22 Small Business Tax Deductions to Lower Your Bill This Year

Discover how to save money in your business, legally, using these 22 small business tax deductions to lower your bill this year.

Business Finance

Not long after launching The Loop Loft, Shopify seller Ryan Gruss saw his profit margin increase. But there was a catch.

“We’d have a pretty profitable year but then get nailed with income tax,” he says. “Looking back, we should have reinvested that money into the company.”

Even though those tax hits hurt, they inspired Gruss to put some of profits toward actual expenses he could write off—in this case, marketing—and help turn The Loop Loft into the steadily growing company it is today.

Every ecommerce entrepreneur can benefit from Gruss’s experience.

Read on to learn about the write-offs you may be missing and some ideas on how to use them as a means to reinvest in your ecommerce business.

What can Small Business Owners Write Off?

If you run an online store, putting some of your profits toward tax-deductible business expenses can help your business grow and give you a break come tax season.

Write-Offs to Deduct from Qualified Business Income

Even day-to-day expenses—car trips to the post office or the electricity bill for your home office—could be saving you money, so long as they’re reported in your small business accounting records. Let’s look at a few key write-offs you can deduct from your qualified business income this tax year:

1. Shipping
2. Workspace
3. Banking, retirement plans and insurance
4. Professional services
5. Workers
6. Marketing
7. Website fees
8. Education
9. Travel

22 Small Business Tax Deductions to Lower Your Bill This Year

1. Packaging.
2. Home office.
3. Utilities.
4. Improvements and repairs.
5. Coworking space.
6. Business interest and bank fees.
7. Business insurance.
8. Health insurance.
9. Retirement plans.
10. Bookkeeper, accountant, and tax consultant fees.
11. Legal fees.
12. Bad debts.
13. Independent contractors.
14. Employees.
15. Advertising.
16. Marketing tools and services.
17. Shopify.
18. Domain and web hosting.
19. Services.
20. Classes.
21. Magazines.
22. Business travel and vehicle expenses.

What are non-deductible business expenses?

Non-deductible business expenses are any expense that cannot be subtracted from your tax bill. While non-deductible expenses vary by state and country, they typically include:

1. Taxes
2. Fines and penalties
3. Insurance
4. Capital expenses and equipment
5. Commuting costs
6. Personal expenses
7. Political contributions
8. Illegal expenses (bribes, kickbacks, salaries paid to workers who can’t work legally)
9. Gifts over $25
10. Business attire
11. Business meals and entertainment expenses
12. Legal fees
13. Club memberships
14. Travel expenses for friends and family

What are Some Home Business Tax Deductions?

If you meet the IRS guidelines for business use of your home, you can deduct the following expenses:

1. Homeowners insurance
2. Homeowners association fees
3. Mortgage insurance and interest
4. Real estate taxes
5. Utilities, including internet, electricity, heat and phone
6. Cleaning fees used in your office space

Read more here.