It’s no secret that part of running any business is finding ways to maximize your revenue as you minimize your expenses. This is especially critical when running a small business because the revenue might not outweigh the expenses by very much each month. Fortunately, you can get some relief by writing off some of those expenses as deductions when you file your taxes. While the concept of write-offs is great and can be extremely helpful, it’s important that you consult a Toronto accountant that can help your small business identify the write-offs that you qualify for. Our team at Leonard Tam Professional Corporation has put together a few examples below that can help you get started.
The first rule of tax write-offs is that they must be directly related to your business. So, when it comes to writing off a portion of your lunch next, it doesn’t mean that you head over to Joso’s to order the lamb chops then call it a business expense. Rather, your meal needs to be legitimately business-related to fall under the proper qualifications. With that, you must keep your receipt as proof of the date, location, and cost of the meal as well as the business relationship of the person or people who accompanied you so you can write off 50% of the food and drinks.
Facility utilities and rent
Your office itself is an expense that can be written off when you file your taxes. Keep track of what you pay in utilities each month with electrical, gas, and so forth as you can write off the entirety of those expenses. What’s more, you can deduct your rent and other office expenses to ensure that you’re not cutting too deep into your profits. However, understand that the deductions that you file do not necessarily mean that you don’t have to pay those bills when they come due. Instead, it means that you get the money back that you paid. It would be irresponsible and erroneous to think that you can upgrade to an office outside of your budget. After all, you’re only going to write off the rent because you're still able to make your monthly payment to operate.
Business use of vehicles
If you have a personal vehicle that you use for work, keep track of the mileage that you put on the car during business hours as you can deduct fuel that’s used for work. Additionally, you can deduct maintenance, repairs, licence and registration, insurance, and interest you paid on your auto loan. This can get tedious if you’re doubling the use of a personal vehicle with work, but a full-time business vehicle is much easier to manage.
It’s not uncommon for small business owners to operate primarily out of their home office. If you fall into this category, you’re eligible to claim a portion of your home on your taxes. Keep in mind that you can’t write off your entire rent or mortgage. The correct way to calculate the number you use to deduct is found by figuring out the percentage of your home that you use then take that same percentage out of your total rent or mortgage payment.
Book a meeting for more
If you own a small business, we can help you find areas where you can save money on your taxes. Our team of experts at Leonard Tam Professional Corporation is full of expert accountants for small businesses. Give us a call at 416-783-2222 or use our form to schedule a free consultation. We look forward to working with you and your business.