Automobile Expenses

• As a business owner, you may deduct automobile expenses if your automobile is used for business purposes. The IRS allows two types of tax deductions for automobile expenses: standard mileage and actual mileage. The first year a business owner uses a vehicle for business purposes, the IRS requires the individual to use the standard mileage deduction. As of 2011, the standard mileage rate is 51 cents per business mile. After the first year, you may choose between the two. The actual mileage deduction allows you to deduct all of your actual automobile expenses. According to the IRS, qualified expenses include gas, oil, tolls, lease payments, insurance, parking fees, registration fees, repairs and tires.
  
  

Home Office

• If you operate a home business, the IRS allows you to deduct home office expenses. To qualify for this deduction, you must use a portion of your home exclusively for business activities on a regular basis. For example, if you operate your home office from your den, you may deduct the cost of using your den. If you conduct business outside of the home, such as for business meetings, you may still take the home office deduction as long as your home is your primary place of business. Home office deductions are based on the percentage of your home used for business purposes. For example, if your den makes up 20 percent of your home, you may take a deduction worth 20 percent of the eligible expenses determined by the IRS.
  
  

Health Care

• Business owners who pay at least 50 percent of the cost of their employees' health coverage may qualify for heath deductions. According to Catherine Clifford of CNN Money, businesses with 10 or fewer full-time employees and annual wages averaging $25,000 or less receive the greatest benefit from the deduction. Businesses may take a tax credit up to 35 percent of the cost of employee health insurance premiums through 2013. Starting in 2014, business owners may take a credit up to 50 percent. The Small Business Jobs Act of 2010 allows self-employed workers to deduct the cost of health insurance premiums from their federal income tax and self-employment tax.
  
  

Eligible Entities

• Self-employed workers may take a tax deduction for contributions made into a qualified retirement plan. Qualified plans include the Simplified Employee Pension, or SEP; Savings Incentive Match Plan for Employees, or SIMPLE; defined contribution plan; and defined benefit plan. You may set up a SIMPLE retirement plan as a SIMPLE IRA or a SIMPLE 401k. The deductions vary per retirement plan; for some plans, it's based on a percentage of the annual contribution amount.