Common tax deductions for solopreneurs

As a solopreneur, most purchases you make for your business are likely tax-deductible. And every time you take a deduction you lower your tax bill, which means more money in your pocket at the end of the year! The IRS has strict guidelines on what expenses can and cannot be categorized as Business (also called a write-off or deduction). Our team read them all so you don't have to, and we created this guide to help you maximize your tax write-offs.

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Below are some common deductible expenses that apply to most small businesses:

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✅ Office expenses

Office expenses are small purchases and items you use up quickly. It includes supplies like pens, paper, cords, postage, desk supplies, and other day-to-day items you may need to conduct business.

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✅ Devices (phone, computer, displays, etc)

Any device you use that helps you run your business could be tax deductible. This includes your phone, computer, displays, lighting equipment, etc. If you use a device for both personal and business, only deduct the portion of the expense related to the business use.

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✅ Phone bills

If you use your personal mobile phone to communicate with clients, manage work-related apps, or complete work-related tasks, you can write off the business percentage of your phone bill (it’s okay to use a rough estimate). On the other hand, if you have a separate business phone, it’s 100% deductible. Just make sure you’re truly using it for business only.

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✅ Software

Any software you pay for and that is used for your business is tax-deductible. Subscription fees for things like Slack, Dropbox, and Shopify are tax-deductible.

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✅ Contractors & freelancers

Use this category to categorize payments you make to contractors who worked for you during the year. It includes: subcontractors, independent contractors, project support, creative resources, outside research and data collection.

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✅ Professional services

Use this category for short-term professional advice including lawyers, accountants, and consultants. It's usually for assistance with one-time business deals or activities. Rule of thumb: if the service provider gives you a W-9, it’s not professional service. In that case, use the Contractors & freelancers category above.

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✅ Marketing & ads

Promoting your business is part of being a business owner. Any marketing and advertising expenses that you incur are considered write-offs. Physical ad spaces like print ads or billboards, marketing softwares like HubSpot or Mailchimp, promotional knick knacks like branded pens, social media ads on sites like Facebook or LinkedIn, and other forms of promotion are all deductible.

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✅ Health insurance premiums

When you’re self-employed and paying for your own healthcare, you can take advantage of a tax break called the ‘self-employed health insurance deduction.’ This deduction allows you to deduct the cost of your health and dental insurance premiums as an adjustment to your income on the Form 1040 (also known as an ‘above-the-line’ deduction), rather than as a business expense on your Schedule C. You’re eligible for this tax break as long as you’re self-employed, paying for your own healthcare, and were not offered coverage from an employer or on a spouse’s health plan.

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