The 12 Most Commonly Missed Deductions for Small Business Owners

Every deduction you skip is money you already earned, handed back for no reason. And small business owners skip a lot of them, usually for one of two reasons: they didn't know the deduction existed, or they knew but couldn't back it up with records.

This list handles the first problem. Bee handles the second.

As always, everyone's tax situation is different, so run the specifics past your CPA. Here are the twelve deductions they most often watch clients leave behind.

1. The Home Office Deduction

Owners skip this one because they've heard it's an audit trigger or because the math sounds hard. The IRS offers a simplified option that makes the math easy: $5 per square foot for up to 300 square feet, a deduction of up to $1,500 for space you already pay for. The catch: the space has to be used regularly and exclusively for business. A desk in the corner counts. The kitchen table does not.

2. Half of Your Self-Employment Tax

You pay 15.3% in self-employment tax to cover Social Security and Medicare. What many new business owners miss: you can deduct the employer-equivalent half of that when calculating your income tax. It's built into the tax forms, but only if you (or your software or CPA) claim it.

3. Health Insurance Premiums

If you're self-employed and pay for your own health, dental, or qualified long-term care insurance, you may be able to deduct the premiums for you, your spouse, and your dependents. Owners who came from W-2 jobs often have no idea this exists, and it can be one of the largest personal-side deductions on the return.

4. Retirement Contributions

Contributing to a SEP IRA or solo 401(k) lowers your taxable income now and pays your future self. For 2026, SEP IRA contributions can reach $72,000, up to 25% of compensation. Solopreneurs miss this one because nobody automatically enrolls you when you work for yourself.

5. The QBI Deduction

The qualified business income deduction allows many owners of pass-through businesses to deduct up to 20% of their qualified business income. It was made permanent in 2025, and starting in 2026 there's even a minimum $400 deduction for active businesses with at least $1,000 of qualified income. If you're profitable and haven't heard of QBI, that's a conversation to have with your CPA this year.

6. Business Mileage

The standard mileage rate is 72.5 cents per mile for the first half of 2026 and 76 cents per mile from July 1 onward, the first mid-year increase since 2022. Missed constantly because the log never gets kept. Date, miles, business purpose. That's the whole record, and it's worth real money.

7. Startup Costs

Spent money getting the business off the ground before you opened? You can generally deduct up to $5,000 of startup costs in your first year, with the remainder amortized over time. New owners miss it because the spending happened before they thought of themselves as a business.

8. Software and Subscriptions

Your CRM, your design tools, your scheduling app, your accounting tools, even the subscription you're using to read industry news. Ordinary and necessary business subscriptions are deductible, but they're often overlooked because they're small, scattered across cards, and invisible by December.

9. Business Insurance

Premiums for general liability, professional liability (E&O), and other business coverage are deductible as ordinary business expenses. Often paid annually, then forgotten by tax time.

10. Bank and Payment Processing Fees

Every Stripe, Square, and PayPal fee. Monthly account charges. Business credit card interest. Individually tiny, collectively real, and almost never tracked because they're buried inside deposits and statements.

11. Education and Professional Development

Courses, certifications, coaching, books, and conferences that maintain or improve skills for your current business are generally deductible. Owners skip these because they feel personal. If it makes you better at the business you're running, tell your CPA about it.

12. Phone and Internet

You run your business from your phone. The business-use percentage of your cell and internet bills is deductible, and most owners claim zero because they never sat down to figure out a defensible split. Even a reasonable, documented percentage beats leaving it blank.

Knowing the List Is Half the Job

The other half is proving it.

Bee's job is to help you do that. Link your credit card and every charge shows up on its own, with Bee texting you a reminder to send the receipt. Snap it, add a note, or flag it as personal. Everything is captured, categorized, and verified, so your CPA can work through the entire list with clean records rather than guesswork.

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