14 Tax Write-Offs for LLC

As a limited liability company (LLC), one of the most important things to keep track of is your yearly expenses. From inventory to payroll, these costs determine the success of your business. Of course, one of the biggest expenses for LLCs is taxes, which is why strategic tax write-offs are so important. 

In this guide, we’ll explain 14 common LLC tax write-offs to make this year, helping to significantly reduce taxable income and save more money at tax time. We’ll also cover info on LLC taxation and give tips for effectively managing and writing off business expenses. With this info, LLC owners will be empowered to maximize their deductions over the tax year while ensuring compliance with all tax laws. Let’s take a look!

Key Takeaways 

• LLCs can leverage a variety of business tax deductions to minimize their taxable income.
• Generally, any expense considered ‘ordinary and necessary’ for your business can be deducted from your LLC taxes.
• Common LLC write-offs include the home office deduction, payroll taxes, and real estate taxes for a business property.
• LLCs are considered ‘pass-through entities,’ which means income and expenses related to the business are passed on to the individual taxes of LLC members.
• Single-member LLCs and multi-member LLCs have different tax filing requirements to be aware of.
• Many small business owners maximize LLC deductions with good expense tracking and record organization, which is made easier with accounting software.

Table of Contents

• Self-Employment Tax Deduction
• Legal and Professional Fees
• Automobile Expenses
• Bank Fees and Interests
• Home Office
• Office Supplies
• Travel Expenses
• Phone and Internet
• Business Meals
• Business Startup Costs
• Advertising and Promotions
• Business Insurance
• Education Expenses
• Medical Expenses
• How Are LLCs Taxed?
• How to Write Off LLC Business Expenses
• Elevate Your Tax Preparation with FreshBooks
• FAQs About Tax Write-Offs For LLCs

1. Self-Employment Tax Deduction

Minimizing your tax liability through the self-employment tax deduction is one of the most significant ways to reduce taxable income for LLC owners. If you’re the sole owner of a limited liability company, you’re obligated to pay the full cost of the self-employment tax. In 2024 and 2025, that cost is 15.3%, which includes taxes for both Medicare and Social Security. However, you’re able to reduce this income tax burden by declaring and deducting half of that amount, or 7.65%, on your federal income tax return

2. Legal and Professional Fees 

There are a number of professionals you may need to hire to advise you on running your LLC. The professionals may include an accountant or tax professional, notaries, and legal professionals. Whether it’s for bookkeeping, contracts, or document preparation, you can deduct the cost of legal fees and other professional costs to reduce your tax bill. The deduction applies to everyday business costs like preparing financial documents and records, as well as to things like tax audits and legal cases where you may be required to hire a professional team to manage unique circumstances.

3. Automobile Expenses  

When you use your car or other vehicle for your LLC, you can deduct common auto expenses from your qualified business income. Vehicles that are exclusively for business usage are recorded as assets and depreciated over their useful life rather than having their full cost deducted. You can also include depreciation since your vehicle qualifies as a business asset. If your vehicle is used for a mix of personal and business transport, you’ll have to calculate what percentage is used for business and write off only that amount. 

4. Bank Fees and Interest 

Running an LLC may come with significant banking fees. You may have to take out startup loans to finance your business, use credit to purchase new equipment or pay monthly service fees to maintain a business account at your bank. From interest on purchases made with credit to the interest on business and startup loans, interest payments on your business banking are fully tax deductible. Business owners can also deduct everyday business fees for things like money transfers, registration fees, new checks, and business bank account name fees.

5. Home Office 

If you use a home office for managing your LLC, that part of the home is considered a business property. You can deduct a portion of your home office expenses. The home office deduction includes a portion of rent for renters or a portion of property taxes and mortgage payments for homeowners. Home office deductions are based on the square footage of your home office, and the whole office space must be used exclusively for business purposes. Business owners are also able to deduct a portion of relevant costs like the internet, so it’s important to save receipts for all home office expenses. Another option is to choose the simplified home office deduction, which allows you to deduct a maximum of $5 per square of your home that is used for business, up to a maximum of 300 square feet or $1,500.

6. Office Supplies  

Whether you work from home or at an office, you can deduct the cost of office supplies for your LLC on your tax return. Some common office supply deductions include:

• Printing paper
• Printer ink
• Office furniture, including desks and desk chairs
• Software subscriptions like Microsoft Office
• Postage costs
• Office cleaning supplies

Business owners can also deduct the cost of computers, printers, and other office equipment that’s used for business purposes. Eligible supplies include everything from minor purchases of pens and ink to major things like equipment and furniture, so it’s worth saving your receipts for office supply write-offs.

7. Travel Expenses  

When you travel for work, you’re able to deduct almost all of your business travel expenses. These deductible expenses can include:

• The cost of flights, train tickets, and other modes of transport
• Hotels and business lodging
• Car rentals, parking, and fuel
• Meals
• Rentals for conference rooms and other business meeting essentials

Save all receipts from your business expenses when you travel so that you have clear proof that your expenses were necessary and related to the work of your LLC. Non-business expenses, such as personal entertainment expenses, don’t qualify for write-offs even if they’re incurred while you’re on a business trip.

Save all receipts from your business travel expenses when you travel so that you have clear proof that your expenses were necessary and related to the work of your LLC. Non-business expenses, such as personal entertainment expenses, aren’t tax-deductible, even if they’re incurred while you’re on a business trip.

Ready to make tax season easier than ever? FreshBooks helpful videos on tax preparation help you save money while making LLC tax return filing quick and easy.

8. Phone and Internet  

As long as your phone and internet are used for business purposes, you can deduct the cost of your cell phone and internet bills. For office phones and internet, you can deduct the full costs, whereas for home phone and internet, you can deduct the portion that you use for business. This also applies to the cost of new phones and internet-related equipment like modems that you need to conduct your business.

9. Business Meals  

You can deduct 50% of the cost of most business meals at restaurants. This includes meals with employees, clients, and other work connections where you actively discuss work during the meal. This applies to your personal food or to your total bill if you’re treating clients to a meal. There are also some food expenses that are 100% tax-deductible, such as snacks for customers, food at events for charitable contributions, or food for employee events like annual parties. You can also claim 100% of meal costs as a tax deduction if they’re directly related to your business—for example, if you work as a restaurant critic or food reviewer.

10. Business Startup Costs  

New LLC business owners can deduct some of the costs of creating a company. Particularly if you’ve invested money to start your new business, this write-off of startup expenses can help reduce financial strain. If your total costs for starting a business are $50,000 or less, you can deduct up to $5,000 of those costs in your first tax year. These deductions decrease dollar by dollar if your startup costs exceed $50,000, and the remainder is deductible over 15 years.

11. Advertising and Promotions  

Starting your LLC can require a significant amount of promotion to attract new clients and grow your business. You can deduct a wide variety of advertising and promotional elements from your federal taxes, including:

• Printing costs for business cards and posters
• Ads for television, online, and social media
• The cost of designing and maintaining your website
• Promotional events
• Sponsorships of local events, sports teams, etc.

12. Business Insurance  

There are a wide variety of business insurance types, and most of them can be deducted from your taxes since they’re considered ordinary and necessary. Ordinary refers to commonly used in your industry, while necessary is required for your business. You may have liability insurance, property insurance, or even an errors and omissions insurance to protect yourself and your LLC. Some businesses also provide employee health insurance benefits and other employee support. You can deduct these insurance premiums from your taxes as a business expense. Life insurance is not deductible on your tax return.

13. Education Expenses  

You can deduct continuing educational expenses for yourself and the employees of your LLC. The educational program must be related to your business, meaning it increases your business expertise or adds other value to your LLC. However, it cannot be a new and unrelated degree you’re getting. You can also get a tax deduction for up to $5,250 for your employee’s tuition payments.

14. Medical Expenses

You can deduct all the insurance premium payments from your tax return. In addition, if your medical expenses add up to more than 7.5% of your adjusted gross income, you may be able to write some of them off on your taxes. These expenses must be unreimbursed by others, for example, your health insurance. Some qualifying expenses include:

• Fees for medical practitioners like doctors, surgeons, and dentists
• Hospital and care home costs
• Insulin and other prescription drugs
• Medical devices including dentures, eyeglasses, and hearing aids
• Travel expenses related to obtaining medical care

How are LLCs Taxed?

LLCs are considered ‘pass-through entities’ for tax purposes. What does this mean? The LLC itself doesn’t pay taxes—instead, the tax liability ‘passes through’ to its members, who pay the necessary taxes along with their individual income tax when they file their personal tax returns. With that said, there are differences in LLC taxation and tax forms depending on the way its membership is set up. 

For single-member LLCs with self-employed business owners, the individual will report income generated by the business on their personal Form 1040. They’ll use Schedule C to report expenses, which allows them to make the necessary tax deductions for business costs. 

Multi-member LLCs, on the other hand, will file Form 1065 (U.S. Return of Partnership Income). On this form, the LLC will list all profits, losses, credits, and deductions. Next, you need to prepare Schedule K-1 documents for each LLC member. This form is used by members to declare their share of income and tax deductions they receive via the LLC based on percentages set out in the LLC’s operating agreement.

How to Write off LLC Business Expenses

How do LLCs go about writing off their business expenses as tax deductions? The process can be broken down into five simple steps:

1. Track All Business-Related Expenses

The most important part of writing off small business tax expenses is to track them throughout the year. This means keeping accurate records of every expense you incur. We suggest keeping categorized records of all receipts, invoices, and other digital records to make tax deductions simpler when it’s time to file. Accounting software can be very useful for this purpose, helping small business owners save time and money.

2. Separate Business and Personal Finances

Another key step is to ensure your business and personal finances remain separated at all times. Even though LLCs are pass-through entities, it’s vital that you differentiate your business income and costs separate from personal finances, including bank accounts and credit cards. This helps avoid confusion and ensure compliance with tax law. 

3. Identify Tax-Deductible Expenses

Not all expenses can be deducted from your LLC’s taxable income, so it’s important to understand which expenses are tax-deductible in the first place. The list above is a good start, but it’s worth doing some research to see if any of your more industry-specific expenses may qualify as tax deductions. Doing this in advance will help you estimate your total tax liability, making financial planning much simpler for busy small business owners. 

4. Organize and Document Properly

It’s one thing to keep receipts of your expenses, but they won’t be much help unless they’re properly organized and documented. We suggest digitizing these records—it helps keep them neat and easily accessible, ensuring nothing is lost or confused when it comes time to file your taxes—but a well-organized physical records system can also work. A good system will also help in case you ever get audited by the IRS.

5. Leverage Accounting or Tax Software

One of the best ways to simplify tax deductions and expense tracking for your LLC is with the help of accounting software, such as FreshBooks. This tool automates expense tracking, categorizes your deductions automatically, and generally makes the tax filing process much simpler without having to pay to hire a tax professional.

Elevate Your Tax Preparation with FreshBooks 

In order to ensure success for your LLC, it’s critical to have an understanding of which business expenses are tax-deductible. Leveraging these deductions can significantly lower taxable income, potentially saving small business owners thousands of dollars on their income tax. 

FreshBooks offers an all-in-one solution for LLC expense tracking, financial record organizing, and simplified filing at tax time. With multiple interconnected features for cost tracking and organization, you can easily manage your deductible expenses throughout the year, saving time and maximizing your deductions when it’s time to file your taxes. Try FreshBooks for free! 

FAQs About Tax Write-Offs For LLCs

Still have questions about LLC tax write-offs? Expand your knowledge with these frequently asked questions

How much can you write off on taxes for an LLC?

Provided that the expenses you write off are considered ‘ordinary and necessary’ for your business, there are technically no limits to how much you can write off. Make sure to take full advantage of available deductions to minimize your tax bill as a small business owner.

How do LLC owners avoid taxes?

The best way to minimize your LLC’s taxable income is by deducting business expenses. You can write off a variety of business costs, including startup expenses and ongoing operation costs. You can also write off mortgage interest, home office deduction, rent costs, equipment expenses, and more.

Can I have an LLC and not pay myself?

Single-member LLCs aren’t required to pay themselves a salary, but it is recommended. Paying yourself from your LLC as a small business owner helps to keep business and personal finances separate, making tax filing much simpler. 

Can a single-member LLC write off expenses?  

Yes, single-member LLCs can write off a variety of business expenses. This includes some startup costs, home office expenses, business and health insurance premiums, and other business-related expenses.

Can an LLC write off a car purchase?

If your car is reserved for business use, you can write off some or all of your vehicle expenses as tax deductions for LLCs. If you use your vehicle exclusively for business, you can write off fuel expenses, insurance car loan interest payments, and include depreciation of the asset if you use the actual expense method. You can also use the Standard Mileage Rate method to deduct a flat amount per driven mile. Parking and toll fees are deductible in addition to either the standard mileage rate or actual expense method.

What deductions can I claim without receipts?  

Self-employed individuals can claim self-employment insurance and business insurance without receipts, as long as you have a copy of your policy. The IRS will also not ask for expenses below $75.

How much of your house can you write off for business?  

You can write off the portion of your home reserved for business use under the home office deductions. For example, the square footage of your home office represents a percentage of your home that’s necessary for business, and you can apply that to deduct your mortgage interest, a portion of rent, home insurance, and other home costs. You can also opt to use the simplified option for home office deduction allowing you to deduct $5 per square foot of the home used for business, up to a maximum of 300 square feet or $1,500.

Can I write off clothing as a business expense?   

If your clothing is used to promote or run your business, you can write it off as a business expense. This includes things like special uniforms for yourself and your employees or promotional costs like shirts and hats printed with your logo.

Can I write off expenses at LLC with no income?  

Yes, even if your LLC has no income you can still write off expenses and report it as a loss. Since this counts as business activity, you need to clearly report it on your annual taxes. It can later be applied to offset future income once you begin turning business income into a profit.

More Useful Resources

Explore our diverse tax deduction guides catering to various niches. From small businesses to real estate agents, find valuable insights to optimize your tax savings.

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