Small Business Deductions Canada

Small Business Deductions

You know that shoebox of receipts you keep in your desk drawer? Well, it’s that time of the year again when you need to sort your life out and file your *dreaded* taxes.

It can be a stressful time for most small business owners and it’s easy to let business deductions slip through the cracks, so here’s a cheat sheet for small business deductions:

Top Small Business Deductions Freelancers (Almost Always) Miss

1.     Vehicle Expenses

This doesn’t just include CRA’s mileage allowance but fuel, repairs and maintenance costs (oil change, anyone?) – those can all be included as vehicle expenses. Lease a car you use for work? That’s a tax-deductible business expense as well.

2.     Training & Education Expenses

Did you buy a course on Udemy or Coursera to upgrade your skillset? Or maybe attend a masterclass to learn about something related to your business? Tax-Deductible!

3.      Software Subscriptions

Do you use photoshop for your business? Or maybe something like Asana or Monday.com as a project management tool to keep your business on-track? Tax-Deductible! 

4.     Home-Office Costs

Most people deduct part of their rent or mortgage as home office costs, but did you know you can deduct part of your utilities like heating, home insurance, electricity and cleaning materials as well? Yes, you can!

To calculate the part you can deduct, use a reasonable basis, such as the area of the workspace divided by the total area of your home.

While allowed by the CRA, be careful with deducting property taxes and mortgage interest for home office expenses as this can affect your tax position when you sell your home. Talk to a tax professional before deciding to deduct these expenses on your business tax return.

5.     Medical Expenses

Depending on your business’ structure and situation, you can get a Health Spending Account (HSA) for your business.

Health Spending Accounts perform a basic function: they convert the personal health and dental expenses of employees (including owners who are also employees) into a business write-off. This allows the business to transfer money tax-free from the business to the owners and employees to support their health and wellness.

6.     Bad Debts

Have an invoice to a customer that you’re sure will never be paid? You can deduct the unpaid invoice as a bad debts expense.

7.     Legal and Professional Fees

You can deduct and legal and accounting fees charged by professionals that are related to your business operations. The bookkeeper you hired to help with your bookkeeping? His or her fees are Tax-Deductible!

8.     Startup Costs

Did you register your business or incorporate recently? Those costs are tax-deductible! 

9.     Membership Dues

 Are you a member of a professional organization related to your business? Those dues are tax-deductible!

To learn more about these small business deductions and how they could affect you try scheduling a free consultation with us.