Even savvy entrepreneurs sometimes miss deductions that, when combined, could save thousands. The reasons are usually simple: lack of awareness, poor documentation, or uncertainty about eligibility. Below are ten commonly overlooked deductions, plus related strategies, a mini case study, and an actionable checklist you can implement immediately.

Why These Deductions Often Get Missed

Most missed deductions trace back to one of three gaps:

• Awareness: Owners don’t realize an expense is deductible.
• Documentation: Receipts, logs, and purpose notes aren’t captured in real time.
• Eligibility confusion: The deduction may be valid — but only if applied correctly.

The 10 Overlooked Deductions (And How to Use Them)

1. Home Office Deduction
   If you use part of your home regularly and exclusively for business, you may be able to deduct a portion of rent or mortgage, utilities, insurance, and maintenance. Keep square footage documentation and a simple “business-only use” note.
2. Startup Costs
   New businesses can often deduct certain startup costs — including market research, legal fees, and travel — subject to IRS rules and limits. Track these early expenses carefully to avoid classification mistakes.
3. Professional Fees
   Fees for accountants, consultants, and legal advisors are generally deductible. Keep invoices and engagement descriptions.
4. Software & Subscription Tools
   Everything from accounting software to project management tools counts. Include annual subscriptions and platform fees.
5. Mileage & Vehicle Expenses
   Use the standard mileage rate or the actual expense method. Either way, you need a mileage log that shows date, purpose, and miles.
6. Continuing Education
   Courses, seminars, certifications, and reference materials that improve your business skills may be deductible. Keep receipts and course descriptions.
7. Phone & Internet
   Deduct the business portion of your phone and internet bills. Document reasonable usage percentages when personal use exists.
8. Bank Fees & Interest
   Business loan interest, credit card fees, and bank charges related to business activity may be deductible when properly categorized.
9. Business Insurance
   Premiums for business liability, professional liability, and other business policies are typically deductible. Confirm the policy is business-specific.
10. Meals & Entertainment
    Generally, 50% of business meals may be deductible when tied to business and properly documented. Record date, attendees, purpose, and amount.

Important Additional Topics You Shouldn’t Overlook

Depreciation & Capital Assets

If you’ve purchased equipment, furniture, or long-lived assets, depreciation spreads the cost over time. Bookkeeping that separates capital improvements from repairs supports correct depreciation and potential Section 179 treatment.

Qualified Business Income (QBI) Deduction

Pass-through entities may qualify for the 20% QBI deduction (subject to rules and limitations). Proper classification of income and expenses impacts QBI calculations — coordinate bookkeeping with tax planning.

Retirement Plan Contributions

Contributions to SEP-IRAs, Solo 401(k)s, or SIMPLE IRAs may be deductible and can be a powerful owner strategy.

Self-Employed Health Insurance

If you pay health insurance premiums, you may be able to deduct them as a business-related benefit depending on your structure and eligibility.

Mitigating Audit Risk

Large or unusual deductions can invite IRS attention. Keep contemporaneous records, avoid overly aggressive positions, and consider professional review when deductions are large or complex. (See our audit guidance here.)

Mini Case Study

Case Study — Sarah’s Design Studio
Sarah, a freelance designer, documented her home office, logged business trips with a mileage app, and consolidated software subscriptions. By capturing these items properly, she reduced taxable income by $12,000 in one year and reinvested the savings into business development.

Actionable Checklist: Maximize Your Tax Deductions

1. Set up a mileage log system (app or manual) and capture trips immediately.
2. Create and maintain a home office log: square footage + business-only use note.
3. Catalog professional fees and attach invoices inside your bookkeeping system.
4. Inventory software subscriptions and confirm business purpose.
5. Track continuing education costs with receipts and course descriptions.
6. Allocate phone & internet usage percentages monthly.
7. Keep bank statements and categorize fees/interest to the correct accounts.
8. Store insurance invoices and confirm business coverage.
9. Maintain a meals log: date, attendees, purpose, and cost.
10. Review QBI, retirement, and health insurance strategy with a tax advisor.

Frequently Asked Questions

Related Guides from Qupid Tax Advisors

• Build a system that captures deductions year-round: How to Use Bookkeeping to Drive Growth (Not Just File Taxes)
• Understand what the IRS focuses on in audits: What the IRS Really Looks for in an Audit (and How to Stay in the Clear)
• Explore advanced strategy and planning: The 7-Figure Business Owner’s Guide to Choosing the Right Tax Structure