Deductions & Write-Offs
Schedule C Deductions: The Master Checklist for Service Businesses
Short answer
Schedule C lets you deduct any ordinary and necessary business expense from your gross income. The biggest categories for service businesses are vehicle (standard mileage rate or actual), home office, materials, tools, software, insurance, and contractor labor.
Every $1,000 of deductions saves a typical sole prop ~$300 in taxes (income + SE). Tracking them year-round is worth more than any tax-prep trick at year-end.
The master checklist
- Vehicle: 67¢/mile (2026 IRS rate) OR actual expenses (gas, repairs, depreciation, insurance) — pick the higher
- Home office: square-footage method, $5/sq ft up to 300 sq ft, OR percentage of actual home expenses
- Tools and equipment: full expense if under $2,500 per item (de minimis safe harbor)
- Supplies and materials consumed in service
- Software and SaaS subscriptions (invoicing, accounting, CRM)
- Phone and internet — business-use percentage
- Insurance: liability, E&O, workers comp, business auto
- Continuing education, certifications, licenses
- Subcontractor labor (1099 them if over $600/year)
- Marketing: website, ads, business cards, signage
- Bank and merchant processing fees
- Professional fees: accountant, lawyer, bookkeeper
- Health insurance premiums (above the line, if self-employed)
- Retirement contributions (SEP-IRA, Solo 401(k))
What is NOT deductible
- Commuting to a regular work location
- Personal portion of mixed-use items (always allocate)
- Clothing unless it has a logo or cannot be worn off-site
- Meals with no business purpose (50% of business meals are deductible)
- Fines, penalties, political contributions
Frequently asked questions
Do I need receipts for everything?
Yes for anything over $75. Best practice: photograph or scan every receipt. The IRS does not accept 'I am sure I bought it'.
Can I write off my truck?
Yes — either standard mileage or actual expenses. If the vehicle is over 6,000 lbs and >50% business, Section 179 lets you expense a large chunk in year one.
Tax-ready records, automatically.
Glo Invoice tags every expense and 1099 contractor so tax time is a download, not a scramble.
Sources & further reading
Primary sources we consulted when writing and reviewing this guide.