Keeping more of what you earn: a guide to small business tax deductions
The goal of bookkeeping isn’t just to stay compliant — it’s to understand the financial story of your business. For many solopreneurs and small business owners, one of the most empowering parts of that story is learning how tax deductions work.
If you’re using QBO or another bookkeeping app, you’re already one step ahead! Let’s walk through the most common tax deductions you can claim to keep your hard-earned money where it belongs — in your business.
The golden rule: ordinary and necessary
To be deductible, a business expense must be both ordinary and necessary.
Ordinary: An expense that is common and accepted in your trade or business.
Necessary: An expense that is helpful and appropriate for your trade or business.
An expense doesn't have to be indispensable to be considered necessary; it simply needs to support the operation or growth of your work.
Common deduction categories
Operations and Infrastructure → These are the costs required to keep your virtual or physical doors open.
Home Office: If you use a portion of your home exclusively for business, you can deduct a percentage of your housing costs (utilities, insurance, mortgage interest) or use the simplified square-footage method.
Software: Monthly or annual subscriptions for tools like QBO, project management platforms, design software, and cloud storage.
Communication: A portion of your internet and cell phone bill, calculated based on how much of the usage is strictly for business.
Professional Development → Investing in your own expertise is a recognized business cost.
Education: Workshops, online courses, and books that directly relate to your current field.
Memberships: Dues for professional organizations or networking groups.
Marketing and Outreach → Anything you spend to get the word out about your business is generally 100% deductible.
Digital Presence: Website hosting, domain registration, and SEO tools.
Advertising: Costs for social media promotions, print materials, or email marketing platforms.
Professional Services → The fees you pay to other experts to keep your business running smoothly are deductible.
Legal and Professional: Fees paid to accountants, bookkeepers, attorneys, and consultants for business-related advice or services.
Meals and Travel
Business Meals: Typically 50% deductible. This applies when you're meeting a client or colleague to discuss business.
Mileage: You can track your business miles (trips to the post office, meeting clients, or picking up materials) and deduct a set rate per mile.
Business Travel: If you travel away from home for a conference or client meeting, your airfare, lodging, and local transportation (like Uber or car rentals) are generally 100% deductible.
The importance of documentation
A deduction is only as good as the record behind it. To ensure you feel confident in your books (and your tax return), aim to keep two things for every expense:
The "What": A receipt or digital invoice showing the date and amount.
The "Why": A brief note (especially for meals or travel) explaining the business purpose.
By organizing these throughout the year in a system like QBO, you transform tax time from a stressful scavenger hunt into a simple review of your P&L report.
Onward and upward
Understanding these categories is the first step toward moving from overwhelmed to in control. When you see your expenses as investments in your business, the numbers start to feel a lot more joyful.
