“I Was Told I Can Write Everything Off Now That I’m a Business Owner”

ediandsiennagroup
Jan 24
2 min read

What You Can (and Can’t) Actually Deduct

One of the most common things I hear from new business owners is:

“Now that I have a business, I can write everything off, right?”

Short answer: No.Long answer: You can deduct legitimate business expenses—but only when they meet very specific rules.

Unfortunately, social media and word-of-mouth advice often oversimplify tax deductions and create unrealistic (and risky) expectations.

Let’s clear it up.

The IRS Rule Most People Miss

For an expense to be deductible, it must be:

✔ Ordinary – common and accepted in your industry

✔ Necessary – helpful and appropriate for your business

If it fails either test, it’s not a valid business write-off—no matter what TikTok, Instagram, or your friend says.

What Is Commonly Deductible

Here are examples of legitimate business expenses, when properly documented:

Office supplies and software
Business insurance
Professional services (accounting, legal, consulting)
Advertising and marketing
Business meals (subject to limits)
Mileage or vehicle expenses (business portion only)
Home office (if it qualifies)
Education related to your current business
Cell phone (business percentage)

These deductions must be:

Reasonable in amount
Directly tied to business activity
Supported by records

Where People Get It Wrong

1. Personal Expenses Don’t Magically Become Business Expenses

Creating an LLC or S-Corp does not turn personal spending into deductible spending.

These are not automatically deductible:

Personal groceries
Family vacations
Everyday clothing
Your personal rent or mortgage
Kids’ expenses
Luxury items with no business purpose

Trying to “force” these into your books is one of the fastest ways to create audit risk and messy financials.

2. “I Used It Sometimes for Work” Is Not Enough

Many expenses require allocation, not full deduction.

Examples:

Cell phone
Internet
Vehicle
Home office

If something is 60% business / 40% personal, you deduct 60%, not 100%.

Overstating usage is a common (and avoidable) mistake.

3. Writing It Off Doesn’t Mean It’s Free

A tax deduction reduces taxable income, not dollar-for-dollar tax owed.

Example:

You spend $10,000
Your tax rate is 30%
Your tax savings ≈ $3,000

You still spent $10,000 in real cash.

This is why cash flow planning matters just as much as tax planning.

4. Entity Structure Matters More Than People Realize

What you can deduct—and how—depends on:

Sole proprietor vs LLC vs S-Corp
How you pay yourself
State tax rules
Whether expenses are reimbursed properly

Advice that ignores structure is incomplete at best and dangerous at worst.

The Hidden Cost of “Write Everything Off” Advice

When deductions are misused, I often see:

Inflated expenses
Inaccurate profit margins
Cash shortages
Loan and mortgage issues
Red flags during audits or due diligence
Poor business decisions based on bad data

Clean books are not just about taxes—they’re about running a real business.

A Better Question to Ask

Instead of:

“Can I write this off?”

Ask:

“Is this a reasonable business expense that supports growth, profitability, and cash flow?”

That mindset separates business owners who survive from those who scale.