21 Deductions For Canadian Business Owners
There are LOTS of benefits to becoming your own boss and starting a company, like freedom and flexibility to innovate, and to work a schedule that is tailored to your lifestyle - but one of the best benefits to being a self-employed Canadian are the tax-saving benefits! If you don’t have an accountant in your life yet to ask these questions to - you should always refer to the CRA website for the most accurate, and up-to-date information, or reach out to us at Signal Operations.
Because the CRA website is so big and can be tricky to navigate, we decided to compile a list of eligible business expenses for Canadian Business owners to simplify things for you.
If you’re at a stage where you’re DIY-ing your bookkeeping, setting up a spreadsheet with the following expense categories will help you tremendously at tax time when it comes to inputting your business expenses on your tax return. CRA doesn’t want to see one big total for expenses, they want it broken down into these categories, because each category is eligible for a specific deduction amount. For example: when you’re tracking supply expenses that were shipped to you - you need to break out the shipping/freight costs, and record them in their own category, separate from the supply expense. The downfall of spreadsheet tracking for your expenses is that you have to stay on top of it, which is where many business owners fall short, leaving them guessing at their financial situation, and falling behind in their bookkeeping. This is where using accounting software comes in. At Signal Operations, we work with our clients by using only cloud-based software, XERO and Hubdoc, where you can take a photo of your receipt, which then gets filed into the appropriate expense category on our end.
Deductions for Canadian Business Owners
(Retrieved from The Canada Revenue Agency, March 3, 2022)
Business start-up costs
Advertising
Business tax, fees, licenses, and dues
Delivery, freight, and express
Insurance
Bad debts (uncollected invoices)
Interest & bank charges
Legal, accounting and professional fees
Maintenance & repairs
Management & administration fees
Meals & entertainment
Motor vehicle expenses
Office supplies
“Other” or “misc”
(*Note, we don’t recommend using this category if at all possible, unless you can’t fit an expense into one of the other 21 categories)
Prepaid expenses
Property taxes
Rent
Salaries, wages & benefits (including employer’s contributions to CPP & EI)
Supplies
Telephone & utilities
Travel
Capital cost allowance
Signal Operations offers monthly service packages that offer you 100% cloud-based, virtual professional bookkeeping and accounting services in Canada. Our service packages are a flat monthly rate that coincide with your business size and needs, making this important service affordable to a wide range of businesses, starting at just $225/month.
Reach out for a FREE, 30-minute consultation!