Which expenses can you claim through your small business?
When it comes to taxes and small business expenses, the general rule is that if it’s related to earning money for your business which you can claim it at tax time. Keep documents such as invoices and cheques to support your expense claims and when in doubt contact us or check on the CRA website.
Business Operating Expenses
Every business has its own needs that influence how you spend money to make money. Some business operating expenses are just a computer, while others are a bit more advanced. If your revenue depends on the relationship you have with your clients, you might buy lunch or hockey tickets to build the relationship. Expenses such as these are allowable when it’s a reasonable business practice, but the CRA allows you to claim only 50 percent. If your business depends on delivery vehicles, fuel and repairs are legitimate expenses, as are maintenance costs for a building. Lawyers’ and accountants’ fees are an accepted part of doing business so you can claim these costs as business expenses as well!
Home Offices and Office Expenses
Calculate the percentage of your house that your home office space takes up. Count only the percentage of time it’s used as an office. Use your result to determine the business percentage of costs associated with it, such as mortgage interest or rent, property taxes, utilities and home insurance. If you have an office at your store but also work from home, you will likely not be able to claim this. Office expenses such as stationery, staples and pens can be claimed as long as they’re only used for business.
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. We have the knowledge of all there classes and will be able to help you claim your property properly.
Other Business Expenses
Advertising is essential for many businesses and you can claim this expense. All advertising must be directed at a Canadian market. Newspapers, television and radio can be deducted fully, but magazine advertising depends on the content of the publication. If the editorial content of the magazine is less than 80 percent, you can only deduct half your cost to advertise. There are many different expenses you can deduct and Acuity will help walk through the deductions what suit your business.