LLC Write-Offs: How Much Can You Really Deduct?

LLCs get a lot of flexibility when it comes to tax write-offs, but there are still rules about what actually counts. If you’re just starting out, the idea of “writing off” anything can sound magical, but at the end of the day, it just means subtracting legit business expenses from your income—so you only pay taxes on what’s left.

Here’s the deal: the IRS doesn’t have a magic number or a maximum amount that your LLC can write off. Instead, you can deduct as much as you have in ordinary and necessary business expenses for the year. That means if all your costs are legit and you keep receipts, the savings can seriously stack up.

But, not every expense should get thrown in with the kitchen sink. There are clear guidelines and some “gray areas” (think: home office, meals, travel) that can make the difference between a smart write-off and an audit risk. It’s smart to get clear on the basics before you start tallying all those coffee shop receipts.

• What Is a Write-Off for an LLC?
• Common Deductible Business Expenses
• Surprising Extras You Might Not Be Claiming
• Limits and Red Flags: What Can’t You Deduct?
• Tips to Maximize Your LLC Tax Savings
• Avoiding Trouble: Record Keeping and IRS Audits

What Is a Write-Off for an LLC?

A write-off is just a business expense your LLC can subtract from its income before figuring out how much tax you owe. The less taxable income you show, the less you pay in taxes. This is a big deal for small businesses, especially single-member or multi-member LLCs, because every dollar you deduct makes a difference.

The IRS says that any expense must be both “ordinary and necessary” to your business to count as a deduction. Ordinary means it’s common in your industry. Necessary means it helps you run your business (even if you could live without it, as long as it makes sense for your work, you’re good).

Here’s a breakdown of what really counts as a LLC write off:

• Office rent or co-working space fees
• Equipment (laptops, printers, tools, etc.)
• Software and apps for your business
• Advertising and marketing costs
• Business insurance premiums
• Office supplies—yes, including your mountain of sticky notes

The most important thing? All write-offs must be directly tied to your business. Personal expenses do not count, even if you sometimes use your personal phone for work—only the business part can be deducted. If you work from home, only a portion of your expenses may qualify, and you need to crunch the numbers correctly.

Each write-off lowers the amount of income your LLC reports, which can knock you into a lower tax bracket or trim your self-employment tax. It’s not about how much you spend—it’s about tracking every legit expense and connecting it clearly to your business activity.

Common Deductible Business Expenses

When you run an LLC, knowing what you can legally bounce off your tax bill is half the battle. These aren’t just random costs—the IRS wants you to list only those that are typical for your type of business and truly necessary for keeping things running. Mess this up, and you could end up paying more tax than you need...or you could get flagged for an audit. Here’s what usually counts.

• LLC write off basics: Stuff like rent, utilities, office supplies, and insurance easily make the list. If you’re renting a space or using a co-working spot, the monthly payment is a slam dunk deduction. The same goes for internet and phone bills tied to your business—just don’t mix up personal usage.
• Employee costs: Wages, contractor payments (think freelancers or consultants), and even the employer’s share of payroll taxes, Medicare, and Social Security can all be written off. Benefits like health insurance or retirement contributions? Those, too.
• Equipment and depreciation: Bought a laptop, printer, or furniture strictly for business? Deduct the cost up front or, depending on the item, write it off over time through depreciation. Section 179 lets you deduct the full cost of certain assets in the year you buy them, up to $1,220,000 in tax year 2024.
• Business travel and meals: If you travel to meet clients or attend conferences, flights, hotels, rental cars, and ride shares all count. For meals, half the cost is usually deductible—but only when it’s with a client or for a legit business purpose. Grabbing a solo burger at lunch? Nope—that’s on you.
• Marketing and subscriptions: Website hosting, digital ads, business cards, software, and any subscriptions you need (like accounting tools or trade magazines) are fair game. These days, even your Zoom subscription or Canva account can be counted.
• Professional fees: Money spent on lawyers, accountants, consultants, or even tax prep can get deducted. If you’re paying for the advice you need to keep things straight, the IRS sees that as a business expense.

To put it in context, here’s how some common expenses might look for a small LLC making $120,000 per year:

That wipes out almost 70% of the gross income from taxation. The more accurately you track and deduct, the less you owe the IRS—plain and simple.

Surprising Extras You Might Not Be Claiming

Think you’ve already grabbed every possible deduction for your LLC? Probably not. A lot of folks miss little-known write-offs that really add up. Some of these are legit game-changers, especially if you’re trying to trim your tax bill the smart way. Here are a handful of extras you might be overlooking:

• LLC write off for your cell phone: If you use your cell for business, the cost of the device and the monthly bill can be partially written off. Just keep track of what percentage is business versus personal.
• Startup costs: If you formed your LLC recently, the IRS lets you deduct up to $5,000 in startup costs and $5,000 in organizational costs during your first year, as long as your expenses don’t go over $50,000 total. That’s stuff like legal fees, licensing, and even some marketing.
• Education and training: Need a course or seminar to keep your business sharp? Those fees (plus workshops, subscriptions, and even some books) are fair game.
• Home office expenses: Got a dedicated space at home for business? You can claim a portion of your rent or mortgage, utilities, internet, and even repairs. The space has to be used only for business work and nothing else, though.
• Business software and apps: Licenses or monthly fees for tools like QuickBooks, Adobe, Canva, Dropbox—these count as regular business expenses.
• Health insurance premiums: If you’re self-employed with an LLC, you can usually deduct the cost of your health insurance premiums for yourself, your spouse, and your dependents—as long as you’re not eligible for a plan through another employer.
• Business-related meals: As of 2025, you can deduct 50% of business meal costs—make sure it’s with clients or for business purposes, and keep those receipts handy (write who you met and what you discussed).
• Retirement contributions: Adding money to a SEP IRA, SIMPLE IRA, or solo 401(k) not only funds your future—it’s a solid deduction today.

Curious how these could impact your bottom line? Here’s what it might look like for a real LLC owner over a typical year:

It’s easy to leave money on the table if you don’t know what to look for. Double-check your accounts for stuff like these and see what you find. Every legit deduction is money back in your pocket.

Limits and Red Flags: What Can’t You Deduct?

Just because you run an LLC doesn’t mean you can write off every penny that leaves your business bank account. There are clear rules for what’s allowed as a deduction, and breaking them is one of the top ways to end up flagged for an audit. Here’s where folks get tripped up most often.

• Personal expenses: You can’t deduct what’s not tied directly to your business. Using company cash to pay for groceries, your Netflix account, or family vacations is totally off-limits.
• Fines and penalties: The IRS won’t let you write off most legal fines or penalties—think parking tickets, OSHA fines, or late fees.
• Political contributions: Donations to political campaigns, parties, or PACs? Not deductible, no matter how passionate you are about the cause.
• Entertainment expenses: The days of writing off baseball game tickets for clients are over. As of 2018, entertainment expenses are not deductible, even if the meeting is business-related.
• Capital improvements: While you can often deduct depreciation, you can’t fully expense big purchases (like a new building) all in one year. There are set rules for spreading those costs over time.

Now here’s the reality check: if you push the limits on these, the IRS has some serious audit triggers. Think about it—a small business with huge “travel” or “meals” costs is going to look suspicious unless that’s normal for your industry. Here are a few benchmarks to keep you out of hot water:

If you’re way above these averages and there’s no clear reason (like you own a travel agency), you might want to double-check your books. Red flags pop up fast if you blend personal and business spending, don’t keep receipts, or claim deductions that just don’t make sense for your type of work.

Pro tip: make sure every deduction you take can be backed up with proof. The pain of an audit isn’t worth the extra few bucks you thought you’d save on your LLC write off this year.

Tips to Maximize Your LLC Tax Savings

If you want to keep as much of your hard-earned money as possible, there are some practical moves you can make right now. Let’s walk through easy wins, common slip-ups, and things you don’t want to miss if your goal is shrinking your tax bill.

• Track every expense from day one. Small stuff adds up—software subscriptions, new chairs, even snacks for the team. Use a spreadsheet, an app, or set alerts on your phone. The IRS frowns on made-up expenses, but they love good records.
• Don’t let home office deductions freak you out. If you have a space at home used only for LLC work, you can usually claim a cut of rent, mortgage interest, utilities, and insurance. Just be ready to prove it’s really for business and not just an extra bedroom.
• Understand the 50% rule for meals. Only half of qualified business meal costs are usually deductible—unless it’s a company party, which can be 100%.
• Max out on auto deductions. If you use your car for business, log every work mile. There’s a standard mileage rate (67 cents per mile in 2024) or you can total up actual expenses if that gets you a bigger deduction.
• Don’t sleep on retirement plan options. Solo 401(k)s and SEP IRAs let you save for your future and get a tax break at the same time—often thousands of dollars a year.
• Don’t mix business and personal spending. One bank account for the LLC makes tax time way easier, and the IRS likes seeing a clean separation.

Want a quick look at what folks often miss? Here’s a rundown of the biggies—and how much they could save a typical LLC owner, based on a $75,000 net income.

*Sample figures use a 22% tax bracket for illustration.

A final pro tip: review your books every month, not just at tax time. People who check income and expenses at least monthly catch more deductions and avoid headaches. If you’re not sure what counts, talk to a CPA before filing. Missing out on a deduction is like leaving money on the sidewalk—no one wants to do that.

Avoiding Trouble: Record Keeping and IRS Audits

Nothing kills the mood faster than an audit letter from the IRS. When you run an LLC, good record keeping isn’t just smart—it’s pretty much your safety net. The IRS has a real thing for details. If you want those LLC write offs to actually stick, you’ve got to prove every one of them with solid paperwork.

Here’s how to keep your LLC in the clear:

• Keep receipts for everything: Even the $4 coffee you drank during a business meeting. Digital receipts count, but back them up someplace safe.
• Make notes on receipts: Jot down who you met and what it was about—especially for meals and travel. This tiny habit pays off big if the IRS comes knocking.
• Use business accounts only: Separate your personal and business expenses. A dedicated LLC bank account makes your life way easier come tax time.
• Track mileage with an app: If you’re driving for business, a mileage app saves time and shows you aren’t guessing the numbers.
• Organize documents electronically: PDFs, cloud storage, and accounting tools (like QuickBooks or Wave) help keep years of records tidy and searchable.

Need-to-know fact: The IRS says you have to keep most business records for at least three years, but hold onto payroll records for four. If you mess up deductions, you want that old paperwork to cover your back.

Wondering what triggers an audit? Here’s some data from a 2023 IRS report that shows your chances:

Your odds are low, but if your numbers look weird—like lots of meal write-offs or big “miscellaneous” lumps—the IRS may get curious. Just stick to stuff that’s truly business-related and back it all up. If you’re ever unsure, ask a tax pro before you file. Better safe than sorry when Uncle Sam wants proof.