A guy walked into my office last month, handed me a shoebox full of receipts, and said he’d been running his landscaping business for three years. He figured he owed about $8,000 in taxes based on what he made. Two hours later, after going through his actual expenses and talking about how he runs his operation, we got that number down to $2,400. He’d been missing over $5,000 in legitimate deductions every single year.
This happens more than you’d think. Small business owners know they can write off some expenses, but they’re operating with this vague understanding of what counts and what doesn’t. They claim the super obvious stuff and leave thousands of dollars sitting on the table because nobody ever explained what they’re actually allowed to deduct on their small business tax return.
At Sincoff & Sincoff, LLC, we spend half our time during tax season explaining to business owners that yes, that thing you spent money on absolutely counts as a business expense. The relief on their faces when they realize they don’t owe nearly as much as they thought is pretty satisfying. Let me break down some of the deductions that get missed most often.
Small Business Tax Deductions in NJ
Your Home Office Is Probably Worth More Than You Think
Most business owners have heard about home office deductions, but they fall into one of two camps – either they’re claiming it when they shouldn’t, or they refuse to claim it even though they absolutely qualify.
The rules are simpler than people make them. You need a space in your home that you use for business and nothing else. Doesn’t have to be a whole room with a door. It could be a corner of your bedroom sectioned off with a bookshelf. It could be a desk setup in your basement. As long as that space is dedicated to business and you’re not also using it to watch TV or store your off-season clothes, it counts.
Here’s where people lose money – they think home office deduction is just about the space itself. It’s way bigger than that. You’re deducting a chunk of every expense related to maintaining your home. Heat in the winter, AC in the summer, electric bill, water bill, internet, insurance on the house, property taxes if you own, rent if you don’t. Even things like lawn care and snow removal, if you own the property.
Figure out what percentage of your home that office space takes up. Then apply that percentage to all those costs. I worked with a contractor last year whose office took up about 150 square feet of his 1,500 square foot house – 10%. His total home expenses for the year were around $32,000. He got to deduct $3,200 that he didn’t even know was possible.
The IRS has a simplified option where you just multiply your square footage by $5, capping at 300 square feet for a $1,500 maximum deduction. Saves you from digging through all your bills. But nine times out of ten, doing the actual calculation gets you more money back. We run both versions and pick whichever one saves you more on your NJ tax deductions.
Subscriptions and Memberships Nobody Remembers
Every business uses software now. You’re probably paying monthly for something – maybe it’s QuickBooks for bookkeeping, maybe it’s Adobe for design work, maybe it’s scheduling software for appointments. Those monthly charges that auto-deduct from your bank account? Every single one is a business expense.
People forget about these because they’re automatic. You set them up once and stop thinking about them. Then tax time comes around and you’re not even remembering they exist because you haven’t actively paid them in months.
Same thing with professional memberships. You join the chamber of commerce, you pay dues to an industry association, you subscribe to trade magazines. All deductible. That $500 annual membership fee to the local business group where you network? Write it off. The $200 you pay yearly for that industry magazine subscription? Write it off.
I had a graphic designer who was paying for five different software subscriptions, totaling about $150 a month. Never claimed any of it for two years because she just didn’t think about it. That’s $3,600 in missed deductions sitting right there in her bank statements.
The Stuff You Buy For Your Actual Work
This sounds obvious, but you’d be surprised what people don’t claim. You’re a plumber and you buy a new pipe wrench – that’s deductible. You run a bakery and you replace your commercial mixer – deductible. You’re a consultant and you buy a new laptop bag – deductible.
Where people really miss out is on the small purchases. You buy a $30 office chair cushion because your back hurts. You spend $45 on file folders and organizers. You pick up a new mouse because the old one is dying. These feel too minor to bother tracking, but ten of those purchases throughout the year are $500 or $600 that should be reducing your tax bill.
I tell every client at Sincoff & Sincoff, LLC to snap a photo of the receipt with their phone immediately when they buy something for the business. Takes five seconds, and at the end of the year, you’re not trying to reconstruct what you bought based on cryptic credit card statements that just say “Amazon.com” with no details.
Clothing counts too if it’s specific to your work and you wouldn’t wear it otherwise. Uniforms obviously, but also things like steel-toed boots for construction, non-slip shoes for restaurant work, protective gear for any kind of manual labor. You can’t deduct regular business casual clothes you’d wear anyway, but job-specific items absolutely count.
Driving Your Car For Business Adds Up Fast
You probably know mileage is deductible. You might even be tracking it sometimes. But a lot of business owners are only counting the obvious trips – driving to meet a client, going to pick up supplies. They’re missing a bunch of other driving that counts.
Going to the bank to deposit checks? Business mileage. Driving to the post office to mail packages? Business mileage. Running to the office supply store because you ran out of printer paper? Business mileage. That trip to meet a potential new client, even though they didn’t end up hiring you? Still business mileage.
The rate changes yearly – it was 67 cents per mile in 2024. If you’re driving 200 miles a month for business-related stuff, that’s over $1,600 annually in deductions. Most people are tracking maybe half of their actual business driving.
There’s also the option to deduct actual costs instead of mileage – insurance, gas, repairs, oil changes, new tires, car washes, everything. You calculate what percentage of your total driving is business-related and deduct that percentage of your costs. This works better for people driving expensive vehicles with high maintenance costs, but you need every receipt.
And here’s the kicker – tolls and parking fees for business trips get added on top of whichever method you choose. You’re not choosing between mileage or parking; you get both. Those bridge tolls into New York City or parking garage fees downtown add up if you’re making those trips regularly.
Food and Coffee That Actually Counts
You take a client to lunch to talk about a project. You grab coffee with someone you’re trying to land as a customer. You meet a supplier for breakfast to discuss pricing. All of those meals are 50% deductible as business expenses.
The key is that there has to be a business discussion involved and you need to note who you met with and what you talked about. Write it on the receipt. Doesn’t need to be an essay, just “met with John from ABC Company to discuss website project” or whatever.
What people don’t realize is how many of their meals actually qualify. That coffee shop meeting where you spent $15? Business expense. Taking a potential customer to a nice dinner to close a deal? Business expense. Even meals while you’re traveling for work count, whether you’re eating alone or with someone.
I worked with someone who was meeting clients and prospects for coffee or meals at least twice a week. Never claimed any of it because the amounts seemed small – $20 here, $35 there. Over the course of a year, she’d spent close to $3,000 on business meals. That’s $1,500 in deductions she left on the table.
Paying For Your Own Health Insurance
If you’re self-employed and paying your own health insurance instead of getting it through a spouse’s job, you can deduct 100% of those premiums. Not a portion, the whole thing. This isn’t some minor deduction either – family health insurance in New Jersey can easily run $1,500 to $2,000 a month.
This one gets missed constantly because people don’t think of health insurance as a business expense. But when you’re self-employed, the IRS treats it as one. Dental coverage counts too. Vision insurance. Even certain long-term care insurance premiums are up to specific limits based on your age.
The deduction comes right off your income before you calculate how much you owe. It’s not an itemized deduction where you need to hit a certain threshold. You just subtract it straight from your earnings, which makes it even more valuable.
I’ve had multiple clients who were self-employed for years, paying massive health insurance premiums and never deducting a penny because they didn’t know they could. We’re talking $15,000 to $20,000 in annual premiums that should have been reducing their tax bill the entire time.
Learning and Training For Your Business
Went to a conference in your industry? Deductible. Took an online course to learn a new skill related to what you do? Deductible. Got a certification that improves your professional qualifications? Deductible.
The rule is that it has to relate to the business you’re currently running. You can’t deduct going back to school for a completely different career. But training, education, and professional development in your existing field all count as business expenses.
Travel to conferences counts too – flights, hotel rooms, half your meals while you’re there, and the conference registration fee. I see people attend expensive industry events every year and treat the whole thing as a personal cost. They’re spending $2,000 to $3,000 on something that could be cutting their tax bill and they don’t even realize it.
Books count. Courses count. Webinars count. That $500 training course you took online? Write it off. Those $200 worth of business books you bought throughout the year? Write them off.
Money You Spent Before You Even Opened
If you started your business within the last few years, you probably spent money getting it off the ground before you made your first dollar. Market research, developing your product or service, advertising to let people know you exist, legal fees to set up your business entity, and even costs related to finding your first customers – all of that counts as start-up expenses.
You can deduct up to $5,000 in start-up costs in your first year. If you spent more than that, the rest gets spread out over 15 years, which is less exciting but still better than nothing.
A lot of new business owners don’t realize that those early expenses are deductible at all. They spent $8,000 getting their business launched and they never claimed any of it because they didn’t know they could. That’s money they essentially threw away.
Bank Fees and Payment Processing Costs
Every fee your bank charges you for maintaining your business account is deductible. Monthly maintenance fees, per-transaction charges, overdraft fees if you screwed up your math, wire transfer fees, and even the cost of ordering new checks.
If you accept credit cards or digital payments, every processing fee gets deducted too. Square takes 2.6% plus 10 cents per transaction? That’s a business expense. Does PayPal charge you fees? Business expense. Stripe processing costs? Business expense.
These seem tiny individually, but they pile up. Small businesses easily pay $1,000 to $2,000 annually in various bank and payment processing fees. That’s $1,000 to $2,000 in deductions most people never think to claim because they’re not writing checks for these costs – they just get automatically deducted.
Why Doing This Yourself Usually Costs You Money
I get it – you’re trying to save money by handling your own taxes. Seems like paying a business CPA is an unnecessary expense when you can just use software and figure it out yourself.
Here’s what actually happens. You miss deductions you didn’t know existed. You claim things incorrectly and risk problems if you ever get audited. You spend hours struggling with tax forms when you should be running your business. And you usually end up paying more in taxes than you would have if you’d just worked with someone who does this professionally.
At Sincoff & Sincoff, LLC, we work specifically with small business owners navigating both federal and state taxes here in New Jersey. We know what tax deductions NJ businesses can claim. We know how to document things properly. We know what questions to ask based on your specific type of business to find deductions you wouldn’t think of on your own.
The cost of hiring a tax professional is itself tax-deductible, which people always seem surprised to learn. And it typically pays for itself through the deductions we find that you would have missed. I’ve never had a small business owner regret working with us once they see the difference between what they thought they owed and what they actually owe after we’ve properly prepared their small business tax return.
You started a business to do whatever your business does, not to become a tax expert. Let someone who specializes in business taxes handle making sure you’re not overpaying. The difference between doing it yourself and doing it right is usually several thousand dollars a year – money that stays in your business instead of going to Trenton and Washington.
