There are literally dozens if not hundreds of deductible expenses available to the typical Sole Proprietor.
Some of these are more obvious than others, such as rent and lease expense.
Let's take a closer look to make sure you're not missing out on this deduction.
Schedule C, Line 20 provides two sub-categories for this expense: Line 20a - Vehicles, machinery and equipment.
Let's start with "machinery and equipment" first.
Businesses often lease office equipment like computers, copy machines and the like.
If the equipment is being used 100% for business, then the lease expense is 100% deductible.
As far as vehicles are concerned, it is more likely that you are not using the vehicle 100% for business, as most Sole Proprietors drive the same car for both business and personal use.
If that's the case, you'll have to do an allocation of the expense based on the business use percentage, which is calculated by dividing business miles by total miles.
Then apply that business use percentage to the expense to determine the deductible portion.
Keep in mind, too, that this expense is only deductible if you are using the Actual Expense Method.
If you are using the Mileage Rate Method, then the lease expense is not deductible at all.
The Mileage Method uses the IRS-authorized standard mileage rate to determine your vehicle expense, in lieu of actual expenses such as lease, gasoline, maintenance, repairs, insurance, etc.
Line 20b - Other business property.
This is where you report the most common type of rent or lease expense: the cost of renting your office, store, warehouse, or other commercial building.
For many small business owners, this is one of your largest expenses, if not the largest.
So don't forget to deduct it!