Quick note: Deductions depend on facts and documentation. This article is general information, not tax advice for your specific situation.
Small business owners often miss deductions for one reason: the expense happened, but the recordkeeping didn’t. The “best” deduction strategy isn’t a clever trick—it’s a simple system that captures expenses clearly, categorizes them consistently, and keeps documentation easy to find.
The foundation: separate business and personal finances
If you do one thing, do this: use a dedicated business checking account and a dedicated card for business purchases. It reduces messy categorization and makes your records easier to defend if questions ever come up.
Common expense categories worth tracking
Most businesses will recognize many of these categories. The key is to track them in a way that matches how you actually operate.
- Advertising and marketing
- Software subscriptions and tools
- Contractor and professional services
- Office supplies and small equipment
- Travel and meals (with clear business purpose notes)
- Vehicle use and mileage (if applicable)
- Rent, utilities, and internet
- Insurance
- Education and certifications (if applicable)
Documentation that keeps you audit-ready
“Audit-ready” doesn’t mean you’re expecting trouble—it means your records can explain your numbers. Strong documentation reduces back and forth, speeds up tax preparation, and makes your financial reports more reliable.
- Keep receipts or invoices for major purchases and recurring services
- Match transactions to categories consistently (avoid large “misc” totals)
- For meals and travel, keep notes on business purpose and attendees
- Maintain mileage logs if you use a vehicle for business
A simple monthly routine (15–30 minutes)
The easiest way to stay organized is a short monthly review. Reconcile bank and card activity, clean up uncategorized transactions, and attach receipts while they’re fresh. That’s it. Done monthly, it prevents an overwhelming year-end cleanup.
If you want help setting up categories, a bookkeeping workflow, and a clean year-end package for your return, we can build a system that matches your business.