Did you know there are deductions you’re eligible to claim to help you save money when paying taxes as a business owner? That’s right!

The Canadian Revenue Agency, CRA, has approved certain tax deductions for small businesses. Just so you know, a tax deduction is an amount of money the CRA allows you to detract from your total taxable income. If you have a good chunk of tax deductions, it can help push you into a lower tax bracket, which can ultimately reduce the amount of taxes you pay for the financial year.

KEY DATES:Individuals have to file their tax returns by April 30, but if you, your spouse, or common-law partner are self-employed, you have until June 15 to file your return. On the other hand, corporations can choose any date for their fiscal year end; it must not be later than six months after the end of each tax year.

WHAT CAN I DEDUCT?

As a small business owner, you can subtract from your income expenses that are incurred not only to make the business operational but also to maintain that business daily.

Any money spent running your business is a business expense you incur to earn business income, and you can claim it on your tax return as a deduction.

Even if you use your home as a workspace for your business, you can still deduct expenses like heating, home insurance, electricity, etc. if it is your main place of business, you use the space only to earn your business income, and you use it on a regular to meet your clients, customers or patients. Isn’t that wonderful?

The expenses you can deduct include any GST/HST you incur on these expenses, minus the amount of any input tax credit claimed. However, since you cannot deduct personal expenses, enter only the business part of expenses on the form T2125, Statement of Business or Professional Activities.

However, you cannot claim expenses you incur to buy capital property.

Here are 15 common business expenses that the CRA allows you to deduct:

1. Advertising and Promotion: You can deduct expenses for advertising, including in Canadian newspapers and on Canadian television and radio stations, as well as a finder’s fee. However, there are restrictions to this; as this doesn’t apply if you advertise on foreign websites.
2. Business Use of Home: If you operate your small business from a room in your home, you may be eligible to claim a portion of your home-related expenses, such as rent, utilities, and insurance, as business expenses.
3. Rent for Commercial Space: Should you choose an official space instead, the rent you pay on a commercial space for your business may be deductible as a business expense.
4. Vehicle Expenses: If you use your vehicle for business purposes, you may be able to deduct a part of the vehicle’s operating expenses, such as gas, motor oil and lubricants, maintenance, and insurance. Just so you know, the cost of fuel related to business use of workspace in your home has to be claimed as business-use-of-home expenses.
5. Office Expenses: You can claim the cost of small items like pens, pencils, paper clips, stamps, stationery, paper clips, as well as expenses related to your business telephone and internet services. This does not include items like calculators, filing cabinets, chairs, and desks. 
6. Start-up Costs: These can include anything your business needs to take off; ranging from equipment, machinery, and supplies to legal and accounting advice. To claim this, the start-up cost must arise during the fiscal period your business started.
7. Meals and Entertainment: The CRA allows you to claim expenses on meals and entertainment incurred while conducting business like business lunches or networking events. However, the maximum amount you can claim for these expenses is 50% of the total sum. So please keep a detailed record to claim only these expenses that are directly related to your business.
8. Professional Fees: Fees paid to accountants, lawyers, and consultants can be deducted as a business expense. Also, you can deduct any annual business license fees, annual dues, subscriptions to publications, and club membership dues for your business.
9. Utilities: Expenses for telephone and utilities, such as gas, oil, electricity, water, and cable can be deducted if you incurred the expenses to earn income. While you can’t deduct the basic monthly rate of your home telephone, you can deduct any long-distance telephone calls you made on your home telephone for your business.
10. Travel Expenses: Public transportation fares, hotel accommodations, and 50% of meals, beverages, and entertainment when you travel to conduct business to earn professional income are eligible for claims.
11. Bad Debts: This is a debt owed to you and remains unpaid after you have exhausted all means to collect it. You can generally deduct an amount for a bad debt if you had determined that an account receivable is a bad debt in the year and you had already included the account receivable in income.

FINAL THOUGHTS:

These all sound interesting and I’m sure you’re itching to begin enjoying your claims.

Before you start, it’s important to know that the above list is not a general guideline and may not apply to every small business. So, it’s best to consult with a tax expert or accountant like EMCA to ensure you maximize all the deductions you’re eligible for.

We recommend you keep detailed records like receipts and invoices of all business expenses to support your tax deductions. Also don’t forget that tax laws and regulations change frequently, it won’t hurt to stay informed and up-to-date on the latest tax laws and regulations.