Question 1

What is the most commonly missed small business deduction?

Accepted Answer

Home office and vehicle mileage are frequently under-claimed. The IRS standard mileage rate was 67 cents per mile in 2024 for business use. A sole proprietor driving 15,000 business miles saves over $10,000 in deductible expenses. Keep a mileage log throughout the year — reconstruction at tax time rarely holds up to audit.

Question 2

Can I deduct meals and entertainment?

Accepted Answer

Meals with a clear business purpose (client meeting, employee working dinner) are 50% deductible. Entertainment was largely eliminated by the 2017 Tax Cuts and Jobs Act. Always note the business purpose on the receipt.

Question 3

What's the difference between an expense and a capital expenditure?

Accepted Answer

Regular expenses (supplies, software subscriptions, advertising) are deducted in the year incurred. Capital expenditures — equipment, vehicles, property improvements — are typically depreciated over their useful life. Section 179 and bonus depreciation rules allow many businesses to deduct large equipment purchases in the year of purchase.

Question 4

Does borrowing money affect my deductions?

Accepted Answer

Loan proceeds are not income and loan repayments are not deductible — but the interest you pay on business loans is deductible. Track interest paid separately from principal. This also applies to business credit card interest and lines of credit used for business purposes.

Question 5

How long should I keep records?

Accepted Answer

The IRS generally has 3 years from the filing date to audit a return, but 6 years if substantial income is unreported. Best practice: keep all business records for 7 years. Digital receipts are acceptable — scan paper receipts and store them in a dated folder.

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Business loan interest is deductible

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