The Top 10 Uncommon Business Deductions You Might Be Missing

Most business owners know the big-ticket deductions — rent, payroll, and office supplies — but some of the best deductions are hiding in plain sight. Here are 10 unusual but legitimate tax deductions you might not be claiming, and how they can help you lower your taxable income.

1. Startup and Organizational Costs

New business? You can deduct up to $5,000 of startup expenses (like market research, travel to scout suppliers, and professional fees before you open your doors) and up to $5,000 of organizational costs (like state filing fees or legal fees to create your LLC or corporation). The rest can be amortized over 15 years.

2. Business Gifts

Client appreciation counts! You can deduct up to $25 per person per year for business gifts like thank-you baskets, wine, or branded gear. Keep good records — who got the gift, what it was, and the business reason for giving it.

3. Bad Debts (Unpaid Invoices)

If you use accrual accounting and a customer doesn’t pay, you can deduct the unpaid amount as a business bad debt. This helps you avoid paying tax on money you never actually received.

4. State-Mandated Fees

Annual LLC fees, California’s $800 minimum franchise tax, and other state filing fees are deductible business expenses. They’re easy to forget because they’re not tied to daily operations, but they reduce taxable income just like rent or utilities.

5. Bank & Processor Fees

Every Stripe, Square, PayPal, or credit card processing fee is deductible. Even bank overdraft charges and wire transfer fees can be written off if they relate to your business accounts.

6. Personal Assets Converted to Business Use

Start using your personal laptop, camera, or furniture for business? You can depreciate its fair market value as of the date you converted it to business use. You don’t have to buy new equipment just to get a deduction.

7. Specialized Clothing and Uniforms

Work-specific clothing that isn’t suitable for everyday wear — like branded polos, safety boots, chef jackets, or protective gear — is deductible. Regular business attire, even if worn only for work, doesn’t qualify.

8. Educational Content & Research

Subscriptions, online training, or even industry-specific streaming content can be deductible if they help you stay current in your field. A marketer could deduct industry journals, while a chef could deduct culinary magazines.

9. Business-Related Apps and Subscriptions

Project management tools, Canva, AI writing tools, CRM systems, and even social media scheduling apps are deductible if you use them for your business. Don’t miss these small but powerful write-offs.

10. Co-Working Spaces and Day Passes

Even if you don’t rent a permanent office, you can deduct day passes or short-term co-working memberships as business rent. This is a great option for solopreneurs who need an occasional professional space.

The tax code is full of opportunities for small business owners — but only if you know where to look. These deductions may be less common, but they are completely legitimate when properly documented. Don’t leave money on the table — talk with a tax professional to see which of these apply to you. Reach out to info@mkhstaxgroup.com with questions — we’re here to help you understand more, stress less, and file with confidence.