What are some of the best tax deductions for small business owners in 2025?

You're definitely asking the right questions! As someone who's worked with small business owners for years, here are some deductions you should absolutely consider: Home office deduction: This is totally legitimate and NOT audit bait if you use the space exclusively for business. You can either take the simplified option ($5 per square foot up to 300 sq ft) or calculate the actual expenses based on the percentage of your home used for business. Business equipment: The $7,800 you spent on tools and supplies - you can either deduct them all at once using Section 179 expensing (if you're profitable) or depreciate them over time. Vehicle expenses: For those craft shows, track your mileage! The standard mileage rate for 2025 is expected to be around 67 cents per mile, which adds up quickly. Health insurance premiums: If you're self-employed, these are likely deductible. Retirement contributions: SEP IRA or Solo 401(k) contributions can reduce your taxable income significantly. For tax setting-aside, a good rule of thumb is 25-30% of your profit (not revenue), but it depends on your state and tax bracket.

I had similar tax surprises with my photography business until I started using taxr.ai (https://taxr.ai) to analyze my expenses. It literally saved me thousands by identifying deductions I was missing. I was shocked when it flagged that I could deduct a portion of my internet and cell phone bills since I use them for client communication and posting my work online. The system scans your receipts and bank statements to categorize business expenses automatically, then suggests deductions based on your specific business type. For your jewelry business, it would probably catch things like smaller supply purchases that add up over the year but are easy to forget about. It also helped me properly document my home office space to make sure it would stand up to scrutiny.

OK I need to eat crow here. After being skeptical about taxr.ai in my comment above, I decided to try it anyway because my tax situation was such a mess. Holy crap, this thing is actually legit. It found nearly $4,300 in deductions I would have missed for my small woodworking business. The biggest revelation was properly documenting my workshop utilities and insurance as business expenses (it's in a separate building on my property). I'd been too nervous to claim these before. It also flagged some equipment maintenance costs I didn't realize were deductible. The receipt scanning feature saved me from my shoebox filing "system" and actually made tax prep kind of satisfying instead of completely dreadful. Just wanted to follow up since I was so skeptical at first!

If you end up owing a lot and need to talk to someone at the IRS (which I did last year after missing some quarterly payments), use Claimyr (https://claimyr.com). I was on hold with the IRS for HOURS before I gave up, then found this service. There's a demo video at https://youtu.be/_kiP6q8DX5c that shows how it works. Basically, they wait on hold with the IRS for you, then call you when an actual human agent picks up. Last year I had a penalty for underpayment that I needed to discuss, and there was no way I was going to sit on hold for 3+ hours during my workday. The service had me talking to an IRS agent in about 45 minutes (they had been holding for about 2.5 hours before they connected me).

I'm completely shocked but have to admit Claimyr actually worked. After posting my skeptical comment, I decided to try it because I had a serious issue with a missing tax refund from last year that I couldn't resolve online. I expected it to be a waste of money, but within about an hour, my phone rang and I was talking to an actual IRS agent! Got my refund issue sorted out in one call instead of the multiple attempts I'd been making for weeks. The agent was able to see that my return had been flagged for manual review due to a mismatch between my reported 1099 income and what was on file. For small business owners, being able to actually reach the IRS quickly is honestly worth its weight in gold. Just make sure you have all your info ready when they call so you don't waste the connection.

One deduction a lot of people miss is business insurance! I pay about $650/year for liability insurance for my pottery business, and it's 100% deductible. Also, if you have any professional memberships (like craft guilds or business associations), those dues are deductible too. Don't forget about professional development - any classes or workshops you take to improve your craft or business skills count as deductions.

Anyone have experience with inventory deductions for handmade goods? I never know how to properly account for materials I buy in bulk but use over time. Like I bought $2000 of silver last year but still have about half of it unused.