The Illinois CPA Society suggests the self-employed explore these essential and sometimes overlooked deductions to help reduce their tax burden, increase their profitability, and keep their business moving forward.

CHICAGO, March 19, 2025 – Whether you launched a new start-up or have been self-employed for years, lowering your taxes is always a savvy business strategy. Here are 10 deductions—and there may be many more—that you could consider discussing with a certified public accountant (CPA) before filing your returns this tax season:

1. Start-Up & Organizational Costs: The costs of forming a legal business entity, like registration fees and licenses, add up. Up to $5,000 in qualifying start-up costs and $5,000 in organization/incorporation costs that your business venture paid to get up and running can be deducted. Any start-up costs that aren’t deductible in the year you start your business can be gradually written off over a 15-year period.
   
2. Business Interest Expenses: If you’ve taken out a business loan or used a business credit card, the interest paid on those debts is generally deductible. However, deductions may be subject to limitations for businesses with gross receipts exceeding the IRS threshold.

    

3. Business Insurance: Self-employed individuals can deduct premiums paid for insurance policies directly related to their trade or business. Common deductible policies include general liability, professional liability, casualty, accident insurance, and health insurance for employees. Self-employed individuals may also qualify for a deduction on their own health insurance premiums, subject to certain IRS restrictions.
   
4. Home Office: If you operate your business from home, you may qualify for a home office deduction, provided the space is used exclusively and regularly for business purposes. You can choose between: 
   
   -The actual expense method: Deducts a percentage if eligible home expenses (mortgage interest, real estate taxes, utilities, and depreciation) based on the square footage used for business.
   -The simplified method: Allows for a deduction of $5 per square foot of the dedicated workspace, up to 300 square feet ($1,500 maximum).
   
   
5. Rent: If you rent a space for your trade or business, the rental expenses are deductible, providing you don’t have any ownership interest in the rented property.
   
   
6. Business Travel: The self-employed can deduct costs for common business-related travel expenses, like airfare, transportation, lodging, and even the use of personal vehicles. Documentation of business use is key, and “commuting” expenses aren’t deductible.
   
   
7. Advertising: Your business needs customers, right? Advertising expenses for promoting your products or services may qualify for a 100% deduction once the business has commenced operations.
   
   
8. Professional Fees: Need an accountant or consultant? Expenses incurred for professional services provided by an independent contractor or business can often be deducted.
   
   
9. Retirement Contributions: Self-employed individuals can establish various retirement accounts, like a 401(k), Simplified Employer Pension IRA, or Savings Incentive Match Plan for Employees IRA. Money contributed to these plans, in some cases up to 25 percent of income, can be deducted as a business expense.
   
   
10. Self-Employment Taxes: One of the most common self-employment deductions is self-employment tax. You can deduct up to 50 percent of your self-employment tax from your income taxes.

These are just some of the many business-related expenses the self-employed can deduct from their taxable income. The Illinois CPA Society (ICPAS) suggests seeking guidance, as everyone’s tax situation is different, and not all tax deductions will be available to everyone. Consulting a CPA is the best way to maximize any tax credits and deductions available to you while getting the strategic business advice you need to increase your profitability and keep your business moving forward.

Remember, for most taxpayers, the deadline to file a 2024 federal tax return, pay any tax owed, or request an extension is April 15, 2025. If you file for an extension, your tax return will be due Oct. 15, 2025. However, even if an extension is granted, any taxes owed must still be paid by April 15, 2025, to avoid penalties and interest.

For expert tax planning and guidance, consider working with a CPA to ensure compliance and optimize your tax strategy. ICPAS’ free “Find a CPA” directory can help you find the trusted, strategic business advisor that’s right for you based on location, types of services needed, and languages spoken. Find a CPA at www.icpas.org/findacpa.