Start With the Real Problem: The Deduction Is Usually Not Missing, the Evidence Is
When I review accounting data, the tax problem is rarely that the business owner has no deductible expenses. The problem is that the expense sits in the wrong account, has no receipt, mixes personal and business use, or cannot be tied to a clear business purpose.
That matters for LLC owners because an LLC is a legal structure, not one single tax treatment. A single-member LLC may report business activity on Schedule C. A multi-member LLC may file as a partnership. An LLC that elected S corporation tax treatment has different handling for owner wages, reimbursements, and health insurance. Before claiming anything, confirm how your LLC is taxed.
The IRS test for most business deductions is still simple: the expense must be ordinary and necessary for the business. The IRS describes an ordinary expense as common and accepted in your trade or business, and a necessary expense as helpful and appropriate. You can read that wording directly from the IRS here: IRS ordinary and necessary expense guidance.
The three deductions below are not tricks. They are common areas where LLC owners lose money because the bookkeeping file does not show enough detail.
1. Home Office Deduction: Useful, but Only When the Space Passes the Test
The home office deduction is often missed because owners either fear it too much or claim it too loosely. Both approaches create problems.
The basic check is this: do you use a specific area of your home regularly and exclusively for business? A desk in a bedroom used only for client work, bookkeeping, invoicing, and business calls may qualify. A dining table used for family meals at night usually does not.
The IRS explains the business-use-of-home rules in Publication 587. That publication also explains how home expenses may need to be divided between personal and business use.
What to do before you claim it
Measure the workspace. Keep the calculation in your tax folder. For example, if the office is 120 square feet and the home is 1,200 square feet, the business-use percentage is 10%. Then keep the records that support the expenses you are allocating, such as rent, mortgage interest, utilities, insurance, repairs, or internet bills.
Do not push personal costs into the deduction. A repair inside the dedicated office may be treated differently from a repair to a family bathroom. If the expense benefits the entire home, it may need to be allocated. If it has nothing to do with the business space, it should stay out of the business records.
Accounting setup I would use
Create a separate bookkeeping category for home office expenses or keep a worksheet outside the accounting file that shows the allocation. Do not dump full household bills into the business account unless your tax preparer has told you to do that. A cleaner method is to record the deductible business portion with a memo that explains the calculation.
2. Business Mileage: The Deduction Fails When the Log Is Rebuilt After the Fact
Vehicle costs are easy to underestimate because many LLC owners drive for business without recording the trip. A contractor visits a job site, a consultant drives to a client meeting, or an owner drives to buy supplies. If those trips are not logged, the deduction becomes harder to defend.
For 2026, the IRS standard mileage rate for business use is 72.5 cents per mile. The rate is useful, but the rate alone does not prove the deduction. You still need the business miles, dates, destination, and business purpose. The IRS mileage rate announcement is here: 2026 IRS standard mileage rate.
What a usable mileage record should show
A good mileage log does not need to be dramatic. It needs to be boring and complete. Record the date, starting point, destination, business purpose, and miles driven. “Client meeting — 18 miles” is better than no record, but “May 12, office to ABC client site, project review, 18.4 miles” is stronger.
Do not include commuting from home to a regular office as business mileage. Also be careful with mixed-purpose trips. If you drive to buy business supplies and then continue to a personal errand, separate the business portion instead of treating the full trip as deductible.
Standard mileage or actual vehicle expenses?
Many small LLC owners use the standard mileage method because it is easier to track. Actual expense reporting may make sense for some vehicles, but then you need fuel, repairs, insurance, lease payments or depreciation records, and a business-use percentage. The right choice depends on the vehicle, business use, and prior-year treatment, so this is one area to confirm with the tax preparer before year-end.
3. Self-Employed Health Insurance: Often Missed Because It Is Not Booked Like a Normal Expense
Health insurance is one of the most misunderstood LLC-related deductions because the handling depends on how the LLC is taxed and who paid the premiums.
For a sole proprietor or single-member LLC taxed on Schedule C, self-employed health insurance may be deductible if the owner qualifies. For an LLC taxed as an S corporation, more steps may be needed, including proper wage reporting for a more-than-2% shareholder. This is not a category to guess on after the return is almost finished.
What to collect before tax preparation
Keep the insurance policy statement, proof of payment, the months covered, and the name of the insured person. If the premium was paid personally instead of from the business bank account, do not ignore it. Give the details to the tax preparer and ask where it belongs based on the LLC tax treatment.
The mistake I would avoid is coding owner health insurance casually as “insurance expense” inside the profit and loss statement without checking the tax treatment. Business liability insurance, workers’ compensation, property insurance, and owner health insurance are not the same thing.
Where LLC Owners Usually Lose the Deduction
The deduction is usually damaged before the tax return is prepared. It happens during the year when receipts are missing, personal and business spending are mixed, or the chart of accounts is too vague.
For example, “Auto Expense” with no mileage log is weak. “Meals” with no client name or business purpose is weak. “Office Expense” containing software, printer paper, a home internet bill, and personal electronics is hard to review. The cleaner the accounting file, the less time is wasted later trying to reconstruct what happened.
This is also where audit risk and deduction planning meet. A deduction may be legitimate, but poor records can still create trouble. If you want a separate checklist on red flags, keep this related guide open: 5 IRS audit triggers for small service LLCs.
A Simple Recordkeeping Process for These Three Deductions
First, separate the bank activity. Use one business bank account and one business credit card where possible. When an owner pays personally, record it clearly as an owner-paid business expense or reimbursement item instead of letting it disappear.
Second, attach proof at the transaction level. A bank feed only proves money moved. It does not prove what was purchased or why it was business-related. Keep invoices, receipts, policy statements, mileage logs, and home office calculations.
Third, review the categories monthly. Look for large “miscellaneous,” “uncategorized,” or “ask my accountant” balances. Those accounts often hide deductible items, but they also hide personal expenses that should not be claimed.
Fourth, add short memos for mixed-use expenses. For example: “Internet bill allocated 60% business based on work use” or “vehicle mileage tracked separately; fuel not deducted under standard mileage method.” These notes help the preparer understand the treatment without guessing.
What Not to Do
Do not claim a deduction only because another LLC owner claimed it. Two businesses can have the same expense category and completely different facts.
Do not treat every home-related cost as a home office deduction. The workspace, percentage, and use pattern matter.
Do not rebuild a full-year mileage log from memory in April. Calendar entries, client appointments, job sheets, and map history may help fill gaps, but the better habit is to track trips when they happen.
Do not assume your LLC status automatically creates a tax deduction. The tax treatment of the LLC controls how the item is reported.
Do This Before the Next Tax Filing
Open your bookkeeping file and check only three areas first: home office, vehicle use, and owner health insurance. For each one, ask whether the file shows the amount, date, business purpose, and calculation. If one of those pieces is missing, fix the record before the return is prepared.
Then send your tax preparer a short note with the facts: how the LLC is taxed, whether you used a home office, whether you tracked business miles, and who paid health insurance premiums. That is a better starting point than asking for “all possible deductions” after the books are already closed.
One more practical step: review your records against 5 IRS audit triggers for small service LLCs so the deductions you claim are supported by the same file you would rely on if questions came later.