15 Biggest Tax Write-Offs for Small Business Owners and the Self-Employed

Small enterprises and the self-employed have always been a backbone of our economic engine, and ever more so in recent years. Along with that great freedom comes great responsibility, or at least liability.

April is arriving and the tax man cometh. Unless you file for an extension, of course. But either way, there are a lot of deductions that small business owners and the self-employed should be aware of as you face your annual reckoning. Here are 15 not to overlook.

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This write-off has become even more important because of the pandemic. Whether your own or rent your home, you can deduct expenses connected to the space you use for conducting business. That could include utilities, telecommunications, security systems, repairs, and insurance.

ALSO READ: Can I Claim a Home Office Deduction?

If you rent space for your business, that can be a deduction from your enterprise's taxable income. Now, if that's a home office, you can only do that through the home office deduction.

You can deduct your costs for providing your business with telephone and internet service, from landlines to email to websites. If you work at home, you need to calculate and report how much of the service you pay for is dedicated to business use.

ALSO READ: Investing in Top Telecommunication Stocks

Small business owners and gig workers alike should be well aware of the self-employment tax, that 15.3% they pay toward Social Security and Medicare. You can deduct half of that from your net income since you've already paid the employer match.

What you pay your people can be a hefty tax deduction, too. Just make sure it's a reasonable salary, that the services you're paying for are real and were provided, and that your employee is not yourself or a partner, such as a co-owner of your LLC.

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Do you pay for a local business license? That's deductible. Same for that array of taxes your business is responsible for, from payroll to personal and business property, sales to excise, and fuel to state income. It all adds up and can be used to reduce your taxable income.

Contributions to employee retirement accounts -- including your own -- can be deducted as a business account. How much you can contribute and how much you can deduct can be a moving target depending on the type of plan you're using.

ALSO READ: A Big Change Is Coming to Social Security in 2022

There are a lot of categories of business insurance, and you can reduce your taxable income by deducting those expenses. That could include property and liability insurance, business interruption coverage, life and health insurance for your employee(s), and worker's compensation.

Small businesses usually can deduct healthcare expenses such as insurance premiums and contributions to a health savings account (HSA). For owners and the self-employed, out-of-pocket costs like prescriptions and co-pays also could be deductible.

ALSO READ: What Is an HSA & How Does It Work?

Remember business travel? With the pandemic fading, you might find yourself out and about again, and a lot of that could be tax deductible. That includes airline and train tickets, shipping costs for materials you send ahead of you, parking, lodging, meals, and more.

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Like the home office deduction, how much of your use of your own vehicle can be deducted depends on how much it's actually used for business. Even if it's all business use, you'll still need to decide between deducting actual expenses -- including maintenance -- or simply mileage. (It's 58.5 cents per mile this tax year.)

Did your business move in the past year? What you paid to move your inventory, supplies, equipment, etc., can be deductible, whether it's across town or across the country. Again, keep good records.

ALSO READ: How to Finance a Move

Do you have contractors, freelancers, or gig workers that you pay in cash? You can deduct that. Keep in mind you're required to send anyone you pay more than $600 to in a single tax year a 1099 form by Jan. 31.

The IRS requires that you spread your deduction for equipment and furniture and the like over a period of years. That's called depreciation. But there are ways to write off the full costs in a single year, too, if that's more attractive to you.

The IRS permits your small business to deduct advertising and marketing costs as long as it's "ordinary and necessary." A good rule of thumb is if what you're doing is common practice in your industry. Same thing with bank card and transaction fees.

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We hope this checklist helps you find some ways to lower your tax bill that you might otherwise have overlooked. The IRS itself is a good source, too. Here's just one example from its vast store of digital documents, and of course, consult a professional. And keep good records.

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