Everyone that has ever owned a small business knows that there are costs every step of the way. The good news is that the CRA makes most of these expenses tax deductible. A good rule to remember is that if it is necessary to running your business then chances are you can claim it. Go over these expenses with your accountant to make sure you are claiming the right items for the right amount.
Advertising and marketing is vital to the success of a business. Not every media is equal in the eyes of the CRA though. Canadian newspaper, television and radio advertising is all 100% deductible but most magazine ads are only 50% deductible. There are also certain rules when it comes to claiming advertising in international publications or towards international markets so talk to your accountant about how much you can claim for these.
Business Operating Expenses
Expenses such as fuel, repairs, and building maintenance all fall under this category. These expenses are typically 50% deductible. Service fees for lawyers or accountants are also allowed to be claimed so as you meet with your accountant and go over all these items know that you can write it off on your taxes!
Businesses run from a home office are deductible as well. The CRA keeps a close eye on these though so make sure you qualify. You must use the space only to meet with patients, customers or clients for your business. When expenses overlap with personal ones (such as mortgage, insurance and bills) you can only claim the percentage related to the business.
Meals and Entertainment
For some businesses certain entertainment items like lunches or tickets are necessary to wooing clients and keeping them happy. The CRA allows you to claim 50% of the value of these items. Staff parties, fundraising events and client billings are also fully deductible on your taxes.
Purchases such as vehicles, furniture, equipment and building space are not only vital to the success of your small business but are also tax deductible. For these items the full amount can’t be claimed in one year, but the cost can be claimed in small percentages over the lifetime of the item.
When it comes to deducting items for your business, it is always a good practice to talk things over with your accountant. Deducting errors can lead to a CRA audit, which no one wants to always double check.