What Are the Top 7 Write-Offs New Entrepreneurs Miss in Year One?
Year one is where bright founders quietly leak cash. These 7 high-impact deductions are routinely missed — with crisp rules, examples, and simple documentation that stands up.
Summary of What This Blog Covers
- Seven high-impact deductions founders skip in year one
- Crisp rules, examples, and documentation that stands up
- Simple “do this now” steps + fast checklist for your bookkeeper
1. Accountable Plan for Reimbursements
Reimburse yourself tax-free for business expenses (mileage, supplies, home office). Requires written policy, substantiation (receipts + logs), return of excess. Deductible to business, tax-free to you.
2. Documented Home Office
Exclusive/regular use space. Simplified ($5/sq ft up to 300 sq ft) or actual expenses. Keep floor plan/sketch, photos, utility bills, log of regular use.
3. Startup & Organizational Costs
Up to $5,000 immediate deduction (amortize rest over 180 months). Legal fees, filing fees, organizational expenses. Keep receipts + election statement on return.
4. Smart Timing for Equipment Deductions
Section 179: up to $1.22M immediate expensing (2025). Bonus depreciation: 60% in 2025. Place in service by Dec 31. De minimis safe harbor for items ≤$2,500.
5. S Corp Owner Health Insurance Handling
>2% shareholders: include premiums in W-2 Box 1 (deductible to business). Avoid self-employed health deduction issues. Document properly.
6. Reasonable Phone & Internet Allocations
Business % (40–70% common). Document method (logs or estimate). Round down if unsure. Keep receipts + allocation note.
7. Education Tied to Current Services
Courses/conferences that maintain/improve current skills. Receipts + note showing relevance. Not for new trade/profession.
Year-One Write-Off Checklist (copy-paste)
☐ Accountable plan policy written & reimbursements substantiated
☐ Home office documented (sketch, photos, bills, log)
☐ Startup costs receipts & election saved
☐ Equipment placed in service & Section 179/bonus elected
☐ Health insurance coded on W-2 (if S Corp)
☐ Phone/internet % documented
☐ Education receipts + purpose notes filed
Book a Clean-Up + Close Review
Insogna helps new entrepreneurs capture these 7 core deductions: accountable plan reimbursements, documented home office, startup/organizational costs, equipment timing, S Corp health insurance handling, phone/internet allocations, and education tied to current services. We set policies, build trackers, and install a monthly close so receipts become audit-ready. If you’re searching “tax preparation services near me,” “tax advisor near me,” or “CPA in Austin, Texas,” book today and turn year-one leaks into real savings.
Frequently Asked Questions
1) Accountable plan — how does it work?
Business reimburses you tax-free for documented expenses. Requires written policy, substantiation, return of excess.
2) Home office — simplified or actual?
Simplified: $5/sq ft up to 300 sq ft (no detailed records). Actual: prorate rent/utilities (need logs, bills). Pick one per year.
3) Startup costs — what qualifies?
Legal fees, filing fees, organizational expenses before business begins. Up to $5,000 immediate; amortize rest.
4) Section 179 vs bonus depreciation — which first?
Use 179 first (up to limit), then bonus on remainder. Both require asset in service by Dec 31.
5) Phone/internet — safe percentage?
Document method (logs or estimate). 40–70% common and defensible. Round down if unsure.
