Is Business Insurance Tax Deductible for Your Business?

Yes, business insurance is generally tax deductible for self-employed individuals, freelancers, and small business owners. The IRS allows you to deduct ordinary and necessary business expenses, and business insurance typically qualifies when used for legitimate business purposes.

Key Rules for Deducting Business Insurance

General liability, professional liability (E&O), malpractice, and workers' compensation insurance premiums are fully deductible business expenses.

Requirements to Claim This Deduction

• Must be for business operations
• Keep policy declarations and payment records

How to Document Business Insurance for Tax Purposes

Proper documentation is critical for any business deduction. For business insurance, you should:

• Keep all receipts and invoices showing the amount paid
• Record the date of the expense and the business purpose
• If mixed-use, maintain a log showing business vs. personal usage
• Store records for at least 3 years (7 years for major purchases)

Source: IRS Publication 535. This information is for educational purposes only. Consult a qualified tax professional for advice specific to your situation.