially qualifying you for other tax benefits. It's available even if you don't itemize deductions.

7. Retirement Plan Contributions

Contributions to SEP-IRAs, SIMPLE IRAs, or solo 401(k)s are deductible and can significantly reduce your tax liability. For 2026, you can contribute up to 25% of your net self-employment income to a SEP-IRA, with a maximum of $69,000. These contributions also grow tax-deferred until retirement.

8. Software and Subscriptions

Business software, cloud storage, project management tools, and industry-specific subscriptions are fully deductible. This includes accounting software, customer relationship management (CRM) systems, design tools, and even streaming services if used for business research or client entertainment.

9. Bank Fees and Interest

Monthly service charges, transaction fees, and interest on business loans and credit cards are deductible. Many business owners forget to track these smaller expenses, but they add up quickly. Consider using a dedicated business bank account and credit card to simplify tracking.

10. Bad Debts

If you've provided services or sold products on credit and the customer never pays, you can deduct the unpaid amount as a bad debt. This applies to businesses using accrual accounting. You must demonstrate that you made reasonable efforts to collect the debt and that it's truly uncollectible.

Documentation is Key

The IRS requires proper documentation for all deductions. Keep receipts, invoices, bank statements, and detailed records of business expenses. Consider using accounting software to track expenses throughout the year rather than scrambling at tax time. Good recordkeeping not only maximizes your deductions but also protects you in case of an audit.

Work with a Professional

Tax laws change frequently, and what's deductible can vary based on your business structure, industry, and specific circumstances. Working with an experienced tax professional ensures you're taking advantage of all available deductions while staying compliant with IRS regulations.

At MSN Taxes, we specialize in helping small businesses maximize their deductions while maintaining accurate, audit-ready records. Our expertise in C corporations, S corporations, and other business structures ensures you're positioned for optimal tax savings.