LLC expenses cheat sheet: 19 tax write-offs for businesses

A Limited Liability Company (LLC) is a business structure that protects your personal assets from business debt. That's the basic protection. What makes an LLC attractive is the flexibility you get on how you're taxed. Not all LLC expenses receive equal treatment under tax law. The IRS has a simple test. An expense must be both ordinary and necessary to be a deductible expense.

1. Ordinary means it's common and accepted in your industry.
2. Necessary means it's helpful and appropriate for running your business.

If your LLC expense meets both criteria, you can write it off against your revenue, which lowers your taxable income. Deductible LLC expenses, also known as write-offs, are business costs the IRS lets you subtract from revenue, including office rent, employee salaries, marketing costs, business insurance premiums, and professional services. Most costs directly connected to running your business qualify. Non-deductible expenses are costs you cannot write off, including personal expenses, entertainment costs, and certain fines or penalties.

The IRS typically divides expenses into these two categories, so recognizing what qualifies as a legitimate business expense forms the foundation for effective tax planning and bookkeeping for any LLC owner.

Now that you understand why tracking matters, let's look at the specific expenses your LLC can deduct. These 16 categories cover most business costs you'll encounter. Each category includes what it covers, why it qualifies as deductible, and any special IRS rules or limits you should know.

1. Payroll and wages

Payroll expenses represent one of the largest deductible costs for most LLCs. This category includes all compensation paid to employees and contractors for work performed on behalf of your business.

What qualifies as deductible: Salaries, hourly wages, bonuses, commissions, and payments to independent contractors all count as deductible payroll expenses. You can also deduct employer-paid payroll taxes, including Social Security, Medicare, federal and state unemployment taxes, and workers' compensation premiums.

IRS Publication 15 (Circular E) requires W-2 forms for employees and 1099-NEC forms for any contractor paid $600 or more during the year.

2. Employee benefits

Employee benefits are fully deductible LLC expenses that help you attract and retain quality team members while reducing your tax burden. These include health insurance, retirement plans, and other employee perks.

What qualifies as deductible: Health insurance premiums paid for employees, contributions to retirement plans like 401(k)s, SEP IRAs, and SIMPLE IRAs, life insurance premiums, disability insurance, wellness programs, and dental and vision coverage all qualify for deduction. For 2026, 401(k) employee contributions are limited to $24,500 for those under 50, with an additional $8,000 catch-up contribution for those 50 and older.

IRS Publication 15-B states that benefits must be offered to all eligible employees on a non-discriminatory basis.

3. Marketing and advertising

Marketing and advertising expenses are fully deductible and essential for your LLC growth. These costs help you promote your business and reach potential customers or clients.

What qualifies as deductible: Digital advertising campaigns, print advertisements, website development and maintenance, business cards, brochures, trade show expenses, and promotional materials are all deductible. This includes social media campaigns, content creation, billboards, Google Ads, and any other promotional activities designed to generate business.

IRS Publication 535 specifies that the advertising has to be reasonable in cost and directly tied to generating business for it to be deductible.

4. Office supplies and equipment

Office supplies and equipment purchases are generally fully deductible in the year you buy them. This category is particularly valuable for new businesses setting up operations.

What qualifies as deductible: Computers, printers, office furniture, software licenses, paper, pens, filing cabinets, monitors, and any other items used primarily for business operations all qualify. Low-cost items you consume regularly like staplers, notepads, and printer ink are deductible. For bigger purchases over $2,500, depreciation may apply, but Section 179 of the IRS tax code lets you deduct up to $1,310,000 in equipment purchases in 2026, which covers most startups.

According to IRS Publication 535, items must be used more than 50% for business purposes for it to be considered a deductible LLC expense. A monitor you use for work and gaming doesn't qualify, but a laptop you use exclusively for the business does.

5. Software and subscriptions

Software and subscription services are fully deductible business expenses. Most modern businesses rely on cloud-based tools to operate efficiently and stay organized.

What qualifies as deductible: Cloud-based software, SaaS subscriptions, off-the-shelf software, accounting software, project management tools, design software, communication platforms, email services, and any other tools your business relies on to operate are all deductible.

The software has to be directly related to running your business. Subscriptions to entertainment apps or personal services don't count. See IRS Publication 535 for details on software and subscription expense deductions.

6. Professional services

Professional services are essential business expenses that maintain your LLC's legal and financial health. These are some of the most valuable deductions for startups.

What qualifies as deductible: Accounting and bookkeeping services, legal fees for business matters, business consulting, tax preparation, and other professional advice directly related to business operations all qualify. If you hire a lawyer to draft your operating agreement or an accountant to set up your books, those costs reduce your taxable income.

IRS Publication 535 clarifies that services have to be business-related to be deductible. Personal legal advice or tax prep for your individual return doesn't qualify. Keep invoices from your service providers.

7. Travel and meals

Business travel and meal expenses offer valuable deductions for companies conducting business away from their primary location. Meals are typically only deductible up to 50% of the actual cost.

What qualifies as deductible: Airfare, hotels, rental cars, parking, and tolls for business trips are all deductible. Business meals with clients, employees, or business associates also qualify, though limited to 50% of the actual cost. Meals during business travel where you need to sleep or rest qualify under the same 50% limit.

You need to document the business purpose of the trip and who attended business meals. IRS Publication 463 encourages keeping receipts showing dates, locations, and attendees.

8. Vehicle expenses and mileage

Vehicle expenses are deductible for business use, and you can choose the method that gives you the larger deduction. This category includes both fuel and depreciation.

What qualifies as deductible: Business vehicle expenses can be deducted using either the standard mileage rate or the actual expenses method, whichever gives you a larger deduction. If using the standard mileage rate, you deduct 72.5 cents per mile for 2026. If using actual expenses, you can deduct gas, maintenance, insurance, and depreciation for vehicles used for business purposes. You can also deduct parking fees and tolls for business trips.

You must keep a mileage log showing the date, destination, miles driven, and business purpose of each trip. If you don't track mileage in the first year you claim business use, you're required to use the actual expenses method every year going forward. Choose your method carefully. See IRS Publication 463 for detailed mileage deduction rules and requirements.

9. Business insurance

Business insurance premiums are fully deductible and help protect your company from various risks. These expenses are ordinary and necessary for nearly all business types.

What qualifies as deductible: General liability insurance, professional liability coverage, property insurance, workers' compensation premiums, commercial auto insurance, and cyber liability insurance are all deductible. Self-employed founders can also deduct health insurance premiums for themselves and their families.

IRS Publication 535 has specific guidance on deductible business insurance premiums. Insurance has to be ordinary and necessary for your business type. A tech startup probably doesn't need general liability insurance the same way a construction company does, but if you've evaluated the risk and purchased it, it's deductible.

10. Utilities

Utilities for your business location are straightforward deductions that can significantly reduce your taxable income. These costs are necessary to keep your business operational.

What qualifies as deductible: Electricity, gas, water, trash service, internet, and business phone lines are all deductible utilities. If you work from home, you can deduct the business-use portion of these expenses through the home office deduction rather than claiming them all as utilities. The simplified method is $5 per square foot up to $1,500 maximum. The actual expense method lets you deduct the percentage of your home utilities that corresponds to your dedicated workspace.

Utilities must be for business use. If you're deducting 100% of your home utilities and you live there, that's a red flag. See IRS Publication 535 for deductible utility expenses and Publication 587 for home office utility deduction rules.

11. Rent and workspace costs

Rent for your business location is a straightforward deduction that can significantly reduce your taxable income. This applies whether you lease an office, storefront, warehouse, or other space.

What qualifies as deductible: Monthly rent payments for office space, storefronts, warehouses, or other business locations are deductible. For home-based businesses, you can deduct a portion of your rent or mortgage interest using the home office deduction, provided you have a dedicated workspace used exclusively for business.

Rent paid to a related party like a family member has to meet IRS Publication 535 "reasonable rent" standards, so document that the amount is fair market value. Make sure rent agreements are documented and the amounts are reasonable for your market.

12. Home office deduction

The home office deduction allows you to deduct expenses for the part of your home used exclusively for business operations. You can choose between two methods depending on which provides the larger deduction.

What qualifies as deductible: A dedicated space used regularly and exclusively for business activities qualifies. This can include a separate room or a clearly defined area within a room used only for business. You can use either the simplified method ($5 per square foot, up to $1,500) or the actual expense method. The simplified method is easier. Calculate your dedicated workspace in square feet, multiply by $5, and deduct up to $1,500. The actual expense method lets you deduct a percentage of your mortgage interest or rent, utilities, insurance, repairs, and maintenance.

Your workspace must be used regularly and exclusively for business for it to be deductible, according to IRS Publication 587. You can't deduct the living room where you sometimes work on your laptop.

13. Bank fees and loan interest

Business banking fees and interest on business loans are ordinary business expenses that qualify for full deductions. These costs add up quickly throughout the year.

What qualifies as deductible: Monthly account maintenance fees, transaction fees, wire transfer fees, overdraft charges, and interest on business loans are all deductible. Fees on business credit cards and lines of credit also qualify. These seem small, but they add up. If you're paying $10 per month in bank fees, that's $120 a year. Over 5 years, it's $600 deducted from your taxable income.

IRS Publication 535 has details on deductible bank fees. Deductible fees have to be on a business account. Personal credit card interest isn't deductible, even if you occasionally use it for business.

14. Startup costs

Startup costs are the expenses you incur when launching your LLC. The IRS allows you to deduct up to $5,000 in startup costs and up to $5,000 in organizational costs during your first year, provided total costs stay under $50,000.

What qualifies as deductible: Legal fees for entity formation, state filing fees ($100–$500 depending on the state), initial marketing campaigns, business licenses, consulting fees for business planning, and costs for setting up accounting systems all qualify as startup expenses. Organizational costs related to forming your LLC or partnership also count. Market research, prototype development and testing, and other pre-launch activities also qualify.

If total startup or organizational costs exceed $50,000, the $5,000 first-year deduction is reduced dollar-for-dollar. For example, if your startup costs total $55,000, you can only deduct $0 in year one ($5,000 minus $5,000 reduction). Remaining costs are amortized over 15 years. Startup costs must be incurred before your business begins active operations. Costs incurred after you're operational are treated as regular business expenses. Keep detailed records of all pre-opening expenses to maximize what you can write off in year one. See IRS Publication 535 for guidance on startup and organizational expenses.

15. Education and training

Education and training expenses that improve your business skills or keep you current in your field are fully deductible business expenses. This helps you stay competitive and effective in your role.

What qualifies as deductible: Professional courses, certifications, conferences, seminars, business books, and training programs directly related to your business activities all qualify. If you're a business consultant taking an advanced negotiation course, it's deductible. If you're taking nursing school classes to change careers, it's not.

IRS Publication 970 contains education-related tax benefits and Publication 535 asserts business education expenses. The education has to maintain or improve skills relevant to your current business. Training that qualifies you for a brand new trade or business generally isn't deductible. Keep receipts from the educational provider and maintain records showing how the training relates to your business.

16. Depreciation

Depreciation allows you to deduct the cost of business assets over their useful life, spreading the tax benefit across multiple years. This is valuable for equipment, vehicles, and other long-term assets.

What qualifies as deductible: Equipment, vehicles, buildings, and other business assets with a useful life of more than one year can be depreciated. You can often accelerate depreciation using Section 179 or bonus depreciation. For example, a piece of manufacturing equipment might be depreciated over seven years, or you could elect to deduct the full amount in 2026. Section 179 lets you deduct up to $1,310,000 in qualifying assets in 2026, which is valuable for startups making big purchases.

Assets must be used more than 50% for business to qualify. Keep documentation showing when you purchased the asset and its business use percentage. The IRS sets different depreciation schedules for different asset types. IRS Publication 946 specifies depreciation schedules, MACRS rules, and Section 179 guidance.

17. Business gifts

You can deduct the cost of gifts given to clients, customers, or business associates as a business expense. There are specific limits on how much you can deduct per recipient.

What qualifies as deductible: Gifts given to clients, customers, or business associates qualify as business expenses up to $25 per recipient per year. Incidental costs like wrapping or engraving don't count toward this limit unless they add substantial value. Promotional items costing $4 or less with your name permanently imprinted are treated differently and aren't subject to the $25 limit.

According to IRS Publication 17, you need to document who received gifts and when. Gifts have to have a business purpose, not be personal favors.

18. Repairs and maintenance

Routine repairs and maintenance that keep your business property in normal operating condition are fully deductible in the year you incur the expense. The key distinction is that repairs maintain existing functionality, while improvements enhance or change the property.

What qualifies as deductible: Fixing a leaky roof, patching drywall, repainting, repairing equipment, fixing HVAC systems, replacing broken windows, and maintaining machinery all qualify as deductible repairs. Routine maintenance like cleaning, servicing equipment, and minor updates that keep things working as intended are all deductible.

Costs that result in a betterment to the property, restore it to like-new condition, or adapt it to a new use must be capitalized and depreciated instead. For example, fixing a leak in the roof is a deductible repair, but replacing the entire roof would be a capital improvement. See IRS Publication 535 for the distinction between deductible repairs and capital improvements.

19. Charitable contributions with business purpose

Charitable contributions are generally not deductible as business expenses. However, payments to charitable organizations that provide a direct business benefit, such as sponsoring a table at a charity event for advertising purposes, may qualify as business deductions under a different classification.

What qualifies as deductible: Sponsoring a table at a charity event where you prominently advertise your business might qualify as a marketing or advertising expense rather than a charitable contribution. The key is that you receive a clear business benefit such as advertising, client entertainment, or business development opportunities in return for the payment.

The payment must be primarily for the business benefit, not the charitable cause. If the primary purpose is to advertise your business and the charitable donation is secondary, it may qualify as a deductible business expense. Standalone charitable donations without a business benefit component are taken on your personal tax return if you itemize deductions, not as business expenses. Review IRS Publication 526 for charitable contribution rules and Publication 535 for when sponsorships might qualify as business deductions.

Having gone through deductible expenses, it's equally important to know what cannot be deducted as a business expense. Non-deductible expenses are costs that the IRS explicitly disallows as write-offs. Knowing these limits helps avoid costly mistakes during tax filing.

1. Personal expenses

Personal expenses benefit you individually rather than your business, and the IRS doesn't allow these as business deductions. The line between personal and business spending can get blurry, so documentation is critical.

Examples: Personal meals, clothing, haircuts, grooming, and personal travel expenses are not deductible for LLCs. A business meal with a client is deductible. A lunch you eat alone at your desk while working is a personal expense, even though you're working.

2. Household expenses (Non-home office)

Personal household expenses that support your life but not your business are never deductible. The home office deduction is the only exception for certain household costs.

Examples: Residential utilities, mortgage payments outside of home office deduction, furniture for living areas, groceries, and household supplies aren't deductible. These are personal living expenses, not business costs.

3. Commuting costs

Commuting costs are the personal responsibility of employees and business owners, not business expenses. Travel from your office to a client site or another business location is different and is deductible. The distinction matters.

Examples: Gasoline, tolls, parking fees, and public transportation for your commute from home to your primary workplace don't count as deductible business expenses. This applies to all employees.

4. Entertainment

Entertainment expenses are strictly non-deductible under current tax law. While business meals can be deducted at 50%, pure entertainment does not qualify.

Examples: Concert tickets, venue rentals, sporting events, and entertainment-focused expenses are not deductible. If you take a client out for drinks with the intent of discussing business but the primary activity is entertainment, it doesn't qualify.

5. Penalties and fines

Federal law explicitly prohibits deductions for fines and penalties incurred for violating the law. These are consequences for non-compliance, not legitimate business expenses. There are limited exceptions for certain types of restitution and settlements, but fines for breaking the law are generally off limits.

Examples: OSHA violations, parking tickets, speeding tickets, and late fees on taxes are not deductible. Fines for breaking any law cannot be written off as a business expense.

6. Charitable contributions

Direct charitable contributions made by your LLC are generally not deductible as business expenses. However, if a charitable donation also provides a business benefit, it may qualify differently.

Example: Standalone charitable donations are taken on your personal tax return if you itemize deductions, not your business return. If you sponsor a table at a charity event and use it to prominently advertise your business, that might qualify as a marketing expense rather than a charitable donation.

7. Political contributions

Political donations are personal choices made by individuals and businesses, not ordinary business expenses. The IRS treats them as non-deductible regardless of business impact.

Examples: Donations to political candidates, campaigns, political action committees (PACs), or other political organizations are not deductible.

If an expense doesn't have a clear business purpose, it's likely not deductible. If you're unsure, consult IRS guidelines or a tax professional.

Deducting these expenses on your taxes requires proper documentation and following the right procedures. These practical steps ensure your deductions hold up under scrutiny.

1. Keep organized records

Documentation forms the foundation of all write-offs. Save receipts, invoices, and records for every business purchase, whether physical receipts or scanned copies. Use accounting software or apps to categorize expenses separately for travel, supplies, and meals. Store everything in an accessible way through cloud storage or dedicated folders. Good records make tax filing easier and support each deduction if audited.

2. Separate business and personal finances

Open a business bank account and, if possible, a business credit card for the LLC. Mixing personal and business spending in one account leads to confusion and potential trouble with the IRS. A separate account creates a clear audit trail and helps prove that expenses claimed are truly business-related.

3. Document each deduction properly

Different expenses require different supporting documentation. For a business meal, note who was present and the business purpose of the meeting. For vehicle expenses, keep a mileage log detailing each business trip. Home office deductions benefit from photos or measurements of the workspace. Major purchases should have invoices noting the business use.

4. Use the correct tax forms

How you report expenses depends on your LLC's tax status. Single-member LLCs taxed as sole proprietorships report business expenses on Schedule C of Form 1040. Multi-member LLCs taxed as partnerships file Form 1065, with expenses flowing through to owners’ K-1 forms. LLCs electing S-corp or C-corp taxation file Form 1120S or 1120, respectively. Choose the right form and consult a tax professional when needed.

Taking these steps throughout the year, not just at year-end, makes writing off expenses legal, easier, and more effective.

Effective expense management requires more than just saving receipts. These ongoing practices help maintain financial clarity and maximize deductions throughout the year.

Establish an expense policy

For single-owner LLCs, this might mean personal guidelines, but if the LLC has employees or multiple partners, set clear expense policies for spending. Determine what types of expenses are approved, spending limits, and how expense reimbursement works for employee-paid items. This prevents confusion and keeps everyone aligned about what the business will pay for.

Use accounting software or tools

Even very small businesses benefit from startup accounting software like QuickBooks, Xero, or well-structured spreadsheets. These tools automatically import bank transactions, categorize expenses, and generate reports. They reduce human error and save time. Reliable bookkeeping software streamlines expense tracking and ensures no deduction is overlooked come tax time.

Track expenses in real time

Don't wait until year-end to sort through receipts. Log expenses weekly or use mobile apps to capture receipts immediately. Keeping up with documentation avoids the stress of re-creating records months later. This also helps monitor cash flow, showing where money goes and allowing adjustments to business spending if needed.

Maintain separate folders and categories

Organize your expenses into categories that match how tax returns work. Create folders or tags for things like Travel, Meals, Supplies, Utilities, Office Equipment, and anything else that applies to your business. This mirrors how you'll report them come tax time, so nothing gets mixed up or lost.

Clean categories also help with budgeting. You can see how much you're spending in each area and make adjustments if needed. It's way easier than trying to figure it out from a jumbled list.

Review often

Set a calendar reminder to review your expenses monthly or quarterly. This catches mistakes early, like something being categorized wrong or a charge that shouldn't be there. Regular reviews also help make quarterly tax estimates more accurate by projecting deductible business expenses and income.

These practices keep your books organized and make tax season way less stressful. You won't be scrambling to reconstruct records or wondering if you missed a deduction. Good tracking now saves you time and money later, and it puts you in a solid position if you're ever audited.

These additional tax strategies and rules go beyond basic deductions. While slightly more advanced, they can significantly impact an LLC's tax situation.

The QBI deduction

Pass-through entities like LLCs often qualify for the Qualified Business Income deduction, which lets you write off up to 20% of your business's net income on top of regular expenses. If your LLC is profitable, you can deduct an additional 20% of that profit from taxable income. The deduction is now permanent under the 2025 One Big Beautiful Bill Act, which is huge for long-term planning.

For 2026, you get the full deduction if you're a single filer earning under roughly $203,000 in taxable income or a married couple filing jointly earning under $406,000. If you're above those thresholds, things get trickier. Service-based businesses like law firms, consulting practices, accounting shops, and medical practices face stricter limits once you cross those income levels. There's also a new minimum deduction of $400 if you have at least $1,000 in qualified business income from an active business you materially participate in.

Self-employment tax breaks

As an LLC owner classified as a sole proprietor or partner, you pay self-employment tax on your business profits to cover Social Security and Medicare. Here's the good part: you get an above-the-line deduction for half of that self-employment tax.

What does this mean in practice? You deduct half your SE tax on your personal tax return (Form 1040). It reduces your adjusted gross income automatically without requiring you to itemize deductions. This is a straightforward win baked into the LLC structure, and it lowers your taxable income each year.

State tax rules and obligations

Every state has its own rules for LLCs that directly affect what you can deduct and what you owe. Some states charge annual franchise taxes or LLC fees regardless of whether you're making money. California requires a minimum $800 yearly franchise tax on all LLCs. New York has different deduction limits and separate reporting requirements.

While most ordinary business expenses are deductible at the state level too, some states don't recognize federal tax designations like S-corp status. This means your federal plan might not work the same way in your state. Check your state's specific rules or work with a local accountant to ensure you're compliant and capturing all available deductions and credits. It's not glamorous, but it saves real money.

Staying off the IRS radar

A few basic practices keep you out of trouble with auditors. Keep business and personal finances completely separate in different bank accounts. Don't claim expenses that look outsized compared to your income. If you had a low-revenue year, massive meal and travel deductions raise red flags.

When you write off a vehicle or home office, claim only the actual percentage you use for business, not 100 percent unless that's genuinely accurate. The IRS expects businesses to aim for profit. Reporting losses year after year while taking large deductions can trigger scrutiny under hobby loss rules. Document why you spent money on each expense and show that your business actively tries to be profitable. Good records aren't thrilling, but they're your best defense if you're ever audited.

Leveraging these additional deductions and being mindful of special rules can significantly optimize an LLC's tax situation, but planning and expert advice prove invaluable for complex cases.

Managing business expenses shouldn’t be a scramble at tax time. With the right tools, founders and LLC owners can easily document costs, uncover deductible expenses, and keep more money in the business for growth.

Brex helps you stay organized year-round. Expenses are automatically categorized as you spend, receipts are captured in seconds, and recurring bills are logged without manual effort. Everything syncs directly with your accounting software, creating a seamless flow from transaction to tax deduction.

Brex’s spend management software gives you real-time visibility into company finances and generates reports aligned with tax categories. Built-in receipt capture and mileage tracking workflows make it simple to capture two of the most commonly missed deductions

Start maximizing your LLC's tax deductions with Brex’s tools designed for modern business expense management.