The Top Deductions Most Business Owners Miss

Are you running your business empire from a cozy corner of your living room? 

Ever wondered if those McNuggets could be tax-deductible? 

You’re not alone—and you might be leaving money on the table. 

It’s tax season, friends. Whether you’re self-employed, run an LLC, or freelance on the side, the IRS allows a surprising number of deductions that can lower your taxable income—if you know how to use them right. 

In a recent episode of the Cash Flow Podcast, we dove into the deductions that actually move the needle when you file—plus the ones that trip up even the savviest entrepreneurs. 

So let’s break down a few not-so-obvious business tax deductions and make them work for YOU.

1. Home Office Deduction: Your Apartment Counts—If You Do It Right

This one’s a gold mine if you work from home and play by the rules. The IRS lets you deduct expenses tied to the portion of your home used exclusively and regularly for business. 

How it works: 

• Measure your workspace (let’s say it’s 100 sq ft).
• Divide that by your home’s total square footage (say, 1,000 sq ft).
• That’s 10%. You can deduct 10% of your rent, electricity, heating, water, and even renters’ insurance. Now we’re talking REAL cash!
• Caveat: The space must be used solely for business. That corner can’t double as your yoga studio. No Peloton, no dinner guests, no Netflix marathons. 

Keep a quick sketch or photo of the space and note how you use it. It may sound silly, but in case of audit, that helps document your setup.

2. Business Meals: Yes, Your Big Mac Might Count

If you’re discussing strategy over salads or brainstorming over burgers, those meals are deductible—well, 50% of them anyway. 

But here’s the kicker: document it. Jot down 1) who you dined with, 2) what was discussed, and 3) the date and total cost. “Lunch with Francis – discussed filming schedule” is plenty. 

Write it directly on the receipt before it disappears into your car’s cupholder. 

❌ Common mistake: Grabbing Chipotle solo doesn’t qualify. The IRS doesn’t cover burrito bowls as self-care.

3. Travel Deductions: Work First, Luau Later

Planning a trip that might include a little business? Flights, hotels, Uber rides, Wi-Fi charges at airports, and even a few meals are 100% deductible —for you only— if there’s a legitimate business purpose. Think: attending a conference, client meetings, or even hiring a photographer for brand photos. 

Want to blend business with vacation?

Make sure you do the following: 

• Deduct only your share of airfare and lodging if your family tags along.
• Schedule legitimate business activities (like a brand photoshoot or client meeting) to anchor the business intent of your trip.
• Document it! Save emails confirming meetings or receipts for event registration. 

⚠️ Key here: Be honest with yourself and document clearly. If an auditor came calling, could you justify that Waikiki dinner? Vague reasons like “inspiration” won’t fly; you’ve gotta be prepared to prove business was actually conducted.

4. Car Expenses: Your Commute Could Be Saving You Money

Got a personal car you use to drive to a client meeting, or grab gear at Office Depot? 

Those miles can be deducted—if you track them properly. 

You’re eligible for a per-mile deduction, currently over $0.60 per mile (check for yearly updates). This applies to personal cars used for business. If you drive a dump truck full-time for a junk removal biz, the business owns that baby! 

Two ways to deduct: 

1. Standard mileage rate (easiest): Track your miles using an app like MileIQ.
        *This app is super simple—swipe left for business, right for personal (or maybe it’s the other way around…either way, it’s easy!).

2. Actual expense method: Deduct a percentage of gas, maintenance, insurance, and depreciation based on how much you use the car for business. 

At over 60 cents per mile, 1,000 miles = a $600 deduction. That’s no small potatoes! 

My advice: Stick with mileage unless your car is brand new or fancy—the standard method is cleaner and audit-proof if well documented. 

5. Client Gifts and Health Insurance: Generosity, Within Limits

Surprise! You can only deduct up to $25 per recipient per year on client gifts. 

So yes, you can send that beautiful wine set or monogrammed briefcase—but the IRS is only giving you credit for a fraction: $25 per client. 

Workaround: If the gift is branded (like a mug with your logo), it may fall under advertising instead—as always, ask your tax pro. 

📌 Example:
Buy a $75 personalized planner for your top client? Deduct just $25, and the rest is just good karma. 

Also, if you’re self-employed and not eligible for a plan through a spouse’s employer, you can deduct your health insurance premiums—including medical, dental, and long-term care insurance. 

⚠️ Heads-up: This deduction goes above the line on your tax return, meaning it reduces your adjusted gross income (AGI). And, it only applies to the months you weren’t eligible for other employer coverage. 

Again, you gotta talk to your CPA to confirm you qualify, but this can be a biggie, especially if you’re footing the whole bill. 

Risk vs. Reward: The Real Talk You Need 

As I always say—this isn’t tax advice; it’s strategy chat. 

When deciding how aggressive to get with your deductions, ask yourself: would you be comfortable explaining this to an auditor? If yes, you’re probably in the clear. 

Let’s be real—some entrepreneurs go full spreadsheet-warrior with color-coded tabs and track every dime. Others just want to avoid jail. 

The truth is, good documentation is your insurance policy.  You do you, but know that good records today save future-you from a panic attack in front of a spreadsheet. 

If you’re ever audited, you’ll want to be able to show who, what, when, and why for every deduction. Doesn’t have to be fancy—just keep it consistent and accessible. 

Wrap-Up: Every Dollar Counts

You built your business for freedom…but that freedom sure gets a lot sweeter when you’re not overpaying Uncle Sam. 

So whether you’re bootstrapping from your guest room or scaling toward six figures, these deductions can make a real difference. They’re not just tax tricks—they’re part of building a grown-up, financially confident business. 

All in all, if you’re paying for it to keep the lights on, keep the gears turning, or keep clients happy, there’s a good chance it’s deductible. 

So pull out those receipts, log that mileage, and carve out that business-only desk corner in your living room. And if you’re still unsure? Team up with a trusted tax pro or a financial strategist (hey, we know a few 😉). 

Got questions about what qualifies or want us to cover another topic? Shoot me an email at pam@priorities.group and let’s chat.

Until next time, happy deducting! 🧾💸 

Pam Prior

Author, Virtual CFO, and Finance Coach
“Your First CFO: The Accounting Cure for Small Business Owners” on AMAZON
“Founder to Exit: A CFO’s Blueprint for Small Business Owners” on AMAZON

***Disclaimer: This post is for informational purposes only and does not constitute financial or legal advice. Consult with a professional before making any financial decisions.