TL;DR: Most solo SaaS founders leave money on the table not because they're hiding expenses, but because their books are too messy to tell what's deductible from what isn't. This is a working checklist of the expense categories solo founders run into every year — software, contractors, meals, home office, mileage, hardware — with the gray areas flagged and rough dollar benchmarks from real founder books. Your CPA still makes the final call on what qualifies; this just gets your records in shape before you hand them over.
Why solo SaaS founders undercount deductible expenses
Most solo SaaS founders touch their books once a quarter, usually a few days before an estimated tax payment is due. By then, half the context is gone — a Mercury statement that just reads "AMAZON WEB SERVICES" or "GITHUB, INC." with no note about what it was actually for, three months after the charge hit.
The IRS standard for a deductible business expense is that it's "ordinary and necessary" for your trade. That's a low bar for a software company — almost everything you spend to build, host, sell, or support your product clears it. The harder part is categorization: a mislabeled expense either gets dropped when your CPA cleans up the books before filing, or it sits in the wrong bucket and makes your numbers harder to read all year.
This is not tax advice, and nothing here should be read as a determination of what you personally can deduct — only your CPA can tell you that based on your specific situation. What follows is a checklist of the expense categories solo SaaS founders run into every year, with the gray areas called out so you know what to flag for your accountant instead of guessing.
SaaS tools and software subscriptions
If it's a tool you pay for to build, run, or sell your product, it's the easiest deductible category to get right, because the line items are recurring and usually self-explanatory once you label them once.
In our experience reviewing solo SaaS founder books, monthly software spend for a one-to-three-person company typically lands between $300 and $900, and it climbs fast once usage-based infrastructure costs — AWS, OpenAI API calls, Twilio — start scaling with the product instead of staying flat. Compare that to the accounting line itself: a founder still running QuickBooks Online Simple Start pays around $35/month for the software, which is often smaller than any single infrastructure vendor on the list. A Prosper subscription runs $29/month, in the same range.
The common categories:
- Hosting and infrastructure: AWS, Vercel, Render, Railway, Cloudflare
- Payment processing fees: Stripe, Paddle, PayPal transaction fees
- Developer tools: GitHub, Linear, Sentry, Datadog
- Operations: Notion, Slack, Zoom, 1Password, Google Workspace
- Design: Figma, Canva
- Accounting and bookkeeping software itself: QuickBooks, Xero, Wave, Prosper
Contractor and freelancer payments
Contractor payments are deductible business expenses, but they come with paperwork that solo founders routinely skip until January, when they're scrambling to issue 1099-NEC forms for anyone they paid $600 or more during the year through a non-payment-processor method (check, ACH, or Venmo/Zelle business transfers).
Collect a W-9 from every contractor before you pay them, not after. It takes two minutes at the start of the relationship and turns into a chase-them-down problem in January if you wait. If you pay contractors through a platform like Stripe or PayPal using their commercial payment processing, those payments are generally reported by the platform instead, but the rules depend on payment type and volume — this is exactly the kind of thing to confirm with your CPA rather than assume.
The gray area most solo founders hit: paying an international contractor (a developer in Eastern Europe, a designer in South America) through Wise or Deel. Those payments are still deductible business expenses, but the 1099 reporting rules differ for non-U.S. persons, and mixing that documentation into a general "contractors" bucket without noting the country makes cleanup harder later.
Business meals, travel, and conferences
Business meals are generally deductible at 50% when there's a clear business purpose — a call with a contractor over lunch, a meeting with your CPA, dinner during a work trip. The temporary 100% deduction for restaurant meals that applied in 2021 and 2022 expired, so the standard 50% treatment is back, but confirm the current-year rule with your CPA since these thresholds do shift.
Travel for a legitimate business purpose — a conference, a customer visit, a meeting with your accountant if it requires travel — is deductible for airfare and lodging, with meals during the trip still capped at the 50% rate. The line to watch is a trip that mixes business and personal time: if you tack on three vacation days after a two-day conference, only the business-related portion of the trip is deductible, and the split needs to be documented, not estimated after the fact.
Conference registration fees are one of the cleanest categories on this list — keep the registration confirmation and the agenda as documentation, since it shows the business purpose without any ambiguity.
Home office and mileage
The home office deduction has two methods. The simplified method is $5 per square foot of dedicated office space, capped at 300 square feet — a maximum deduction of $1,500 regardless of how large your home is. The actual expense method instead takes the percentage of your home's square footage used exclusively for business and applies that percentage to rent or mortgage interest, utilities, insurance, and depreciation. The actual method usually produces a larger number for founders with expensive housing costs, but it requires more recordkeeping and is worth a conversation with your CPA before you commit to it for the year.
The word "exclusively" matters here. A desk in the corner of a bedroom you also sleep in doesn't qualify under either method — the space has to be used only for business to count.
Mileage is a smaller category for most solo SaaS founders since the job is mostly a laptop and an internet connection, but it applies if you drive to meet a contractor, attend a conference, or visit a co-working space regularly. The IRS updates the standard mileage rate annually, so check the current-year figure rather than relying on last year's number. Commuting from home to a regular office doesn't count — only trips with a specific business purpose.
Hardware, equipment, and the gray areas to flag for your CPA
Laptops, monitors, a webcam and mic for customer demos, a standing desk — all deductible business expenses. In the founder books we've reviewed, hardware spend typically runs $1,000 to $3,000 in a company's first year and drops close to zero after that unless there's a refresh cycle. Whether that cost gets expensed immediately or depreciated over time under Section 179 is a decision for your CPA, since it depends on your entity structure and overall tax position for the year.
A handful of categories don't have a clean yes-or-no answer, and the honest move is to flag them for your CPA instead of guessing:
- Home internet and cell phone bills used for both personal and business purposes — usually split by percentage of business use
- Coworking memberships, which are typically straightforward but worth separating from home office if you claim both
- Software with meaningful personal use overlap, like a Notion or 1Password account you also use personally
- Client gifts, which are subject to a per-recipient cap set by the IRS
- Courses, books, and education related to running the business versus general professional development
Hardware, equipment, and the gray areas to flag for your CPA
Getting these categories right during the year is mostly a matter of having a system that flags unusual transactions instead of forcing you to review every line. That's the gap between a spreadsheet you update quarterly and a Plaid-connected tool with auto-categorization and exception-based review, where the software handles the recurring, obvious transactions and only surfaces the ones that need a human decision — a mixed personal/business charge, a new vendor, a one-off that doesn't match a pattern.
None of this replaces a CPA at tax time. What it does is hand them a set of books where the deductible categories are already sorted and the gray areas are already flagged, instead of a year of unlabeled bank transactions they have to reconstruct from memory.
Prosper is bookkeeping software and does not provide tax or legal advice. Consult a qualified professional for tax advice. Results vary based on transaction volume, data quality, and workflow setup.