What Are Business Expenses and Which Are Tax Deductible?

Oct 7, 2024

Running a business comes with a wide range of expenses, from office supplies to travel costs. But the good news is that many of these expenses can be deducted from your taxable income, helping you save money at tax time. At Kruse & Crawford, based in Cincinnati, OH, we specialize in helping businesses navigate the world of tax deductions to maximize savings. In this guide, we’ll break down what qualifies as a business expense and which ones are tax-deductible.

1. What Are Business Expenses?

Business expenses are the costs incurred in the ordinary course of running your business. These expenses are necessary and ordinary, meaning they are both common in your industry and essential for the operation of your business. Tracking your expenses is essential for calculating your profits and understanding where your money is going.

2. Common Tax-Deductible Business Expenses

Here’s a list of common business expenses that are generally tax-deductible:

  • Office Supplies: This includes everything from pens and paper to computers and software. Anything you purchase specifically for business use can typically be deducted.
  • Rent and Utilities: If you rent office space, the cost is deductible. You can also deduct utility bills (electricity, water, etc.) associated with running your office. If you work from home, you may qualify for a home office deduction, allowing you to write off a portion of your rent or mortgage and utilities.
  • Employee Salaries and Benefits: Payments made to employees, including salaries, bonuses, and benefits like health insurance, are deductible business expenses. This also includes payments to freelancers and contractors.
  • Marketing and Advertising: Any money spent on promoting your business, including social media ads, Google Ads, printed marketing materials, and website development, can be deducted.
  • Travel and Meals: If you travel for business, expenses like flights, hotels, and rental cars are deductible. Meals with clients and business partners can be deducted at 50%, but they must be directly related to business.
  • Business Insurance: The premiums you pay for insurance policies related to your business—such as general liability, workers’ compensation, or property insurance—are deductible.
  • Depreciation of Assets: If you purchase high-cost assets like machinery, vehicles, or computers, you may be able to deduct a portion of the cost over several years through depreciation.
  • Legal and Professional Fees: Payments made to accountants, lawyers, or other professional services for business purposes are tax-deductible.
  • Education and Training: If you take courses, attend workshops, or participate in training that enhances your business skills, those costs are typically deductible.

3. Home Office Deduction

If you work from home, you may qualify for the home office deduction, which allows you to deduct a portion of your rent or mortgage, utilities, and other home-related expenses. To qualify, your home office must be used exclusively and regularly for business.

You can calculate this deduction by either:

  • The simplified method: Deduct $5 per square foot of your home office, up to a maximum of 300 square feet.
  • The actual expense method: Deduct a percentage of your actual home expenses (rent/mortgage, utilities, etc.) based on the size of your office in relation to your home.

4. Vehicle Expenses

If you use a car for business purposes, you can deduct certain costs. This includes either:

  • The standard mileage rate: A flat rate deduction for each mile driven for business (for 2024, the rate is 58.5 cents per mile).
  • Actual expenses: Deduct costs for gas, maintenance, insurance, and depreciation based on the percentage of miles driven for business versus personal use.

5. Health Insurance Premiums

If you’re self-employed, you can deduct the premiums you pay for health insurance. This includes premiums for your spouse and dependents, as long as you’re not eligible for a group plan through another employer or your spouse’s employer.

6. Interest on Business Loans

If you’ve taken out a loan to finance your business, the interest paid on the loan is tax-deductible. This applies to loans used for purchasing equipment, property, or even covering operational costs.

7. Bad Debts

If your business provides services or products and you’ve extended credit to customers, bad debts (amounts you’ve included in your income but couldn’t collect) may be deductible.

8. Which Expenses Are Not Deductible?

Not all expenses are tax-deductible. Some expenses that do not qualify include:

  • Fines and penalties for breaking the law
  • Political contributions or lobbying expenses
  • Personal expenses not related to your business
  • Commuting costs between your home and regular place of business

Understanding which business expenses are tax-deductible can help you maximize your deductions and keep more of your hard-earned money. However, navigating the specifics of tax deductions can be complex, especially as your business grows. At Kruse & Crawford, we specialize in helping businesses in Cincinnati, OH, make the most of their tax situation by ensuring you’re claiming all the deductions you’re entitled to.


Maximize your business deductions with expert tax advice from Kruse & Crawford. Contact us today for a personalized consultation in Cincinnati, OH!

Need help managing your business expenses and tax deductions? Reach out to Kruse & Crawford in Cincinnati, OH, for expert guidance and ensure your business stays on track financially!