2 of 4

Initial Implementation

BUSINESS EXPENSE DEDUCTION

ACTION ITEM	ASSIGNED TO	COMPLETED	RESOURCES / NOTES
Set up a dedicated business bank account and credit card for all business expenses		__ / __ / __	Separation makes tracking and audit defense far easier
Implement an accounting system or bookkeeping software (QuickBooks, Xero, Wave, etc.)		__ / __ / __	Categorize expenses by IRS Schedule C line items
Establish a business-use percentage for mixed-use assets: cell phone, internet, computer, software		__ / __ / __	Document % based on actual usage logs or reasonable allocation
Create a system for capturing and storing receipts (digital or physical)		__ / __ / __	Apps like Dext, Expensify, or QuickBooks receipt capture
Identify all deductible expense categories: advertising, insurance, supplies, professional services, etc.		__ / __ / __	Review IRS Pub 535 (Business Expenses) for full list
Document the business purpose for every expense — especially meals, travel, and entertainment		__ / __ / __	Record who, what, when, where, and business purpose
Set up mileage tracking if using a personal vehicle for business (app or manual log)		__ / __ / __	IRS standard mileage rate or actual expenses — choose method in first year
Review and document home office use if claiming the home office deduction		__ / __ / __	Regular and exclusive use required; calculate square footage %

3 of 4

Ongoing Support

BUSINESS EXPENSE DEDUCTION

ACTION ITEM	ASSIGNED TO	COMPLETED	RESOURCES / NOTES
Track cell phone expenses and apply business-use % (e.g., 30% business = 30% deductible)		__ / __ / __	Document with call logs or reasonable estimate; retain monthly bills
Track internet expenses and apply business-use % (e.g., 30% business = 30% deductible)		__ / __ / __	Entire bill is not deductible if also used personally
Track software & subscription expenses — deduct 100% if business-only, or apply business-use %		__ / __ / __	Adobe, Microsoft 365, Zoom, project management, CRM, etc.
Track computer & equipment expenses — deduct via §179, bonus depreciation, or business-use %		__ / __ / __	Must exceed 50% business use for §179; apply % if mixed use
Document meal expenses with date, amount, attendees, and specific business purpose		__ / __ / __	50% deductible (some exceptions at 100%); keep itemized receipts
Reconcile all business expenses monthly and categorize for tax reporting		__ / __ / __	Proper categorization simplifies tax preparation and audit defense
Review year-end expenses for prepayment opportunities (insurance, subscriptions, supplies)		__ / __ / __	Accrual or cash basis determines timing of deduction
File Schedule C (sole proprietor/SMLLC) or applicable return with complete expense detail		__ / __ / __	Maintain backup documentation for every line item claimed

Important Reminders

BUSINESS EXPENSE DEDUCTION

Business expenses must be both "ordinary" (common in your trade) and "necessary" (helpful and appropriate) �under §162
Mixed-use expenses (cell phone, internet, computer, software) are deductible only for the business-use percentage
Document business-use percentages with actual usage data or a reasonable, consistent allocation method
Meal expenses are generally 50% deductible — must document date, amount, attendees, and specific �business purpose
Entertainment expenses are NOT deductible post-TCJA — only meals with a clear business purpose qualify
Receipts are required for expenses of $75 or more (and all lodging expenses regardless of amount)
The IRS can disallow deductions without adequate documentation — keep records for at least 3 years� (7 years recommended)
Common deductible categories: advertising, insurance, professional services, office supplies, travel, education, dues, and subscriptions

This checklist is for informational purposes. Always consult your CPA or tax attorney for personalized advice.