The end of the calendar year also marks the end of many small businesses’ fiscal year – and that signals filing a tax return in April. For small businesses, many of the tax deductions are obvious in terms of hydro, rent, internet, advertising, vehicle leases, etc., but some may not be as obvious.
Sharlane Bailey, Owner of Canwest Accounting, says her team of accounting and bookkeeping experts in the company’s Victoria and West Shore (Langford) offices take time to discuss expenses with business owners to ensure they are utilizing all the deductions allowable by the Canada Revenue Agency (CRA). Some allowable deductions that surprise clients include:
- Membership fees for business networking groups, as well as 50% of each meal associated with attending the meetings
- Gifts for clients, such as Christmas gifts or customer appreciation presents
- Sponsorship of a sports team (but not tickets to attending games, unless these are gifts provided to clients)
- Staff parties
- Subscriptions to magazines for waiting rooms or trade publications to help the business
- Business travel, even when part of the trip is for leisure (note: the business portion of the trip to attend meetings or a conference can be a tax deduction)
- Fees to a business coach or mentor
Tax Deductions for Business Use From Home
Additionally, if you run a business from your home, you might be paying more tax than necessary if you aren’t writing off expenses for the portion of the home you use for business. If you have a home office, studio, or shop you use for your business, you can write off a portion of your household expenses, including:
- Property taxes
- Strata fees
- Mortgage interest
- Security system
- House insurance
In terms of how much you can write off, you need to calculate the following: space for business ÷ total household space = % that can be written off. Even if it’s only 15%, it is generally worth it to deduct these expenses.
To claim these tax deductions, you must keep your receipts. And remember: CRA does not allow credit card statements, so ensure you save all itemized receipts and bills.
The suggestions and advice provided by Canwest Accounting should not be relied upon in place of professional advice. You are responsible for checking the accuracy of relevant facts and opinions provided.