Understanding Small Business Expenses
If you own a small business in Canada, it is important to understand the expenses your business can write off to reduce your business’ taxable income and taxes payable. Between home, vehicle, and service expenses, having a sound knowledge of your business expenses can be very worth your while.
Small businesses most commonly write off home office expenses. For anyone who works from a home office, certain expenses can be deducted:
- Mortgage interest;
- Property taxes;
- Repairs and Maintenance;
- Home insurance.
If you use your vehicle for work, and are a small business owner you can deduct some vehicle expenses. These expenses include fuel/oil, lease payments, insurance, parking, tolls, and registration fees. These expenses are generally written off as a percentage of your business mileage over the year. You would be required by the CRA to keep an accurate logbook of the car’s use in order to write the car off as an expense.
Legal Fees and Accounting
Any amounts spent throughout the year on legal fees can be deducted, as well as the fees paid to your accountant for preparing your income tax return.
Depending on how you advertise, expenses for advertising can be either partially or fully written off.
To help save you money, and reduce your business’ taxable income and taxes payable, consult your accountant to find out which write offs are applicable to your business.