As an LLC owner, you have the ability to deduct certain business expenses on your taxes.
Deductible Business Expenses
- California’s $800 annual tax and any annual fee
- Maintenance costs for your LLC
- Expenses paid after your LLC is formed
- Expenses related to your rent, mortgage, utilities, and supplies if you have a sole proprietorship or LLC
Important note: LLC owners must keep meticulous records for taxes, including using accounting software, and ensure business insurance is in place.
Non-Deductible Expenses
Personal, living, or family expenses are not deductible as business tax expenses. However, when an expense has a dual purpose (personal and business), it’s possible to apportion the cost and deduct the business portion.
Additionally, expenses paid personally for LLC business can be deductible, but the LLC agreement must demonstrate that members are obligated to cover these expenses.