Did you know that you can deduct many reasonable expenses that were paid to earn income for your business? This includes any GST/HST you have incurred on these expenses, less the amount of any input tax credit that you claim. As long as the expenses are for the business and not personal expenses or expenses used to buy capital property, there is a good chance you can deduct it. Here are some of the most common items that you can deduct as s business expense.
Business Start Up Costs
You are permitted to expense business start up costs, but only if the date in which your business started is clearly defined. Only the expense costs that occurred during the preliminary steps leading up to the start of the business operations can be considered for a deduction.
Advertising that occurs through Canadian broadcasters or Canadian newspapers can be deducted. And if you paid for any businesses cards or finder’s fees that are directed at the Canadian market you can expense these amounts as well.
Business Tax, Licences, Dues, and Fees
If you have any annual licence fees, trade and association membership fees, or business taxes you can deduct these from your expenses. However, you cannot deduct club membership dues or fees if the main purpose is for sporting activities, recreation or dining.
Salaries, Wages, and Benefits
As a business owner, you can deduct the gross salaries and other benefits you pay out to employees – but only employees and not to any other owners of the business.
Certain office supplies can also be deducted. If you use a supply to provide goods and services like cleaning supplies for a maid service, then it can be expensed. Plus, materials like pencils, pens, stationery, stamps and paper clips can be deducted, but calculators, desks, and chairs often will be excluded.
Did you know that your rent can be deducted as a business expense too? This includes the land, the building, or the workspace that you use for business in your home.
Expenses like your oil, gas, electricity, water and telephone can also be expensed. However, it must have been incurred to earn income for your business.
Travel costs are also commonly deducted as a business expense. This includes any hotel accommodation booked, public transportation fees, as well as meals and entertainment.
External Professional Services
If you hire an outsource service or consultant, you can also deduct for their fees. This includes accountants, legal aid, and any other professional. You can also deduct any accounting or legal fees that you incur for preparing and filing your income tax and GST/HST returns, or if an objection or appeal has been prepared for you as well.
This is only the tip of the iceberg – there are 25 categories alone in which you can make a deduction as a business expense. To find out more, contact us at Priti Law Professional Corporation. Our team of professionals can help you determine what is deductible and take care of the entire process for you.