Your Complete List of Freelance Business Expenses
Learn about many of the common costs you incur when running your freelance business. Expense these fees to reduce your profits and the tax you pay.
Key points about freelance business expenses
Your freelance business expenses are deducted from your revenue to determine your freelance profits.
You generally pay tax on your freelance profits, the higher your profits, the more money you earn, but the more tax you pay.
Increasing the amount that you can legitimately expense to your freelance business reduces your profits and taxes.
This list contains many examples of the types of expenses that freelancers can typically claim, but it is not an exhaustive list.
You will need to split business and personal expenses and bookkeep your expenses properly to get the maximum benefit from them.
Lowering your profits through having higher expenses directly reduces the amount of tax you have to pay on those profits.
Why are freelance business expenses important?
Your freelance business takes on unavoidable costs as you manage clients, run your operations, market yourself, take payments, and more. Many of these costs can be deducted as freelance business expenses—money that you’ve paid out to do your work. These expenses can be deducted from your business revenue when working out your profits and taxable income.
This is good for you because it means you don’t pay unnecessary taxes on the money you’ve already spent. That’s why I’ve created this (relatively) complete list to freelance expenses. I’ve based it partly on my own understanding of taxes over the years, partly on what tax authorities say, and partly on many of the other excellent expense guides out there.
Many freelancers may overlook expenses that they can legitimately claim. That's what this guide is for, so you can check that you're expensing what you're legitimately entitled to spend money on for your freelance business.
What's the difference between freelance revenue, expenses, and profits?
The three key concepts for managing money in your freelance business are:
Freelance revenue—money that you receive for performing freelance services, invoicing clients, working through freelance platforms, etc.
Freelance expenses—money that you spend owning and running your freelance business.
Freelance profits—calculated by deducting your expenses from your revenue, it's your profits that you will pay tax on.
Higher profits mean higher taxes; lower profits mean lower taxes. The higher your expenses, the lower your profits, and the less tax you pay.
Legitimately expensing every cost that you're allowed to means you'll pay less tax—and who doesn't want that!
One example would be the cost of a cell phone that you use partly for business and partly for personal calls.
What if I have expenses that partly benefit my freelance business and partly benefit me personally?
If you make a purchase or use a service that benefits both your business and you personally, you can only expense part of that cost to your freelance business, based on how much of that product or service your business uses.
How do I handle large freelance expenses?
If you have large freelance expenses, you may need to depreciate that expense and spread the cost of certain purchases over several years. This means you can't claim it all in your expenses at once. Depreciation can also apply to smaller purchases or expense claims, for example for business use of your home. Talk to your accountant about depreciation.
How can I make sure that my freelance expense claims are legitimate?
Your expense claims must be supported with evidence—for example, a receipt or other proof that you spent that money. Only claim expenses for legitimate business costs where you have a way of showing you paid that expense.
Are freelance business expenses the same as my itemized and standard deductions on my tax return?
Your freelance business expenses are completely separate from your 1040 standard or itemized deduction.
This means you can claim both your business expenses and a standard or itemized deduction. These are recorded in separate parts of your Form 1040 and various schedules.
How can I ensure I record and track my freelance business expenses correctly?
Getting your expenses right relies on really good bookkeeping, and how you choose to categorize your business spending. You need to regularly record your expenses into your bookkeeping system, and reconcile that system against your business bank account to ensure you've captured all of your spending.
What’s included in this guide to freelance business expenses?
This guide covers the following expense areas in some depth:
Computer and communication expenses for freelance businesses.
Home office costs for freelancers.
Bank, financial, and payment processing costs for freelance businesses.
Retirement contributions for your freelance business.
Hiring experts and professional fees to help run your business.
Education, learning, and freelance equipment.
Other freelance business costs like marketing and travel.
Let's get into it.
What are the common computer and communication expenses for freelance businesses?
Communications expenses for freelancers
Your freelance business can typically deduct a proportion of each of these costs, depending on how much they are used for business vs. personal activities:
Broadband and internet access based on the time you use broadband and internet services to run your freelance business.
A second, dedicated landline for your freelance business—your first landline is not deductible as an expense.
Purchase of a smartphone or other mobile device that you use for freelance work, based on the time you expect to use it for freelancing.
Cellphone line rental and call costs for business purposes.
Smartphone applications and subscriptions used for business.
Computer hardware expenses for freelancers
You can deduct costs for computer hardware based on the percentage used by your freelance business. This includes:
Computer systems and upgrades like desktop PCs, laptops, tablets, and Chromebooks.
Computer monitors and other displays.
Keyboards, mice, and similar accessories.
Headsets, microphones, webcams, and speakers.
Cables, leads, chargers, power strips, connectors, ports, splitters, and similar accessories.
Printers and scanners.
Note that if you use software for both business and personal needs, you can only deduct the percentage of the software cost used purely for business.
Computer software expenses for freelancers
You can deduct all of the costs for freelance business software, whether you buy it outright or pay a regular subscription. Types of software might include:
Creative, design, and image manipulation software like Adobe Creative Suite or Photoshop.
Office suite software like MS Office or the Google Office apps.
Project, time, and task management software like Asana, Trello, Monday, Toggl, Todoist, TickTick, and similar.
Search engine optimization and similar software like SEMrush and AHREFS.
Bookkeeping and accounting software like QuickBooks, FreshBooks, Xero, Wave, TurboTax, HR Block, and similar.
Customer relationship management and communications tools like Email, Salesforce, Slack, etc.
Computer security like anti-virus, anti-malware, firewalls, and password managers.
Data retention tools like backup and online storage.
Contract signing and document tools like DocuSign.
Payroll software if you need to pay employees.
Other “Software as a Service” subscription costs.
Computer web hosting, design, and development expenses for freelancers
Many freelancers have websites where they describe their services and show samples and portfolios of their work. The costs related to hosting and creating these websites are tax-deductible as expenses.
Business website design, development, implementation, and maintenance.
Domain registration costs and hosting of a website.
Costs to build a website on a builder like SquareSpace, Weebly, Wix, etc.
Paid addons for websites, like professional WordPress extensions.
What are the common home office expenses for freelancers?
Home office expense and deduction for freelancers
It’s worth explaining the home office deduction in some detail, because it can get complicated. Essentially, the IRS lets you deduct some home office expenses in one of two ways:
In the US, you can deduct the IRS standard, flat rate for your home office deduction at a rate of $5 per square foot of your home office, up to a maximum of 300 square feet.
You can calculate the percentage of your home’s floor space that you use for your home office and apply that percentage to certain bills and costs.
You cannot claim both of these deductions, only one or the other.
To take either of these deductions, your home office must be used regularly and exclusively for running your freelance business and providing freelance services.
The home office deduction is different to and distinct from the other office deductions listed in this freelance expense guide. You can take one of these two deductions in addition to, for example, the cost of maintaining your office or buying office furniture.
This is the method I use, as it’s much faster and easier than the other method, and there are no extra IRS forms that need filing. However, in some cases, the other method may make sense.
Taking the IRS standard deduction for a freelance home office
It’s simple:
Measure the area in square feet (width by depth) of your home office.
Multiply the total number of square feet by $5.
If the total amount is above $1,500, reduce it to $1,500.
Add it as an expense.
Working out your percentage floor space and using that as the basis for your home office deduction
Here’s what you need to do for the other method:
Calculate the total area in square feet of your entire home.
Calculate the total area in square feet of your home office.
Divide the area of your home by the area of your home office to find out what percentage of your home is taken up by your office.
Apply that percentage number to various bills and expenses.
Enter the adjusted amount as an expense.
The bills and expenses you can typically apply this to include:
Energy and utility bills for gas and electricity.
Water, wastewater, trash collection, and recycling.
Property and local taxes.
Home insurance or renter’s insurance premiums.
Mortgage or other home loan interest.
Note that if you take the simple, standard deduction ($5 per square foot), you cannot also take the deductions above.
In the US, if you use the percentage of the home method, you will need to complete and file a Form 8829, Expenses for Business Use of Your Home. This form is filed with your 1040 and Schedule C. This method may also have an impact on depreciation and capital gains tax when you sell your home. Speak to your accountant.
Home office furniture, fixtures, and fittings expenses for freelancers
You can normally deduct 100% of the cost of furniture, fixtures, and fittings that you use exclusively in your home office, provided you only use your home office for your freelance work. This includes:
Office desks, filing cabinets, storage units, bookshelves, chairs, and similar.
Rugs, drapes, blinds, and other soft furnishings.
Areas like artwork, redecoration, or renovation may be tax-deductible, but could also have other implications on depreciation and capital gains tax — speak to your accountant.
You can generally take these expenses in addition to your home office deduction.
For example, repairing a door handle or a floorboard in your office would be completely deductible as an expense. If you’re maintaining the whole of the outside of the property, then you could only deduct the percentage of your home used by your office.
Home office repairs and maintenance expenses for freelancers
If you need to spend money to repair and maintain your home office, then you may be able to expense some or all of the cost:
If the repair or maintenance is only to your home office, then you can deduct 100% of the cost.
If the repair or maintenance is to your house as a whole, you can only deduct a percentage of the cost, based on the area of your home used by your office. So, if the office took up 20% of your home, you could deduct 20% of the cost.
Repairs and maintenance might include things like pest control, a cleaning service, repairs to house-wide systems, etc. You can generally take these expenses in addition to your home office deduction.
Home office sundry expenses for freelancers
You can deduct miscellaneous and sundry costs based on the percentage you use for business:
Stationery like pens, pencils, paperclips, and similar.
Consumables like printer paper and toner.
Postage, packaging, and shipping costs
Some office decorations like potted plants, lamps, clocks, etc.
Some other office accessories and assets.
You can generally take these expenses in addition to your home office deduction.
What are the common bank, financial, and payment processing expenses for freelance businesses?
Payment processing and platform fees for freelancers
These are some of those hidden costs that we don’t often think about, but they add up fast! Essentially, these are fees that you pay to receive payment from individuals, businesses, freelance platforms, and others.
Credit and debit card processing fees charged by payment gateways and services like PayPal or Stripe—these can be around 3% of the total transaction amount.
Currency exchange fees for converting from one currency to another.
Platform fees for working on freelance platforms like Upwork or Fiverr.
Wire transfer and other transfer fees charged by banks for sending and receiving money.
Overdraft and other bank fees.
Financial expenses for freelancers
There’s a whole wealth of finance-related expenses that may be partly or fully deductible as a freelance business expense. Some of these are complex though, so speak to your accountant.
The loan interest amount for debts taken on to benefit your freelance business can be deducted.
Business credit card interest and other interest charged to your business can be expensed.
If you work from home, then mortgage or other home loan interest can be deducted based on the amount of floor space your home office takes up. This is taken as part of the home office deduction, discussed previously.
Business insurance costs like professional liability, business liability, and other business insurance are tax-deductible.
Bad debts you have through invoices not being paid or flaky clients can be expensed.
In the US, half of your self-employment tax (7.65%) is deductible as an expense. This is not typically something you will need to apply yourself as tax filing software or your accountant will ensure that is included.
In the US, qualified business income, equal to 20% of your profits, may be deducted for the purpose of calculating your federal income taxes, subject to certain limitations. Again, this is something your tax filing software or accountant will do.
How do retirement contributions contribute to my freelance business expenses?
In the US, some types of retirement contributions are deductible from the amount you pay on your federal and state income taxes. Retirement contributions as an employee are not typically deducted from your self-employment taxes.
The types of retirement contributions you can deduct are those made to a personal, traditional IRA (this would not be classed as part of your freelance business expenses), and those made to a traditional retirement plan that your freelance business administers, like a 401(K). Please note that these contributions allow you to avoid tax on the contributions you make, but you will pay tax when you withdraw from these retirement accounts when you retire. Employer contributions to a 401(K) are generally deductible for both income tax and self-employment tax purposes, but there are contribution limits. Talk to your accountant to understand more.
Contributions to a ROTH IRA, ROTH 401(K) or similar are not deductible for taxes now, so you will pay normal income tax on those contribution amounts. However, they are tax-free when you take money out of those accounts in retirement.
There are contribution and compensation limits for retirement accounts and taxes, and they can get complicated, so talk to your accountant.
How do expenses for hiring experts and professional fees work?
Hiring freelancers or contract workers expenses
You can hire other businesses, freelancers, and contract workers and make use of their services. You can normally deduct 100% of the cost, provided the services are exclusively for your freelance business. In the US, if you pay a contractor or freelancer more than $600 a year, you will need to file a Form 1099-NEC with the IRS and also provide a copy to the individual or business you hired.
Professional fee expenses
The money you spend on professionals to help you run your freelance business are generally fully tax-deductible. These fees might include:
Accounting and bookkeeping to keep your business finances in order and file your tax returns.
Legal and attorney fees for things like contracts and other legal documents and activities.
Permits, licenses, and regulatory fees to carry out your freelance services.
Membership costs and subscriptions for professional organizations.
Consultancy and similar expenses when paying for someone else’s expertise.
How do I expense for education and learning?
You can completely deduct the cost of any training, learning, or materials designed to enhance your freelancing, business, or similar skills.
Purchase of books and other materials.
Costs for online courses and examinations.
Payments for coaching and classes.
Attending seminars, webinars, workshops, and similar.
Trade publication and similar subscriptions.
Other online or offline training.
How do I expense for freelancing equipment?
If you use professional equipment in your freelancing work, you can normally deduct the entire cost. This might include:
Still or video cameras and accessories for freelance photographers and videographers.
Drafting tables and design tools for freelance designers or illustrators.
Art materials for freelance artists.
Musical instruments, recording equipment, and similar for freelance musicians and sound designers.
Other specialist equipment depending on your freelance services.
What other expenses are there for freelancers?
Advertising and marketing costs for freelancers
Your freelance business can typically deduct 100% of the costs for:
Pay-per-click ads on Google, Facebook, LinkedIn, and other networks.
Display and other online and social network ads.
Traditional, offline marketing and advertising.
Hiring a marketing or advertising agency or individual.
Purchasing marketing and advertising assets like stock images.
Print design and manufacture of assets like business cards, signs, flyers, and similar.
Some event sponsorships.
Travel expenses for freelancers
Some freelancers will work exclusively online and probably won’t have a need to travel, but others, for example, photographers, may need to travel to see clients and perform services.
In the US, if you’re traveling by car, you can claim the IRS standard deduction per mile which typically ranges between 50c and 60c per mile.
Alternatively, you can calculate the actual cost of fuel, repairs, maintenance, and other car-related costs.
If you need to travel by other means, like train, subway, air, etc, then you can claim the cost of the trip based on the percentage of the trip that was related to business purposes.
Are there any expenses you haven't included in this freelance expense guide?
There are lots of expenses small businesses can claim, but several of them are not likely to be claimed by freelancers. Because of that, I haven’t included information on the following areas:
Hiring, paying, and providing benefits to salaried, W2 employees.
Money you spend on meals and accommodation when away from home.
Rental, expenses, or mortgage payments for an external office, outside your home.
Inventory, supplies, and materials for physical products you sell.
If you need information on any of these, there are plenty of other good expense guides available, and you can speak to your accountant.
See our freelance guides on related topics
Accounting and Bookkeeping: Accounting, taxes, and bookkeeping for freelancers.
Business Expenses: Common costs and expenses for businesses and the rules around bookkeeping.
Revenue and Income: Understanding the revenue that’s coming into your business, bookkeeping, and similar topics.
I am not a qualified professional and I do not provide tax, legal, accounting, or similar advice. These guides are provided for informational purposes only. Always consult with a qualified professional on your unique circumstances. You can find more information in my disclaimer.
By Paul Maplesden