By: Sharon Heinz, EA

Date Posted: September 2026

Reading Time: 12 – 16 Minutes

As a business owner, you probably know that certain business expenses can reduce your taxable income; however, knowing that deductions exist and knowing which deductions apply to your business are two different things.

Many business owners focus on the obvious expenses, such as payroll, rent, office supplies, and other day-to-day costs, while overlooking expenses that may also qualify for tax deductions.

The problem isn’t always that business owners don’t spend the money. Sometimes, they simply don’t recognize that an expense may have tax implications. Other times, the expense isn’t documented properly or isn’t separated from personal spending.

That’s where strategic tax planning can make a difference.

The goal isn’t to find ways to “write everything off.” It’s to understand which deductions your business may qualify for, maintain the documentation needed to support them, and make informed decisions throughout the year.

Starting a business can require significant spending before you ever make your first sale.

You may spend money on things such as:

• Business formation and organizational costs
• Market research
• Advertising and marketing
• Website development
• Training
• Professional services
• Pre-opening supplies

Some qualifying startup costs may be deductible, while others may need to be treated differently for tax purposes. The rules depend on the type and amount of the expense and when the business began operating. The important part is to keep records of expenses incurred before the business officially opened. If you simply throw those receipts away because you weren’t technically “in business” yet, you may make it harder to determine whether those costs qualify. This is one reason tax planning should begin before a business opens, and not after the first tax return is due.

Working from home has become common for many small business owners, but some owners hesitate to consider the potential tax implications.

If you qualify for the home office deduction, you may be able to deduct certain expenses associated with the portion of your home used for business.

Depending on your situation, this could involve expenses such as:

• Utilities
• Rent
• Mortgage interest
• Property taxes
• Homeowners or renters insurance
• Repairs and maintenance

However, the rules surrounding business use of a home matter. The space generally needs to meet specific requirements, and personal use can affect what is deductible. In other words, having a desk in your kitchen doesn’t automatically mean you can deduct part of your home’s expenses. If you work from home, it’s worth discussing your situation with your tax advisor rather than assuming you don’t qualify.

Health insurance can be a significant expense for business owners, particularly for self-employed individuals and their families.

Depending on your business structure and circumstances, you may qualify for a deduction related to health insurance premiums. This is particularly important for business owners because how the expense is handled can matter. For example, the rules and reporting requirements can differ depending on whether you’re self-employed, operate as an S corporation, or use another business structure. That means simply knowing that you paid health insurance premiums isn’t necessarily enough. Your tax advisor needs to understand how those premiums were paid and how they were reported.

This is a good example of why tax planning involves more than simply handing your accountant a stack of receipts at tax time.

Retirement planning and tax planning can work together.

Depending on your business structure and retirement plan, contributions to a qualified retirement plan may provide tax benefits while helping you build long-term financial security.

Business owners may consider options such as:

• SEP IRAs
• Solo 401(k)s
• 401(k) plans
• Other qualified retirement plans

The right option depends on factors such as your income, business structure, employees, cash flow, and long-term goals. The timing matters, too. If you wait until tax season to think about retirement contributions, you may have fewer opportunities to make decisions that could have affected the previous tax year. A tax planning conversation earlier in the year can help you evaluate whether retirement contributions should be part of your overall strategy.

Business owners invest in themselves and their employees all the time.

That might include:

• Industry conferences
• Seminars
• Workshops
• Professional certifications
• Business coaching
• Continuing education
• Industry publications
• Training programs

Education and training expenses may qualify when they are related to the existing trade or business and meet applicable tax requirements. The key is understanding the difference between education that helps you maintain or improve skills in your current business and education that prepares you for an entirely new career.

Don’t assume a course is deductible simply because you think it will help your business. Keep the documentation and let your tax professional determine whether the expense qualifies.

Business owners regularly pay professionals for help running and protecting their companies.

Those expenses can be easy to overlook because they may not look like traditional “business expenses” on a bank statement.

Examples can include:

• Accounting and bookkeeping
• Tax preparation
• Legal services
• Business consulting
• Payroll services
• Human resources consulting
• Other professional services

These expenses are often part of the normal cost of operating a business, but they should still be properly categorized and documented. Keeping professional expenses organized throughout the year makes it easier to identify them when tax planning and tax preparation begin. It also gives your accountant a clearer picture of where your business is spending money.

If you use a vehicle for business purposes, you may have deductible vehicle expenses. Depending on your circumstances, you may be able to use the standard mileage method or the actual expense method. But there’s an important catch:

You need records.

Business owners should keep track of information such as the date, mileage, destination, and business purpose of qualifying trips. Commuting between your home and regular workplace generally isn’t considered deductible business mileage. This is one of those deductions that can be missed simply because business owners don’t keep adequate records. If you regularly drive to meet clients, visit job sites, attend business meetings, or conduct other business activities, don’t wait until the end of the year to try to reconstruct your mileage.

Track it as you go.

Your business may pay more in financial fees than you realize.

Think about the costs associated with:

• Business bank accounts
• Credit card processing
• Merchant services
• Payment platforms
• Business loans
• Certain interest expenses
• Other financial services

These expenses can become easy to overlook because they’re often deducted automatically from your account before the money ever reaches you. For example, if a payment processor deposits $4,850 after taking a $150 processing fee from a $5,000 customer payment, that $150 fee shouldn’t simply disappear from your records. Your bookkeeping should make these expenses visible. This is another reason accurate bookkeeping and tax planning go hand in hand.

Growing a business costs money.

You may spend money on:

• Website development
• Digital advertising
• Social media advertising
• Email marketing
• Business cards
• Promotional materials
• Public relations
• Marketing consultants
• Photography and creative services

Marketing expenses can sometimes be overlooked because they’re viewed as “growth expenses” rather than tax-related expenses. But qualifying advertising and promotional costs can generally be ordinary and necessary business expenses. The bigger opportunity, however, may be in looking at your marketing spending as part of your overall business strategy. If you’re already planning to spend money on marketing, understanding the tax treatment before making major expenditures can help you make a more informed decision about timing and cash flow.

Business travel can involve more expenses than the plane ticket or hotel room.

Depending on the circumstances, qualifying business travel may include expenses such as:

• Transportation
• Lodging
• Certain meals
• Parking
• Tolls
• Rental cars
• Other necessary travel expenses

But travel deductions come with rules, and not every expense associated with a trip automatically qualifies. Business owners should document the business purpose of the trip and retain receipts and other supporting records. This is especially important when a trip combines business and personal activities. The business portion may receive different tax treatment from the personal portion. When in doubt, document the expense and ask your tax advisor rather than assuming it is (or isn’t) deductible.

One of the biggest misconceptions about tax deductions is that identifying a potentially deductible expense is the same thing as being able to claim it.

It isn’t.

The IRS generally requires business expenses to be ordinary and necessary, and taxpayers are expected to maintain records that support income, deductions, and credits. That means your business should have a system for tracking expenses throughout the year. A receipt sitting in your email inbox isn’t a tax strategy. Neither is trying to remember what a $600 credit card charge was for eight months later.

Good documentation should help answer basic questions such as:

• What was purchased?
• When was it purchased?
• How much did it cost?
• Was it for business or personal use?
• What was the business purpose?
• Is there a receipt, invoice, or other supporting documentation?

The more complicated the expense, the more important this becomes.

Tax preparation looks backward. Tax planning looks ahead.

By the time your tax return is being prepared, many of the decisions that affect your tax liability have already happened. You already purchased the equipment. You already made the business investment. You already paid the expenses. You already received the income. Strategic tax planning gives you an opportunity to look at your business before the year ends and ask better questions.

For example:

• How is the business performing compared with expectations?
• Are profits higher or lower than anticipated?
• Are estimated tax payments still appropriate?
• Are there major purchases you’re considering?
• Should you review retirement contributions?
• Are there expenses you’re paying personally that should be reviewed?
• Are you keeping adequate documentation for mileage and other expenses?
• Are there upcoming business decisions that could affect your tax liability?

This is where an accountant can provide more value than simply preparing a return. The goal isn’t to manufacture deductions. It’s to make informed business decisions with an understanding of the potential tax consequences.

The easiest deductions to miss are often the expenses that become buried in your everyday business activity.

• A software subscription here.
• A professional development course there.
• Business mileage that wasn’t tracked.
• Merchant fees that weren’t categorized correctly.
• A retirement contribution that was never discussed.
• A home office expense that you weren’t sure you could claim.

Individually, some of these expenses may seem insignificant. Over the course of a year, however, they can add up. More importantly, many tax-saving opportunities require planning before the tax return is prepared. If you’re a business owner, don’t wait until tax season to ask, “What deductions did I miss?” A better question is:

“What should I be planning for now?”

At Profit Wise, strategic tax planning is about helping business owners understand their numbers, identify potential opportunities, and make informed decisions throughout the year—not just when tax season arrives.

If you want to take a more proactive approach to your business taxes, a tax planning conversation can help you understand what opportunities may be available based on your business, financials, and goals.

Sharon Heinz, EA, is the owner of Profit Wise Accounting. Profit Wise provides tax preparation, strategic tax planning, accounting, bookkeeping, payroll, and business advisory services for small and growing businesses.