15 Common Business Expenses To Claim in Canada: An Expert Guide

by | Jun 4, 2022

All the small businesses in Mississauga might need to save big time on taxes. One of the best ways to do this is by taking advantage of tax-deductible business expenses. The great thing about these costs is that you can deduct them from your taxes.

Tasks like maintaining your accounting and collecting corporate taxes call for extra care. You may rely on Yogi & Associates for this purpose because we have a skilled bookkeeping staff in Mississauga.

“Control your expenses better than your competition. This is where you can always find the competitive advantage.” -Sam Walton

1. What are Tax Deductions?

A tax deduction is a sum of money the Canada Revenue Agency (CRA) can subtract from your taxable income. If you qualify for enough tax deductions, you can reduce the taxes you pay for the year.

2. What are the 15 Common Tax Deductions?

Start-up costs

Your business start-up costs can include anything your business needs to begin. Such as from equipment, machinery, and supplies to legal and accounting advice. Thus, you can claim start-up cost as a tax deduction, if business expense begins during the tax year or fiscal period your business started.

Office Expenses

The cost of small items such as pencils, pens, stamps, paper clips, and stationery is tax-deductible. Also, you claim the cost of the cleaning supplies. But, desks, chairs, filing cabinets, and calculators are not included since they are capital items.

Home office expenses

Sometimes you have to work off-hours from home. In this case, CRA allows you to deduct 20% of your home office-related expenses. 

Meals and entertainment

You can deduct 50% of the amount you spend on meals and entertainment. For instance, if you take your client to lunch, you can deduct 50% of the cost you paid for the meal.

Travel

When you go for a business tour, you can write off 50% of the cost of meals, beverages, and entertainment.

Salaries, wages and benefits

You can deduct gross salaries and other benefits, such as the Canada Pension Plan (CPP) and Employment Insurance (EI) premiums you pay to employees.

Telephone and internet

Telephone, cell phone, cable and internet are all tax-deductible. These expenses can be deducted only if they are related to business activities.

Advertising fees

These consists of expenses for ads on Canadian radio, television stations, and newspapers. Moreover, digital advertising is also tax-deductible. You can also claim the cost of registering your website’s domain name and web hosting.

Motor vehicle expenses

You can claim round-trip mileage and parking fees on business-related meetings and trips. Moreover, you can also claim license and registration fees. You can also claim fuel and oil costs, insurance, maintenance, and repairs.

Professional fees

You can claim small business expenses such as legal, accounting, and bookkeeping fees.

Important!

You can never claim your personal expenses as tax-deductible business expenses.

Utilities

The utility expense that is tax-deductible include costs for heat, electricity, insurance, maintenance, mortgage interest, and property taxes. Furthermore, for home offices, deductions must be in accordance with the actual size of the space you’re using for your business.

Rent

The rent paid for property used in your business is tax-deductible. It means you can claim the rent for the land and building of your office as tax-deductible.

Business supplies

The expense for items that your business uses to provide goods or services is also tax-deductible. For example, the tools used by a plumbing service.

Independent contractors

If you hire independent contractors or freelancers for business purposes, such as writing posts for your website blog or taking products for an online store, then this cost is a tax deduction.

Property Taxes

Rent for your business use of the home must be deducted as a home-use-expense. Thus, rent paid for business purposes may be subtracted from these expenses.

Main Idea!

  • Keep track of and claim every business expense, even the small ones. Every receipt matters and they may even knock you into a lower tax bracket.
  • Claim as many business expenses as possible. This way, you will reduce the tax you pay for the year.
  • You can only deduct part (for example, 20% or 50%) of the costs you spent running your business.

Read another interesting article by Yogi & Associates: An Easy Guide to 5 Tax-Deductible Business Expenses in Canada

3. How To Keep Track of Your Business Expenses?

The CRA encourages small businesses to keep a record of business expenses. However, any business cost that you claim as a tax deduction should be supported by documentation. You can keep a record of your business expenses through the following:

4. Do You Need Help For Your Tax Affairs?

Yogi & Associates can assist you if you want to learn more about keeping track of your expenses. With years of experience, we offer the best bookkeeping services in Mississauga, Brampton, and the surrounding areas. So, get in contact with us right away to discover more about our services.

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