16 common small business expenses in 2025
With rising costs and changing market dynamics in 2025, every dollar you spend tells a story about your business.From office supplies to marketing campaigns, tracking common small business expenses might feel like busywork, but it can actually help your business grow.
Small business expense categories
When you categorize your expenses properly, you get an understanding of your cash flow and spending patterns. This will help you make better budgeting decisions and can highlight areas where you might be overspending. Plus, come tax time, having well-organized expense records makes filing smoother and helps ensure you don't miss out on valuable deductions.
Clear expense categorization helps you spot trends quickly. You might notice that your software costs have crept up over the past year, or your office supply spending spikes every September. These insights help you budget better, forecast expenses, and make strategic decisions about where to cut back or invest more.
The IRS also expects you to categorize expenses appropriately. Lumping everything into a single "miscellaneous" category is a red flag that could trigger unwanted attention. Instead, we recommend organizing your expenses into clear, specific categories like the ones we've outlined below.
16 common small business expenses you should be tracking in 2025:
Workspace and utilities. Whether you're renting a storefront or working from home, your workspace costs are likely one of your largest expenses. This includes rent or mortgage payments, electric, gas, water, and maintenance costs. If you're operating from home, you may be eligible for the home office deduction
Payroll and benefits. This encompasses wages, salaries, contractor payments, health insurance, retirement contributions, and payroll taxes. Remember that different types of compensation have different tax implications for both you and your employees.
Professional services. Many small businesses need accountants, lawyers, consultants, or other professionals to operate effectively. These fees are generally tax-deductible and essential for maintaining compliance and making informed business decisions.
Equipment and supplies. From computers and machinery to paper clips and printer ink, these day-to-day items keep your business running. Track everything — small purchases add up and they might be deductible.
Software subscriptions. Modern businesses rely heavily on software for accounting, project management, customer relationship management, and other essential functions. These recurring expenses should be carefully monitored and regularly reviewed for necessity.
Marketing and advertising. This category includes website costs, social media advertising, print materials, and any other promotional expenses. Tracking these costs helps you evaluate your marketing ROI and adjust spend as needed.
Travel and transportation. Business trips, client meetings, and even local mileage add up. Keep detailed records of travel dates, purposes, and costs for potential tax deductions.
Insurance. Various types of business insurance — liability, property, workers' compensation, and professional liability — protect your business from potential risks. These premiums are typically tax-deductible.
Training and education. Investing in yourself and your employees through workshops, conferences, or online courses is often tax-deductible and can pay dividends in improved productivity and capabilities.
Inventory. If you sell products, tracking inventory costs is crucial for understanding your profit margins and managing cash flow effectively. This includes not just the products themselves but also shipping and storage costs.
Banking and transaction fees. Credit card processing fees, bank account maintenance fees, and loan interest can add up quickly. Understanding these costs helps you make informed decisions about payment methods and financing.
Communication infrastructure keeps your business connected. This includes business phone lines, mobile phone plans, VoIP services, video conferencing subscriptions, and other communication tools. These should be tracked separately from personal use.
Research and development. If you're creating new products or improving existing ones, these costs might be eligible for special tax treatment through the R&D tax credit. Keep detailed records of all development-related expenses.
Professional memberships and licenses. Industry association dues, professional certifications, and business licenses are often overlooked expenses that can be tax-deductible.
Depreciation and amortization. When you purchase major assets like vehicles, equipment, or buildings, you typically can't deduct the full cost in the year you buy them. Instead, you deduct a portion of the cost each year through depreciation. Similarly, amortization lets you deduct portions of intangible assets like patents and copyrights over time. Though you won't see these as monthly bills to pay, they're real expenses that reduce your taxable income and help you understand the true cost of running your business.
Maintenance and repairs. Regular upkeep of your business equipment, vehicles, or facilities is necessary to keep operations running smoothly. These costs can often be deducted in the year they're incurred, rather than capitalized over time.
The impact on your bottom line
Tracking these common expenses diligently does more than just help with taxes — it gives you a clear picture of your business's financial health. By monitoring these costs closely, you can:
Identify seasonal patterns in your spending.
Make more accurate cash flow projections.
Spot opportunities for cost reduction.
Plan for major expenses and investments.
Make data-driven decisions about pricing and profitability.
Remember, proper expense tracking isn't just about tax compliance — it's about building a stronger, more profitable business that can thrive as we navigate the economic landscape of 2025 and beyond.
Understanding and managing your expenses is crucial for your business's financial health — but you don't have to figure it all out alone. Learn how we can help your small business with bookkeeping.