Small Business Expenses Write-Offs Canada
[Advice from Raj Katlaria, CPA, Surrey BC]
When it comes to the Small Business Expenses Write-offs Canada, Chartered Professional Accountant in Surrey, BC – Raj Katlaria has simple advice. Whether self-employed, an entrepreneur or a small, work-from-home business owner, his advice- is that no one’s venture is too small to claim business expenses. So don’t be shy, little things add up, and what you leave out will end up costing you.If you are wondering about Small Business Expenses Write-offs Canada, here is a resource just for you, to be informed.
Small business expenses write offs in Canada includes:
Home Office and Office Expenses
Home offices can be claimed for business use, as long as it’s either your main place of business or it’s a space that you use only for earning income and to meet clients on a regular basis. If you have an office at your shop or store but you bring work home to balance your business and life, the CRA probably won’t allow you to claim your home office space. Here is a list of Home business tax deductions you can claim
- Mortgage interest on your residence
- Property taxes
- Repairs & maintenance
- Home insurance
A number of home-office expenses that you can write off are determined by the percentage that your home office space is of the total size of your home.
Business Operating Expenses
Every business has its own needs that influence how you spend money to make money. Business operating expenses forms a major part of small business expenses write offs in Canada that you can claim:
1. Vehicle Expenses
If you’re heading out for a work related spin, getting gas, meeting a potential customer, marketing, those are all valid. Make sure to keep a record of the Date, Destination, and Distance of your work related spin. As a small business owner in Canada, you can deduct the following vehicle expenses.
- Capital Cost Allowance (if you own)
- Fuel & oil
- Lease payments (if you lease)
- Parking fees
- Repairs & maintenance
- Toll charges
- Vehicle registration fees
You are required, by the CRA, to maintain an accurate logbook in order to verify the amount your car is being used for personal and business purposes.
If you own your vehicle, then you can claim depreciation for 30% of the cost of the vehicle each year under the declining balance method. This is referred to as Capital Cost Allowance.
2. Accounting and Legal Fees
Another way of reducing your taxes is by deducting fees paid to your accountant for preparing your income tax return. Similarly, the amount that you spend on legal fees in the ordinary course of operating your business is tax deductible.
3. Office Rent
Rent paid to your landlord for the use of office space is tax deductible. Keep a copy of the lease agreement and rent receipts as you will be required to provide these documents should you be audited by the CRA.
Depending on the advertising method used by your small business, advertising expenses can either be fully or partially written off.
- Online Advertising- including your website’s domain name registration and web hosting
- Television and Radio Advertising
- Magazine and Newspaper Advertising
5. Meals and Entertainment
50% of the amount that you spend on meals and entertainment is tax deductible. For example, let’s say you decide to take your client out for dinner or to watch a baseball game. 50% of the cost can be deducted from your business income, assuming that you are able to provide a receipt. Nevertheless, there are certain circumstances where you are able to deduct 100% of the cost of meals or entertainment. This includes:
- Staff events or parties (maximum of 6 per year)
- Meals and entertainment that is provided for a registered charity fundraiser
There are several different types of insurances that qualify for small business expenses write-offs in Canada.
Types of Insurance
- General Business Liability Insurance.
- Business Property Insurance
- Business Interruption Insurance
- Life Insurance
Major business purchases like vehicles, furniture, equipment or buildings will benefit your business for years. You cannot claim the full amount of a purchase in the tax year it occurs, rather, you can claim a percentage of the purchase cost each year over the expected life of the item. This is called a capital cost allowance. The CRA has a list of CCA classes, each with an annual depreciation amount and a definition for purchases that fit the class. Class 10 includes computer hardware and some motor vehicles, while Class 38 covers excavation equipment and Class 43 lists manufacturing and processing equipment.
Make capital purchases right before year-end so you can take advantage of depreciation deductions on purchased assets. In the first year, only half of the CCA can be claimed.
To conclude tax write-offs will ultimately help save you money by reducing your business’ taxable income and taxes payable. Contact Raj Katlaria, CPA, Surrey BC. to find out which tax-write offs you could be taking advantage of .You should be well on your way to capture every credit to which your small business is entitled!