What Often-Overlooked Tax Deductions Can Save Business Owners Money?

What Often-Overlooked Tax Deductions Can Save Business Owners Money?

In the complex world of taxes, business owners can miss out on key deductions that could lead to substantial savings. From accelerating depreciation through cost segregation to benefiting from electric vehicle tax incentives, we've compiled five expert insights. Hear from a diverse panel of business leaders as they reveal tax deductions that are often overlooked.

• Accelerate Depreciation with Cost Segregation
• Deduct Marketing and Promotional Expenses
• Maximize Section 179 Equipment Deductions
• Utilize the Home-Office Deduction
• Benefit from EV and PHEV Tax Incentives

Accelerate Depreciation with Cost Segregation

One tax deduction often overlooked by business owners is the "cost segregation study" for real estate properties.

If you own commercial property, instead of depreciating the entire building over the standard 39 years, a cost segregation study allows you to break down various components of the building into different asset classes. These components, like lighting, flooring, or specialized HVAC systems, can be depreciated over much shorter periods—typically 5, 7, or 15 years. This accelerates depreciation, significantly reducing taxable income in the early years of ownership.

It's a strategy that can unlock substantial immediate savings and improve cash flow, yet many business owners either aren't aware of it or assume it's only for large companies, which isn't true. Even small businesses with property investments can benefit greatly from this underutilized deduction.

Deduct Marketing and Promotional Expenses

Small-business owners like myself can often overlook the wide range of advertising and promotional expenses that can qualify as tax deductions. I've found that many business owners don't know all the deductible marketing costs. For example, we've deducted expenses for digital marketing, like search-engine and social-media ads, which are essential for reaching high-risk merchants in our niche. Even costs associated with our website, such as domain registration and renewal fees, are deductible. These expenses add up quickly and can significantly reduce taxable income.

Maximize Section 179 Equipment Deductions

One tax deduction that's often missed is the Section 179 deduction. It lets us write off the full cost of qualifying equipment and software in the year we buy it, instead of spreading it out over several years. When we upgraded our surveillance systems and bought new monitoring software, we deducted the entire cost right away. This reduced our taxable income and saved us a lot. Many business owners overlook this, but it's great for cash flow and tax strategy. Using this deduction helped us reinvest in our business and improve our services.

Utilize the Home-Office Deduction

One tax deduction that's surprisingly overlooked by many business owners is the home-office deduction. I get it—there's a lot of confusion and even some skepticism around it, especially with the myths that it's a red flag for audits. But if you're legitimately running part of your business from home, this deduction can lead to substantial savings. The key is making sure that the space is used exclusively and regularly for your business. It doesn't have to be a whole room; even a portion of a room counts. By deducting a percentage of your rent or mortgage, utilities, and other home-related expenses, you're effectively lowering your taxable income. It's one of those areas where a little bit of paperwork can go a long way in cutting down your tax bill.

Benefit from EV and PHEV Tax Incentives

It's not a huge secret, but my accountant is pestering me about the huge tax benefits of upgrading to EVs and PHEVs through the business. There's zero FBT on these vehicles up to April 1, 2025.