What Can I Write Off in my Online Business?

A few days ago, I had a conversation with a local marketing freelancer that illuminated the fact that many people are missing out on deductions/write-offs they can take. So figured it was time for a blog on this one!

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First off…

What’s a Write Off?

A write-off is an expense that a business can deduct from its taxable income, reducing the overall tax burden. This isn’t a dollar-for dollar reduction in taxes (that’s a credit). But it does reduce the your business’s income.

How do you get to that number?

Revenue (Total Sales)

(Less: Expenses → aka write-offs)*

= Taxable Income

Ordinary & Necessary

*These expenses must be ordinary and necessary for the business to qualify under IRS rules. What does that mean?

Is it ordinary for your industry?

Is it necessary to run your business?

Of course… there’s always grey areas, so that’s when it become quite important for you to document your stances. This is where keeping receipts comes in real handy.

For online businesses—whether e-commerce, digital marketers, freelancers, coaches or content creators—many costs can be written off, ultimately helping you reduce your tax liability.

Let’s cover the Schedule C categories, since most small businesses will be required to file this form during tax time. If you’re a different business structure, the same general categories apply, they’re just reported in the Deductions section of the required tax form.

Schedule C Categories for Business Write-Offs

Schedule C (Profit or Loss from Business) is used by sole proprietors and single-member LLCs to report business income and expenses. Here are the main deductible expense categories listed on Schedule C, tailored for spend we usually see in online businesses:

1. Advertising (Line 8)

• Facebook, Google, or Instagram ads
• Website hosting fees
• Business branding costs (logos, design, etc.)
• Sponsored content or influencer collaborations

2. Car and Truck Expenses (Line 9)

• If you use your vehicle for business (client meetings, shipping products, going to events)
• Deduct mileage (2024 IRS rate: $0.67 per mile or $0.70 per mile for 2025) or actual expenses (gas, maintenance, insurance) but not both. To deduct actual expenses, you’ll still need to track mileage to show the business use portion.

3. Commissions and Fees (Line 10)

• Affiliate marketing payouts
• Payment processing fees (PayPal, Stripe, Shopify fees)

4. Contract Labor (Line 11)

• Virtual assistants (VAs)
• Freelancers (copywriters, designers, developers)
• Video editors, podcast producers
• Non-employee team members

5. Depreciation (Line 13)

• Equipment like laptops, cameras, or office furniture (if over $2,500, it may need to be depreciated)
• Vehicles - if your business owns a vehicle

6. Employee Wages (Line 26)

• If you have employees (not contractors), their salaries are deductible - check out THIS BLOG to learn about the differences between contractors & employees

7. Insurance (Line 15)

• Business liability insurance
• Cybersecurity insurance
• Worker’s Comp insurance

8. Interest (Line 16)

• Business loan interest
• Credit card interest (if used solely for business)

9. Legal and Professional Services (Line 17)

• Accountant or CPA fees
• Lawyer fees for contracts or trademarks

10. Office Expenses (Line 18)

• Software subscriptions (Canva, Adobe, Kajabi, Zoom)
• Business supplies (printer ink, stationery)

11. Rent or Lease (Lines 20a, 20b)

• Coworking space fees
• Equipment rental (cameras, studio space)
• Storage Rent

12. Repairs and Maintenance (Line 21)

• Fixing business equipment (e.g., repairing a laptop)
• Repairing dedicated home office space
• Cleaning Service for dedicated office space

13. Supplies (Line 22)

• Shipping materials
• Packaging for products (if not in Cost of Goods Sold)
• Other general business supplies

14. Taxes and Licenses (Line 23)

• Business license renewal fees
• Sales tax software (TaxJar, Avalara)
• Employer portion of payroll taxes

15. Travel (Line 24a)

• Flights, hotels & transportation (uber) for business trips
• Conference or networking event costs

16. Meals (Line 24b)

• 50% deductible if business-related (e.g., meeting with a client) - we still record 100% of the meal on your books. Read more on our blog here.

17. Utilities (Line 25)

• Internet bill (business portion)
• Phone bill (business percentage)
• Home Utilities if you have a home office (business percentage)

18. Other Expenses (Line 27a)

• Domain registrations
• Memberships (LinkedIn Premium, professional groups)
• Coaching or business courses

Maximizing Deductions for Online Businesses

1. Keep Good Records – Use accounting software (QuickBooks, Wave, Xero, or even excel) to track expenses.
2. Separate Business & Personal – Have a business bank account and credit card. We LOVE Relay Bank for Online Business Bank accounts and AMEX Gold for Business Credit Cards.
3. Save Receipts & Invoices – Essential for IRS audits & proving business expenses.

What’s NOT a write off?

Clothing. Last month I wrote a blog about writing off clothing - sometimes this isn’t deductible, so check that out HERE.

Entertainment. Spa days for teams, Disneyland, things like this aren’t deductible.

Gifts. Gifts are only deductible up to $25 per person per year. Check out this blog for more info.

Penalties. If you pay your tax bill late and are assessed penalties, those aren’t deductible. Interest is, though!

This isn’t an all inclusive list of examples, but covers a lot of what we see in the online space with clients. If you’re ever unsure, contact your bookkeeper, and as yourself:

Is it ordinary & necessary? And can I support this business purpose if I were to be audited, or am I ok with that risk?

We always default to our clients’ judgement, because ultimately it’s up to them to maintain the support for business transactions. Ready to work together?

FILL OUT THE INTEREST FORM HERE

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AFFILIATE DISCLAIMER

We participate in affiliate marketing programs, which means we may earn a commission from purchases made through the links on our blog. However, our recommendations are based on our own research and expertise, and your trust is our priority.