40 Practical Ways Small Businesses Cut Costs

Practical steps that cut a small business's energy, vehicle, water, tax, staffing and food costs, from LED lighting and tire pressure to tax credits and staff retention. Many of them cost little or nothing to start. Tax figures change each year; check the current rule before filing.

1. 1 Switch to LED lighting, which uses up to 90% less energy than incandescent lighting and lasts 35 to 50 times longer.
2. 2 Put occupancy sensors in storage rooms, meeting rooms and other low-traffic areas, where they can save between 15 and 30 percent on lighting costs.
3. 3 Start efficiency upgrades with lighting if you run a restaurant, because lighting averages 13 percent of a restaurant's total energy use.
4. 4 Install and properly use an ENERGY STAR qualified programmable thermostat, which can save about $100 a year.
5. 5 Seal and insulate heating and cooling ducts, which can improve system efficiency by as much as 20 percent.
6. 6 Buy ENERGY STAR certified appliances for the break room, since they use 10% to 50% less energy and water than standard models.
7. 7 Buy ENERGY STAR certified commercial kitchen equipment, which saves 10 to 70 percent of the energy standard models use, depending on the product.
8. 8 Buy ENERGY STAR certified computers for the office, which use about 30-40% less energy than standard models.
9. 9 Run an energy treasure hunt: hundreds of organizations have used them to cut facility energy use by 15 percent or more.
10. 10 Start with no-cost actions: an average commercial building can save up to 30 percent on energy bills through no-cost actions, strategic investment, and smart operations and maintenance.
11. 11 Keep refrigeration systems maintained if you run a grocery store, because refrigeration may use up to 40 percent of the property's total energy.
12. 12 Aim for ENERGY STAR certification on a building you own, because certified buildings use 35 percent less energy on average than similar buildings nationwide.

13. 13 Train drivers to drive smoothly, because aggressive driving can lower gas mileage by roughly 15% to 30% at highway speeds and 10% to 40% in stop-and-go traffic.
14. 14 Keep company vehicles at or near the speed limit, because each 5 mph driven over 50 mph is like paying an additional $0.31 per gallon for gas.
15. 15 Take heavy items out of company vehicles, since an extra 100 pounds can reduce mpg by about 1%.
16. 16 Take cargo boxes off vehicle roofs when not needed, because a large, blunt roof-top cargo box can reduce fuel economy by 2% to 8% in city driving, 6% to 17% on the highway and 10% to 25% at Interstate speeds.
17. 17 Turn engines off instead of idling, since idling can use a quarter to a half gallon of fuel per hour.
18. 18 Keep vehicle tires inflated to the proper pressure, which can improve gas mileage by 0.6% on average and by up to 3% in some cases.
19. 19 Use the motor oil grade the manufacturer recommends, because the wrong grade can lower gas mileage by 1% to 2%.

20. 20 Replace old flushometer-valve toilets with WaterSense labeled models, which use 20 percent less water than the federal standard, a swap that could save a 10-story office building with 1,000 occupants nearly $10,000 per year.
21. 21 Check for leaks first when cutting water costs, because leaks can account for more than 6 percent of a facility's total water use on average.

22. 22 Use the Section 179 deduction to expense equipment in the year you buy it; for tax years beginning in 2025 the maximum is $2,500,000, reduced by the amount equipment placed in service costs above $4,000,000.
23. 23 Claim the 100% special (bonus) depreciation allowance, which applies to certain qualified property acquired and placed in service after January 19, 2025.
24. 24 Use the de minimis safe harbor to deduct items up to $2,500 per invoice or item, or up to $5,000 if you have an applicable financial statement.
25. 25 Use the simplified home office method, which allows $5 per square foot of business space up to a maximum of 300 square feet.
26. 26 Take the standard mileage rate for business driving, which is 76 cents a mile for July 1 to December 31, 2026 and was 72.5 cents for January 1 to June 30, 2026.
27. 27 Claim the qualified business income deduction, which lets eligible owners deduct up to 20 percent of their qualified business income.
28. 28 Claim the small business health care tax credit if you have fewer than 25 full-time equivalent employees; the maximum credit is 50 percent of premiums paid for small business employers.
29. 29 Hire through the Work Opportunity Tax Credit, which is in general equal to 40% of up to $6,000 of wages paid in an eligible employee's first year of employment.
30. 30 Apply a qualified small business's research credit against payroll taxes, which can be up to $500,000 for tax years beginning after December 31, 2022.
31. 31 Claim the retirement plan startup credit, worth up to $5,000 for three years for the ordinary and necessary costs of starting a SEP, SIMPLE IRA or qualified plan.
32. 32 Add automatic enrollment to a retirement plan, which earns an eligible employer a tax credit of $500 per year for three years.
33. 33 Ask the IRS to let you file Form 944 once a year instead of quarterly Forms 941 if your employment tax liability will be $1,000 or less.
34. 34 Offer pre-tax commuter benefits: for 2026, employers can exclude up to $340 a month per employee for transit passes and $340 a month for parking from wages.
35. 35 Offer a qualified small employer HRA instead of a group health plan; the 2026 maximum reimbursement is $6,450 per employee, or $13,100 if it also covers family members.
36. 36 Offer educational assistance, since up to $5,250 of benefits each year is exempt from an employee's wages.

37. 37 Work on retention: replacing a frontline worker costs an estimated 40% of their salary, a technical role 80% and a leader or manager around 200%.
38. 38 Fix the exits you can prevent, because 42% of employee turnover is preventable but often ignored.
39. 39 Price a high-deductible plan with a savings option, whose average single-coverage premium in 2025 was $8,620, below the $9,325 average for all plans.

40. 40 Cut kitchen food waste if you run a restaurant: a review of 114 restaurants found the average restaurant saved $7 for every $1 invested.