What Can I Write Off as a Business Expense?

If you earn money from a business or side income, you can usually subtract some of what you spend from your taxable profit. The question people type into Google, "what can I write off as a business expense?", has a short answer: costs that are ordinary and necessary for your business, minus any personal part, and backed by records.

This post explains what that test means in practice, how to handle costs that are partly personal, and which records to keep. It is general information, so check your own situation with an accountant.

What "write off" means

A write-off, or deduction, is a business cost you subtract from your income before tax is calculated. If you earned $60,000 from freelancing and had $9,000 of allowable costs, you would be taxed on the profit of $51,000. That is an illustration, not a prediction for your tax bill.

A deduction lowers the income you're taxed on. It does not give you the money back, and it isn't free. You still spent the money.

The US test: ordinary and necessary

The IRS describes a deductible business expense with two words. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. It doesn't have to be indispensable.

So a graphic designer's design software is ordinary and necessary. A plumber's pipe wrenches are too. The same test also asks whether the cost belongs to your business at all. Spending on yourself or your household is personal, and personal costs are generally not deductible.

Ask these four questions

1. Would someone in my line of work commonly spend on this? If peers in your trade buy it, it passes the "ordinary" half.
2. Does it help the business earn money or run? That covers "necessary."
3. Is this for the business, or for me? Be honest about the answer.
4. Can I show what I paid, to whom, when and why? If not, the deduction is weak even when the purpose is real.

Common categories

The IRS lists many kinds of business expense. The ones most small businesses meet are:

• employees' pay,
• rent,
• interest on business loans,
• taxes, including the employer's share of some payroll taxes,
• insurance,
• depreciation, which spreads the cost of a long-lasting asset over several years,
• travel, gifts and car expenses.

Each category has its own rules and limits. Meals, for example, are generally deductible at 50% of the unreimbursed cost under the IRS's Publication 463 for 2025. Vehicle costs can use either a standard mileage rate or actual expenses. Home-office costs need a space used regularly and exclusively for the business. Check the IRS publication for the tax year you're filing, because limits and rates change.

Costs that are part business, part personal

Many real costs are mixed: a phone, an internet connection, a car, a room at home. The IRS says to separate them, and that the personal part is generally not deductible.

HMRC puts the same idea with an example. If your mobile bills come to £200 a year and £70 of that is business calls, you can claim £70.

A reasonable split rests on something you can show: a usage log, an itemized bill, or the share of a room used for work. "Roughly half" with no basis is hard to defend. A short note written at the time, such as "client calls, from itemized bill, March," is worth more than a guess made at tax time.

The UK version

For sole traders in the UK, the equivalent idea is the allowable expense: a cost of running the business, deducted to work out taxable profit. GOV.UK lists categories including office costs, travel, clothing, staff, stock and materials, insurance, premises costs, marketing, professional subscriptions and training. Again, a cost that is partly personal is only allowable in part.

Other countries have their own rules. The CRA in Canada and the ATO in Australia publish their own guidance, so use those if you file there.

The records behind a write-off

A deduction needs evidence. IRS guidance on expense records says they should identify the person you paid, the amount, proof that you paid, the date, and a description of what you bought. That points to two kinds of document working together:

A statement alone often isn't enough. The IRS notes that proof of payment doesn't, by itself, establish that the cost was a deductible business expense. For travel, gifts and car costs, Publication 463 asks you to be able to show the amount, the time and place, and the business purpose. For meals, it adds the business relationship of the people involved.

Records also need to last. The IRS generally wants them kept for as long as the tax year they support can be reviewed, as we explain in how long to keep receipts.

Do this now: a 20-minute write-off check

Open your last three months of card and bank statements and go through them with a pen or a spare column.

1. Mark each business charge.
2. For each one, check that you have the receipt or invoice, filed where you can find it.
3. For mixed costs, write the business share and how you worked it out.
4. List anything you can't explain. Don't claim it until you can.

If the filing part is the weak link, a simple folder system helps, and how to organize receipts in Google Drive walks through one. If you're a freelancer, our guide for freelancers and sole traders shows how to catch receipts as they arrive instead of hunting for them later.

What not to do

Don't treat the list of categories as a menu. The categories show what is commonly deductible, not what you can claim whatever the circumstances. Don't stretch a personal cost into a business one. And don't skip the records because the amount is small, since small amounts add up and are the easiest ones to lose.

The rules are detailed and they change. Tax rules for the tax year you are filing, and what applies to your own business, belong in a conversation with an accountant or the tax authority's own guidance.