21 Tax Deductions Small Businesses Need to Know

Tax deductions help small business owners reduce the cost of running their enterprise. While most business owners are familiar with some tax write-offs, they aren't taking advantage of all the business deductions.

It’s essential to work with your accountant or bookkeeper to track your small business tax expenditures and maximize your tax deductions. Here are 21 small business tax deductions that are very commonly used.

1. Cost of Goods Sold

Cost of goods sold are all the expenses that go into making the product you sell. So if you sell t-shirts, for instance, the COGS would be all the expenses that make that t-shirt ready for sale.

If you use a car, van or light truck for your company, you can deduct the cost of using it for your business. You can do this by keeping records of when you use it for business.

2. Vehicle Expenses 

3. Wages and Salaries 

You can write off taxes on labor, bonuses, commissions, and wages that you pay staff members. Additionally, you can write off certain benefits, such as retirement plan contributions.

Many small business owners hire freelancers or independent contractors. You must issue Form 1099-MISC if you paid more than $600 to a contractor during the tax year.

4. Independent Contractor Labor 

5. Supplies

You can deduct the cost of office supplies and expenses. For example, you can write off disinfecting supplies if you run a nail salon. You can also write off tangible supplies such as a laptop or vacuum cleaner.

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