If you run an online business, one of the most confusing parts of the whole thing is figuring out what you can actually write off. You started this business to do work you love, not to become a tax expert. But every year at tax time, the same questions come back: What counts as a business expense? What am I leaving on the table? And what am I deducting that I really shouldn’t be?
Here is the frustrating part. There is a real shortage of accountants and CPAs who truly understand online business. I get asked for referrals constantly, and my list is short because so few professionals have taken the time to learn how the online world actually works. So a lot of online business owners are left guessing.
I spent six years as a government tax auditor before I built my bookkeeping firm. I have seen exactly which deductions hold up and which ones get thrown out the second someone looks closely. This guide is here so you can walk into tax season knowing what you are talking about, keep more of what you earn, and stop second-guessing every purchase.
Let’s get into it.
What Counts as a Business Expense?
Before we list a single deduction, you need to understand the test that every expense has to pass. The IRS says a deductible business expense has to be both ordinary and necessary.
An ordinary expense is one that is common and accepted in your line of work. What is normal for one type of business is not automatically normal for another.
A necessary expense is one that is helpful and appropriate for your business.
Here is a simple example. As a blogger, your email service provider (ConvertKit, ActiveCampaign, MailerLite, whatever you use) is both ordinary and necessary. It is a completely normal cost of running an online business. Car expenses, on the other hand, usually are not ordinary and necessary for a blogger, so they are a much harder sell.
Keep that ordinary-and-necessary test in the back of your mind for everything below. It is the whole game.
Track Your Expenses (This Is Not Optional)
You cannot deduct what you cannot prove. Before you worry about individual categories, get a real system for tracking your income and expenses.
Bookkeeping software like QuickBooks Online, Xero, or FreshBooks connects to your bank accounts and credit cards so your transactions flow in automatically. Most of these tools also let you store a photo of each receipt right on the transaction, which matters a lot if you are ever audited. We live in a digital world, and digital receipts are perfectly acceptable, so there is no reason to keep a shoebox full of fading paper.
One more thing that will save you every year: keep your business and personal money separate. A dedicated business bank account and a business card make the difference between clean books and a messy pile you have to untangle each April.
Small Online Business Tax Deductions You Can Take
This is not a complete, comprehensive list. But it covers the deductions that come up again and again for online businesses, and it should answer most of your questions.
Advertising
Advertising covers everything you do to promote your business: Facebook and Google ads, podcast or radio sponsorships, sponsored content, influencer marketing, business cards, flyers, and any branded swag with your business name on it. Email marketing platforms live here too.
Bank and Merchant Fees
The fees PayPal, Stripe, and similar processors charge to collect money for you are a deductible cost of doing business. So are monthly maintenance fees your bank charges on your business account. Quick note: do not raise your prices to pass these fees onto your customers, and do not try to dodge processors with sketchy payment workarounds, because you lose the payment protections that keep both your money and your client’s money safe.
Charitable Contributions
If your business donates money or goods to a qualified charity, that can be deductible, but exactly how and where it gets deducted depends on your business structure. For most non-incorporated businesses, charitable giving flows to your personal return rather than your business return, and there are limits. This is one where the rules and dollar limits shift, so confirm the current-year treatment before you count on it.
Insurance
Business insurance (like general liability or event coverage) is deductible. If your business owns a vehicle outright, the insurance premiums on that vehicle count too.
Interest
Interest on a business credit card, loan, or line of credit is deductible. But here is the catch that trips people up: if you use a single card for both business and personal spending, you generally cannot take the interest deduction. Another reason to keep things separate.
Legal and Professional Services
When you pay a lawyer, accountant, or bookkeeper, those fees are deductible. Yes, the money you pay a bookkeeper to keep your books straight is itself a write-off.
Office Expenses and Supplies
Office expenses are the everyday items that keep you working: paper, pens, notebooks, small equipment like a monitor or keyboard, and cleaning supplies for your workspace. Supplies are the things you constantly replace, which for online businesses often means digital goods like stock photos, fonts, and website themes, plus any materials that go into handmade products.
Rent or Lease
Most online business owners do not have rent, but if you lease office space outside your home, rent an event space, or rent a piece of equipment before buying it, those costs are deductible.
Repairs and Maintenance
Keeping your business equipment running is deductible. That includes maintenance and repairs on the tools you actually create with, like your computer or camera.
Website Expenses
You run an online business, so of course you have website costs. Hosting fees, themes, plugins, and the like are all deductible.
Software Subscriptions
Software is bought by subscription now, not on a disc, and those recurring fees are deductible. I like to give software its own line item so I can see exactly what I am spending, but you can also fold it into office expenses.
Contract Labor and Wages
If you hire independent contractors (a VA, a web developer, a designer), what you pay them is deductible. Pay any single contractor more than the IRS reporting threshold in a calendar year and you will need to issue them a 1099, so keep good records of who you paid and how much. That reporting threshold has been changing, so check the current amount. Wages are different: those apply when you have actual employees, which for many solo online owners only comes into play if you are set up as an S Corp or C Corp and pay yourself as an employee.
Continuing Education
You are always learning in this business, and that investment counts. Courses, workshops, coaching, digital products, and books that build your business skills or deepen your niche knowledge are deductible.
Taxes and Licenses
Business license fees, LLC or corporation formation and renewal fees, trademark fees, the employer portion of payroll taxes, and any professional licenses you need all fall under taxes and licenses.
Travel and Meals
This is the category that generates the most confusion, so read carefully. When you travel for genuine business purposes, most of the trip is deductible: lodging, transportation to and around your destination, laundry while traveling, and tips for hotel staff.
Meals are their own animal. Business meals (think a meal while you are traveling for business, or a meeting where you are actually discussing business) are typically deductible at 50%. Keep the actual receipts or use the per diem rate. What is not deductible is the everyday food you eat while working from a coffee shop, or a meal at the airport that is not tied to a business meeting. You still have to eat whether you are working or not, so a solo lunch does not become a write-off just because you answered email while eating it.
Business Use of Your Home
The home office deduction is one people skip because it feels complicated. It is not that bad. If you have a space used only for your business (a whole room or a dedicated corner), you have two ways to calculate it:
- Actual expense method: Figure out what percentage of your home the business space takes up, then apply that percentage to your home costs (utilities, rent or mortgage interest, insurance, repairs).
- Simplified method: Multiply the square footage of your business space by the IRS’s flat per-square-foot rate, up to the allowed maximum.
Run both and take whichever gives you the bigger deduction.
Utilities
Most utilities get captured through the home office deduction, but a couple of others can count separately. Your phone and internet are deductible for the business-use portion, so if one phone or one connection serves both personal and business life, you deduct only the business percentage. That includes on-the-go costs like mobile hotspots and in-flight or hotel Wi-Fi.
Assets, Depreciation, and Amortization
Bigger purchases with a long useful life (a new computer, a camera and lenses, office furniture, production equipment, a business-only vehicle) are treated as assets rather than one-time expenses. Instead of writing off the full cost in one year, you deduct a portion each year through depreciation (for physical items) or amortization (for intangibles like trademarks and copyrights). There are elections that let you accelerate some of this, which is a great conversation to have with a pro.
Cost of Goods Sold
If you sell physical products, cost of goods sold covers the direct and indirect costs of creating and delivering them (raw materials, packaging, items for resale). If you sell courses, services, or other digital products, you usually do not have cost of goods sold, because the tools you use (like your Canva or Adobe subscription and your computer) are costs you would have whether or not you made that specific product.
Car and Truck Expenses
If you do have deductible business driving, you have two options, and you have to pick one and stay consistent:
- Standard mileage: Track your business miles and multiply by the IRS standard mileage rate (which changes every year, so use the current one).
- Actual expenses: Track your business miles and total miles, turn that into a business-use percentage, and apply it to your real vehicle costs (gas, maintenance, depreciation).
Either way, you have to log your mileage every time you drive for business. Tolls and parking are separate from the mileage deduction, so keep those receipts too.
Other Deductions People Forget
- Affiliate payouts: If you run an affiliate program, the commissions you pay out are deductible.
- Shipping and postage: Mailing products, or even client gifts, counts.
Deductions You Cannot Take
Knowing what you cannot deduct will keep you out of trouble, because these are exactly the ones an auditor throws out first.
Clothing
Buying an outfit for a brand photo shoot feels like a business expense, but it usually is not. If you can wear it in normal life after the shoot (and you can), it is a personal expense. The narrow exception is clothing that can only be worn for work, like uniforms or logo overalls, and that almost never applies to an online business.
Everyday Meals
As covered above, the coffee-shop lunch, the airport snack, and any meal that is not an actual business meeting are not deductible. You can absolutely pay for them out of your business account. You just cannot claim them on your return.
Personal Expenses
It is common to pay for personal things out of business income, especially before you formally pay yourself. But those personal costs are not deductions. They are owner’s draw, plain and simple. The cleaner habit is to transfer money to your personal account and pay for personal things from there. Do not fall into the “it’s just easier this way” trap, because it makes your books messy and your deductions weaker.
Deductions by Business Type: The Blogger Breakdown
Content creators have some unique gray areas, and the deciding factor is almost always the same: personal use versus business use. Here is how it shakes out across the most common niches.
Beauty Bloggers and Makeup Artists
If you are a makeup artist buying products to use on clients, that makeup is a business expense. If you buy makeup to wear yourself (even for demos, unboxings, or videos), it is personal use, and it is not deductible, the same way clothing is not. If you are in an MLM and hold inventory to resell, the cost of that inventory is deductible, but anything you pull out for personal use has to come back out of the deduction.
Crafters and Craft Bloggers
Supplies for crafts you keep or use to decorate your own home are not deductible, even if you photograph them for a tutorial. Supplies become deductible when you sell the finished craft or give it away to someone outside your household. Teaching in person? The supplies you buy for your students are deductible. Teaching online? Students usually buy their own supplies, but if you mail supply kits, those materials and postage are deductible.
Food Bloggers
Here is the one that surprises people. When you are developing a brand-new recipe, the ingredients (including the failed test batches) are deductible, even if your family eats the results. But once the recipe is finished, remaking it for dinner is just groceries. The cleanest move is to keep a separate set of “blog” ingredients on separate receipts from your household groceries.
Home Decor and DIY Bloggers
Decorating or renovating your own home is personal, even if you blog every step, because you live there every day. Decorating someone else’s space as part of your business, or building a project you then sell or give away, makes those supply costs deductible. If you buy items for a client, expense them at what you paid, not the marked-up price you charge.
Travel Bloggers
Only your costs are deductible, never your family’s or partner’s. The full cost of a single hotel room or a single rental car counts, because one person can only use one at a time, but a second room or second car does not. Keep every receipt, because no receipt means no deduction. And whatever sites, meals, or experiences you deduct need to actually show up in your content.
Pro Tips From a Former Auditor
A few things I want you to take with you:
- Separation is everything. Separate bank accounts, separate cards, and separate receipts for business and personal purchases are what make your deductions defensible. When business and personal blur together, an auditor cannot see the line, and neither can you.
- No receipt, no deduction. If you plan to write something off, keep the proof.
- Do not deduct on a “maybe.” If an expense is really personal, leave it off. If it gets thrown out in an audit, you owe tax on the difference plus the headache. It is not worth it.
- Find a professional who actually knows online business. An online-savvy accountant will understand your world far better than a generalist. And if tracking your numbers is not your thing, hire a bookkeeper who genuinely understands accounting. Look at your financial statements monthly, not once a year.
The Bottom Line
The rule underneath every single one of these deductions is the same: an expense has to be ordinary and necessary for your business, and it has to be genuinely for the business, not for you personally. Get that distinction right, keep your records clean, and separate your money, and you will capture the deductions you have earned without giving an auditor anything to pull on.
You do not have to memorize all of this. You just have to have a system that catches it. That is exactly why I built The Deduction Vault inside the Business Finance Command Center: a done-for-you way to track every deduction your online business is entitled to, so nothing slips through the cracks and you keep more of your money at tax time. If you are tired of guessing what you can write off, that is the shortcut.
This guide is for general educational purposes and reflects common treatment of business expenses; it is not tax advice for your specific situation. Tax laws, dollar limits, and thresholds change, so confirm current-year rules with a qualified tax professional before filing.