3 Overlooked Tax-Saving Strategies for Small Business Owners

As a small business owner, you’re always looking for ways to increase profit and reduce costs, and that includes taxes. While most entrepreneurs know about the basics like writing off office supplies or mileage, there are several lesser-known tax savings strategies that could make a noticeable difference come tax season.

Here are three often-overlooked ways to save on your taxes as a business owner - and how to make sure you’re maximizing every opportunity to keep more of your hard-earned money.

1. Claim Your Home Office and Household Expenses 

If you run your business from home, you may be eligible for the home office deduction, which allows you to write off a portion of your rent or mortgage, utilities, internet, and even home insurance.

The key is having a designated space in your home that you use exclusively and regularly for business. This could be a spare bedroom, basement studio, or even a converted closet, just as long as it meets the IRS criteria.

You can calculate the deduction using:

• The simplified method: $5 per square foot, up to 300 sq. ft.

• The regular method: Based on the percentage of your home used for business

Don’t forget to include other related expenses like a portion of your electric bill or home maintenance - those can add up fast!

2. Don’t Skip Charitable Contributions 

You may already give to causes you care about, but did you know that eligible charitable donations could also benefit your business at tax time?

Whether you give cash donations, inventory, or services, qualifying contributions to IRS-approved nonprofits can often be deducted from your taxable income, depending on how your business is structured.

C Corporations can usually deduct charitable contributions directly, while sole proprietors and LLCs typically claim them on their individual returns. Make sure you:

• Get documentation (like receipts or donation letters)

• Verify that the organization is 501(c)(3) certified

• Keep good records of any non-cash donations (e.g., donated artwork, event sponsorships, or volunteer expenses)

These deductions can also help you build goodwill while potentially lowering your tax bill.

Pro tip: If you’re a sole proprietor or LLC and want to claim a charitable donation for your business, find a way to donate where your business name will be displayed somewhere! You can then claim it as advertising/marketing, allowing it to be a business expense, while still donating to a good cause. Just make sure your business name or logo is displayed on a sign at a charitable event or on their website or social media. 

3. Contribute to a Health Savings Account (HSA) 

If you have a high-deductible health plan (HDHP), opening a Health Savings Account (HSA) can offer multiple tax advantages.

Here’s why HSAs are such a powerful tool:

• Contributions are tax-deductible

• Earnings grow tax-free

• Withdrawals are tax-free when used for qualified medical expenses

For 2025, the HSA contribution limits are:

• $4,300 for individuals

• $8,550 for families

• An extra $1,000 if you’re 55 or older

This is a great way to not only reduce your taxable income but also plan ahead for healthcare expenses, especially if you're self-employed and carrying your own insurance.

Final Thoughts on Tax-Saving Strategies

As a business owner, your tax strategy shouldn’t be an afterthought. These often-overlooked deductions - home office expenses, charitable donations, and HSA contributions - could save you hundreds (or even thousands) each year if used wisely.

Being proactive with your bookkeeping and tax planning helps you avoid surprises and puts more money back in your pocket.

Want to see how healthy your books really are? Download our free DIY Bookkeeping Health Checklist - a quick, practical guide to help you assess where your finances stand and spot opportunities for improvement.