Small business tax deduction checklist (plus the records to keep)

The short answer: a small business tax deduction checklist pairs each ordinary and necessary business cost with the record that proves it. Run it before December 31 and again before you file, matching each category to a Schedule C line.

• 30+ common write-offs for sole proprietors and single-member LLCs
• Business share only, and keep proof for every dollar
• 2026 mileage has two rates
• Set aside money for taxes and see what you can't deduct
• Next step: Plan it with the Business Income & Expense Tracker ($7.99).

A small business tax deduction checklist (some people call it a tax write-off checklist) is a list of the ordinary and necessary costs of running your business, paired with the record that proves each one. Go through it before December 31 and again before you file: check each category you actually spent money in, match it to a Schedule C line, and make sure a receipt, invoice, bank entry or log backs up every dollar. The list below covers more than 30 common write-offs for sole proprietors and single-member LLCs that file Schedule C, plus the records to keep and the costs that don't count.

To capture these all year, our Business Income & Expense Tracker logs sales, expenses and business miles, and shows category totals for tax time and how much to set aside.

One quick note before we start: this is general education, not tax advice. Tax rules change and every business is different, so take your organized totals to a tax professional or your tax software and let them make the final calls.

What counts as a deductible business expense?

The IRS test is short. In Publication 334, Tax Guide for Small Business, a business expense must be both ordinary (common and accepted in your field) and necessary (helpful and appropriate for your business). It doesn't have to be indispensable. A candle maker buying wax passes easily. A candle maker buying a family vacation doesn't.

Self-employed? Our guide on 1099 vs W2 explains self-employment tax and why contractors can deduct more of their costs. Hiring your first employee? Start with a clear job description example.

Not started yet? Our list of 30 small business ideas covers low-cost options and the tax basics for new owners.

Three more rules shape almost every line on the checklist:

• Business share only. If something is used for both business and personal life, like a car or a phone, you deduct only the business part. Pub 334's own example is a van driven 16,000 business miles out of 20,000, so only 80% of its operating cost counts.
• Timing. Under the cash method, which many small businesses use, an expense generally counts in the year you pay it. Prepaid costs are different: if you pay a year of insurance on July 1, only the part that applies to this year counts this year.
• Proof. A deduction you can't support isn't much of a deduction. Keep the record when you spend the money, not in April.

The small business tax deduction checklist (with records to keep)

Work through each table and put a check next to every category you spent money in this year. The "Schedule C line" column shows where each cost usually lands on the 2025 Schedule C, so your totals arrive already sorted. A preparer may place a few items differently, and that's fine. The goal is to show up with clean, categorized numbers.

Keep the paper side under control too: here's how to organize receipts in four simple steps.

Running the business

Tools, tech and equipment

A note on equipment: Pub 334 lets businesses without an applicable financial statement (such as audited financials, which most small shops don't have) elect the de minimis safe harbor. That lets you deduct tangible property up to $2,500 per item or invoice, reported as other expenses in Part V. Bigger purchases go through depreciation, where the section 179 limit is $2.5 million beginning in 2025, and a 100% bonus depreciation deduction is allowed for certain qualified property acquired after January 19, 2025. Most small shops will never get near those ceilings, but the point is the same: expensive gear usually still counts, it just has its own paperwork.

Vehicle, travel and meals

2026 mileage has two rates. The IRS standard mileage rates page lists 72.5 cents per business mile for January 1 through June 30, 2026, and 76 cents for July 1 through December 31, 2026. (The 2025 rate was 70 cents.) That mid-year change is why your log needs dates on every trip. Driving from home to your regular workplace is commuting and doesn't count, even if you take a business call on the way.

On gifts, Publication 463 caps the deduction at $25 per recipient per year. Incidental costs like gift wrap and mailing generally don't count toward the $25. For meals, Pub 463 allows 50% of the cost when you or an employee are present and the meal isn't lavish or extravagant. If employees pay out of pocket, a small business expense reimbursement policy keeps those costs documented.

Your workspace

To qualify, the space must be used regularly and exclusively for the business, and it generally needs to be your principal place of business or a place where you meet clients. The simplified method tops out at $1,500 (300 square feet times $5) and needs far less paperwork.

Home business tax deductions checklist

If you run the business from home, these are the write-offs that home-based owners most often miss. Each one is the business share only, and the rules come from IRS Publication 587, Business Use of Your Home.

A quick test before you claim the office: if the kids do homework at that desk or the guest bed is in the room, the space is not exclusive, and the home office deduction usually doesn't apply (daycare and inventory storage have their own exceptions in Publication 587).

Deductions that don't go on Schedule C

These are easy to forget because they live on your Form 1040 instead of your business schedule:

Self-employment tax is 15.3% (12.4% Social Security plus 2.9% Medicare) on most of your net earnings, and you generally have to file once your net earnings from self-employment reach $400. For 2026, the Social Security part applies to the first $184,500. Pub 334 also notes that the 20% qualified business income deduction is now permanent.

Startup costs (for new businesses)

Per Publication 583, Starting a Business and Keeping Records, you can elect to deduct up to $5,000 of start-up costs and up to $5,000 of organizational costs. Each $5,000 shrinks by the amount that type of cost goes over $50,000, and the rest is amortized over time. If you formed a single-member LLC that's taxed as a sole proprietorship, ask your tax professional whether the formation fees belong with start-up costs.

What you can't deduct

A good checklist says no as clearly as it says yes. Pub 334 says you usually can't deduct these as business expenses:

• Personal, living and family expenses
• Commuting between home and your regular workplace
• Entertainment, like concert or game tickets, even with a client
• Club dues (business, social, athletic and similar clubs)
• Political contributions and lobbying
• Penalties and fines paid to a government agency for breaking the law
• Charitable contributions (those may count on your personal return instead, not as a business expense)
• Improvements to property, which are capitalized and depreciated rather than deducted at once

Also, as a sole proprietor you can't deduct your own "salary" or the money you move from the business to yourself. Those are owner draws, and your profit is what gets taxed.

How to use this checklist: a 5-step year-end routine

The checklist only works if your numbers are ready. Here's the routine that gets you there in an afternoon or two.

1. Separate the money. Pub 583 recommends opening a business checking account and keeping it separate from your personal account, because the business checkbook becomes your basic source for recording expenses. If you haven't done that yet, start now and tag past business purchases by hand.
2. Log every transaction with a category. Date, category, description, amount and how you paid. Twelve months of that and the tables above fill themselves in.
3. Match records to entries. Pub 583 lists the supporting documents the IRS expects: sales slips, paid bills, invoices, receipts, deposit slips and canceled checks. Snap a photo of each paper receipt and note where it's saved. If employees or partners turn in costs, a standard expense report template keeps the paperwork consistent.
4. Total by category and run the checklist. Look for empty categories you know you spent money in. That's usually where a missed deduction is hiding: a software renewal on a personal card, platform fees netted out of payouts, or mileage you never logged.
5. Set aside money for taxes. If you expect to owe $1,000 or more, Pub 334 says you generally need to pay estimated tax. Those payments are due on the 15th of the 4th, 6th and 9th months of your tax year, plus the 15th of the month after it ends. For calendar-year filers, that's April, June, September and January.

A simple worked example

Here's a made-up example to show how the pieces fit together. Say a part-time printable shop owner logs these totals for the year:

Without the log, the mileage, the phone share and the platform fees are exactly the items people tend to miss, and here they add up to more than $1,500. That's the case for tracking all year instead of reconstructing in March.

Track it all year with the Business Income & Expense Tracker

We're a small business too, so we built our Business Income & Expense Tracker ($7.99) around the same categories you see above. It's a spreadsheet for Excel and Google Sheets with:

• An income and expense log with a category dropdown, where the income or expense type fills in automatically
• Ready-made categories that match this checklist: supplies and materials, packaging, shipping and postage, platform and payment fees, advertising, software and subscriptions, equipment, phone and internet, office supplies, education and training, professional fees, contract labor, travel and bank fees (rename them to fit your business)
• A mileage log template with an estimated deduction for each trip, using the two 2026 rates on the Setup sheet (72.5 cents through June 30 and 76 cents from July 1), picked by trip date
• A monthly profit and loss, plus month and year totals by category
• A monthly tax set-aside estimate based on a percentage you choose, so you can plan ahead for estimated tax payments
• A dashboard with a chart and a Start Here guide

The estimates are for your own records, not tax advice. Your preparer still makes the final call. One tip for 2026: the Setup sheet holds both 2026 mileage rates, 72.5 cents for trips through June 30 and 76 cents for trips on or after July 1, and each trip in the mileage log uses the rate for its date, so the mid-year change doesn't re-price trips you logged earlier in the year. If the IRS changes a rate, update it on the Setup sheet; the sheet reminds you to check the current IRS standard mileage rate each year.

If you own a rental, the Rental Property Tracker ($11.99) keeps rent, expenses and repairs separate by property, and our guide to tracking rental property income and expenses walks through the setup. You can browse every tool in Spreadsheets.

Just starting out and not ready to buy anything? Our free small business expense spreadsheet covers the basic date, category and amount log. Shopping for a fellow seller this season? See our gifts for business owners.

Keep the records after you file

Organized receipts help long after April. Pub 583's period-of-limitations table puts the usual window at 3 years, stretching to 6 years if you leave out income that's more than 25% of the gross income shown on your return. Employment tax records should be kept at least 4 years, and records on property you own until the limitations period ends for the year you sell or dispose of it. Our guide on how long to keep tax records has a simple keep-or-shred list, and the end-of-year financial checklist covers the household side of your December money review.

Keep copies of every invoice you send too; a numbered free invoice template with a payment log makes income easy to prove. On the buying side, a purchase order template gives each supplier order a number you can match to the bill.

I grew up the oldest of three in Detroit, and I was the one my family counted on to keep track of things. A business is the same: if you keep a list, keep the records and check them before the deadline, the deadline gets a lot less scary. Print this checklist, pour something warm, and work through one table at a time.