5 Tax Write-Offs for Small Business.

Home-Office Expenses.

Home office expenses are the most common tax-write offs for small businesses in Canada.

How much you can write-off is determined by the percentage of your home office space compared to the total size of your home.

If you work from home, you can write-off:

Furniture, computers, office equipment, mobile devices.

Property taxes.

Home insurance.

Mortgage interest on your residence.

Utilities.

Internet, telephone, etc.

understand the difference between office expenses (pens, stamps) and depreciable assets (printers, filing cabinets, computers). Depreciable assets wear out over time, so you can only claim a portion of the original cost as a tax deduction each year.

Advertising Costs.

Depending on the medium, you can write-off a portion or all of your media advertising costs.

Magazines and Newspapers: Both mediums are fully deductible, but only under some strict conditions. To write-off 100% of the costs, at least 80% of the material in the magazine or newspaper must be journalistic in nature. This means advertising cannot take up a majority of the space. If the journalistic content is less than 80% in nature, only 50% of the costs can be written-off.

Online Advertising: Online advertising is 100% deductible. This includes the website’s domain name registration and web hosting costs.

Television and Radio Advertising: Television and radio advertising is also 100% deductible for Canadian stations.

Automobile Expenses.

Most Canadian small business owners use their personal vehicles for business purposes. This can be advantageous come tax time because you can write-off the business portion of your vehicle use expenses.

Vehicle expenses include:

Capital cost allowance (if you own)

Fuel and oil

Parking fees

Vehicle registration fees

Toll charges

Repairs and maintenance.

Lease payments (if you lease)

You are required by the Canada Revenue Agency to keep an accurate logbook to verify when the car is being used for business and pleasure.

Meals and Entertainment.

As a small business owner, you can write-off most expenses that are used to help the business generate income. In addition to office supplies, which are 100% deductible, business expenses can also include meals and entertainment, but are 50% deductible. If you take a client out for dinner and to a baseball game, you can deduct 50% of the cost. Just make sure to keep all receipts.

Home-Based Insurance.

You can deduct all regular commercial insurance premiums you incur on any buildings, machinery, and equipment that you use for your business. This includes your home-based business.

But there’s a catch. Your home-based business needs to have commercial insurance. Home-based business insurance is pretty much commercial in nature, but it’s separate from home insurance.

Get home-based insurance and use it as a small-business write-off.

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