Tax deductibles for small businesses in Canada

It is rewarding to see your small business flourish and reach new heights, but people don’t understand the struggles behind it. Tax filing is such an important part of any business, but many times it is overlooked. While you focus on growth and expansion of your business, let our professional accountant services get your tax filing process done seamlessly.

The Canada Revenue Agency (CRA) allows small businesses to claim many tax deductions that can directly offset taxable income, improve your overall cash flow, and build better financial resilience. The idea is to know when is the right time for tax filing and having the right expert accountant to help you sail through the entire process in a seamless manner. With Taxccount Canada, you get the best accounting services and our experts will help you with risk-free tax filing.

In this article, we’ll discuss the common tax deductibles for small businesses and how you can benefit from them.

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Tax Deductible Items

Tax-deductible items are expenses sustained in order to earn business income. It is best that you document these properly, because then these expenses can be subtracted from the total revenue, thus, reducing the taxable income that you report on a T1 (for sole proprietors) or T2 (for incorporated businesses) forms.

Keep in mind these principles: expenses must be reasonable, necessary, and directly related to business activities.

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Common Tax Deductibles for Small Businesses

Office Supplies and Equipment

• Office supplies and equipment like pen, paper, printer, software subscriptions, and other daily supplies are deductibles.
• Larger items like laptops, desktops, office furniture, and machinery, etc. may be deducted through Capital Cost Allowance (CCA) over several years, as decided by the CRA.

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Business Use of Home

When you operate your business from home, a percentage of household expenses fall under deductibles. These include:

• Utilities
• Internet
• Mortgage interest
• Rent
• Property taxes
• Maintenance costs

The % is based on the portion of your home that is used exclusively for business.

Trust the expertise of Taxccount Canada accountant to help you understand these intricacies.

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Vehicle and Travel Expenses

• Fuel, repairs, insurance, and lease payments (or depreciation for owned vehicles)
• Parking fees, tolls, and registration costs
• Travel expenses such as airfare, accommodations, and 50% of meal costs when away for business purposes

Make sure you maintain accurate mileage logs to substantiate these claims and your accountant can guarantee risk-free tax filing.

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Marketing and Advertising

Expenses incurred to promote your small business such as:

• Online ads
• Print campaigns
• Trade shows
• Website development

Costs associated with branding, like graphic design or promotional merchandise, also qualify for tax deductibles for small business.

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Professional Services

The fee that’s paid to:

• Accountant
• Accountant for small business
• Tax consultants
• Legal advisors
• Business coaches

…are considered tax deductibles. These professional services provide value to your business and ensure that you comply with CRA guidelines.

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Employee and Wages Benefits

• Salaries, wages, bonuses
• Employer contributions to CPP, EI, and benefits plans
• Payments to contractors or subcontractors

All of these are part of tax deductibles for your business.

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Insurance Premiums

Another deductible is business insurance. This includes:

• Liability
• Property
• Errors and omissions coverage
• Health and dental premiums for employees

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Utilities and Telecommunications

• Mobile phone bills
• Business internet services
• Utility costs related to office or warehouse operations

Where lines are shared, only the business-use portion is eligible. You can get in touch with our professional accountants to know more about these services.

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Banking, Interest, and Fees

• Interest paid on business loans and credit lines
• Bank charges
• Merchant fees (credit card processing)

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Training and Education

• Workshops, courses, and certifications that improve skills related to your business
• Subscriptions to trade journals or industry publications

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Why Deductions Matter?

An experienced and professional accountant will help you claim all the eligible tax-deductible items. It has various benefits – reduces taxable income and ensures more capital is available to reinvest in the business.

With Taxccount Canada, you get complete peace of mind about risk-free tax filing. Our accountant for small business will help you identify, categorize, and optimize deductions by complying with CRA rules. Whether you’re a sole proprietor or incorporated entity, our specialized tax accountants are there to help you at every stage of tax filing for small business.

This is general information only and not professional advice. Consult a professional before acting.