Whether you’re calculating your own taxes or collaborating with an online accounting firm, you won’t want to overpay by forgetting to claim what you deserve. If you’re overlooking any of these common small business tax deductions, you may be shortchanging yourself.
Home-Based Business Expenses
If you’re running a home office, you should be entitled to a deduction on a portion of your rent, utilities, and other expenses. You must, however, verify with the Canada Revenue Association that your home is the principal place of business and that it can host physical meetings for clients and customers. As of now, CRA doesn’t account for video conferences. If you would like to learn more about business expenses, check out our blog What does it mean to deduct business expenses
Automobile Expenses
A deduction in vehicle expenses is possible if you’re using your car for business. To avoid any personal tax liabilities, list any vehicle used for both business and personal uses under your name. There are two ways to go about vehicle tax deductions:
- If you’re an employee of your corporation, pay yourself a per-kilometer fee based on CRA’s allowance rate. This will ensure that the amount is not taxed as income in your hands. You will still have to shoulder maintenance, gas, and insurance fees.
- Calculate the percentage of vehicle expenses you dedicated to business use. Say you drove 10,000km in a single year, with 3,000km of that distance having been used for business purposes. You would qualify for a 30% deduction.
Calculating vehicle expenses can be a headache, so if you’re open to sourcing bookkeeping services in Halifax, we suggest you do so. If you would like more information about this specific topic, check out our blog How work vehicles are taxed in Canada
Research and Development
If you’re running a research and development business, you should be entitled to major tax credits that may depend on your area of expertise. These tax deductions cover employee compensation for qualified services and necessary materials (such as computers and lab tools) used for conducting research, among other things.
Meals and Entertainment
Yes, meals and entertainment for business purposes are deductible, but only 50%. It’s important to remember not to go overboard with this, and use it only when you think it would provide the most value for your business.
Advertising and Promotional Material
Regardless of whether you’re advertising digitally or on print, you can write your resources off as a business expense. These include personal merchandising materials, such as branded t-shirts, stickers, or even USB drives, distributed at seminars or conventions. On occasion, you’ll also be able to retrieve expenses for ad space on local radio or television.
Charitable Donations
Does your business make monetary donations to registered Canadian charities? If so, you can claim these deductions during your next tax return. Remember to request an official receipt with each contribution, which you must then present to the CRA to make an expense claim.
Conclusion
Qualifying for certain tax deductions can definitely give your business a leg up, but calculating them on your own can take up a lot of your time. Keen on never having to worry about numbers again?
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