LLC Tax Write-Offs: The List That Actually Matters

Every write-off comes back to two words: ordinary and necessary. Here is the list, the gray areas, and the documentation that makes a deduction survive.

Every LLC write-off comes back to the same IRS standard: the expense must be ordinary and necessary for your business. Ordinary means common in your line of work. Necessary means helpful and appropriate — not indispensable. If a purchase passes that test and you can document it, it is almost certainly deductible.

The core list

Vehicle and mileage — business miles at the IRS standard rate, or actual expenses. Requires a mileage log.
Home office — a dedicated space used regularly and exclusively for business, deducted by square footage or the simplified method.
Supplies and materials — what the work consumes.
Software and subscriptions — tools you use to run the business.
Advertising and marketing — ads, website, cards, sponsorships.
Professional fees — your CPA, bookkeeper, attorney.
Contract labor — freelancers and subcontractors, with 1099-NEC filings when you pay one $600 or more in a year.
Insurance — liability, professional, and commercial policies.
Rent — shop, office, storage, and equipment leases.
Travel — transportation and lodging for business trips.
Meals — generally 50% deductible when there is a business purpose.
Bank and merchant fees — including the processing fees card processors net out of your deposits.
Education and licenses — training, certifications, and permits that maintain or improve skills for your current business.
Phone and internet — the business-use percentage.

The ones owners miss

Merchant processing fees top the list — they are netted out of deposits, so they never appear as an expense unless someone books them. Mileage is second: a real number built from dozens of small trips nobody logged. Health insurance premiums for self-employed owners are deductible as an adjustment to income, subject to rules. And retirement contributions — a SEP-IRA or solo 401(k) — can move a large amount of profit out of reach of this year's tax bill entirely.

Most owners can also deduct a portion of their qualified business income on their personal return — the qualified business income deduction. It has income limits and exceptions, so have your preparer confirm it.

The gray areas

Mixed-use expenses are where write-offs die. A phone used half for business is a 50% deduction, not 100%. A truck used for commuting and jobs needs a mileage log to separate the two. Clothing is deductible only when it is a uniform or safety gear not suitable for everyday wear. And meals need a business purpose noted at the time — who, what, and why — not a stack of anonymous receipts in March.

What you cannot write off

Owner draws are not expenses — ever. Personal expenses are not expenses even when they run through the business card. Commuting from home to your regular workplace is personal. Fines and penalties are not deductible. And capital purchases like equipment and vehicles are generally depreciated or expensed under specific rules rather than deducted like supplies — your preparer will choose the treatment.

Documentation is the deduction

A deduction you cannot document is a deduction you should not take. Photograph receipts when you buy, note the business purpose on meals, keep a mileage log as you drive, and keep records for at least three years. The businesses that deduct the most legally are not aggressive — they are organized.

LedgerFast captures expenses as they happen — bank, card, and cash — maps them to tax categories automatically, and keeps receipts attached, so the write-offs you earned in March still exist in January. Plans from $49/month, first month free.

Disclaimer

This article is general educational information, not tax, legal, or accounting advice. LedgerFast is not a CPA firm and does not provide tax preparation or filing services. Deductibility depends on your facts and current law — consult a qualified tax professional before claiming any deduction. Use of LedgerFast is governed by our Terms of Service.

Frequently asked questions

What can an LLC write off on taxes?

Any expense that is ordinary and necessary for the business: vehicle and mileage, home office, supplies, software, advertising, professional fees, contract labor, insurance, rent, travel, half of business meals, bank and merchant fees, and more. The test is the business purpose, and the requirement is documentation.

Can I write off my car as an LLC owner?

The business-use portion, yes — either through the IRS standard mileage rate applied to business miles or through actual vehicle expenses. Both methods require a mileage log that separates business, commuting, and personal driving. Commuting to a regular workplace is personal and not deductible.

Are owner draws a tax write-off?

No. Draws are you moving your own profit from the business to yourself — they never reduce taxable income. You are taxed on the LLC's profit whether you withdraw it or not, so recording draws as expenses understates your income.

Can an LLC write off health insurance?

Self-employed owners can generally deduct premiums for themselves and their family as an adjustment to income on the personal return, subject to rules — for instance, not for months you were eligible for an employer-subsidized plan. Confirm the details with your tax professional.

What records do I need to keep for write-offs?

Receipts or invoices for purchases, a mileage log for vehicle deductions, notes on the business purpose of meals and travel, and bank or card statements. The IRS generally expects records kept for at least three years, and the habit that works is capturing them at the moment of purchase, not reconstructing them later.