Important Tax Deductions for Small BusinessesBrian Jang ON March 7, 2017
When it comes to Canadian small businesses, there’s certainly no shortage of them. To date, there are over 1.14 million small enterprises, contributing more than 30 percent to Canada’s GDP. That’s huge. What’s equally as large is the growing need from entrepreneurs for sound tax advice. If you are setting out on the small business path, you’ll want to make sure you don’t miss out on any potential tax write-offs.
What is the Small Business Tax Deductions?
Before we get started, it’s probably a good idea to go over the meaning of a small business tax deduction. Simply put, they are deductions you can use to decrease the amount of income tax you’ll owe at the end of each tax year.
How does a business write-off work?
Write-offs (a.k.a. deductions) lower the amount of taxable income you have. As a small business owner, there are many expenses you can deduct when you file your tax returns. This is something you can do yourself. But you if have many write-offs, you’ll want to consult with an accountant.
With that out of the way, here are some great tax deductions to help you make the most of your money.
Looking for some great small business tax deductions? When it comes time to file your return, you can deduct a host of operating expenses. For starters, you’ll be able to write off advertising and startup costs, maintenance and repairs, delivery expenses, employee salaries, and utilities from your business expenses list. You can also deduct rental costs if you rent an office space.
Home Business Tax Deductions
Believe it or not, there are a wide range of tax deductions you can claim if you are running a home-based business. The Canada Revenue Agency (CRA) states you are eligible for deductions on a number of home-office related expenses, including mortgage interest, utilities, property taxes, home insurance, and repairs and maintenance.
Travel and Entertainment Expenses
Travel and entertainment expenses are crucial for many small business owners. Fortunately for you and your wallet, you’ll be able to claim some of them. Accommodations and transportation costs like taxi fare and plane tickets are fully deductible. Keep in mind, however, you can only deduct 50 percent of your food, beverage, and entertainment expenses.
Did you know that as a small business owner in Canada, you can deduct a percentage of your vehicle expenses? For example, you can claim leasing payments, fuel, oil, repairs and maintenance, vehicle registration fees, and even parking fees and toll charges. Just make sure to keep an accurate drive log to verify the amount to the CRA.
Remember, one on the best ways for a Canadian small business owner to take advantage of deductions is with the help of a chartered professional accountant. They have the experience and the know-how to make sure vital tax deductions are not overlooked.
To ensure your business receives the best tax return possible, contact BCJ, Chartered Professional Accountants today!