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What to Know: Small Business Write-Offs Canada

What to Know: Small Business Write-Offs Canada
November 21, 2022

Small businesses are the lifeblood of the Canadian economy, accounting for more than 90% of all businesses in the country. And while small businesses face many challenges – from razor-thin margins to cash flow shortages – they also enjoy a number of tax advantages that larger businesses don't.

One such advantage is the ability to write-off certain expenses against income. This can include items such as office supplies, advertising, and travel costs. In fact, small businesses can write off a wide variety of expenses, making it easier to keep their books in the black.

There are a few things to keep in mind when claiming small business write-offs. The first thing to note is that small businesses can only claim expenses that are related to their business activities – you can't just claim a deduction for any old thing you bought. Second, you need to have receipts or other documentation to support your claims. Finally, you can only claim deductions that exceed 2% of your company's net income. This limit is called the "small business deduction limit," and it changes from year to year.

There are a number of different expenses small businesses can write-off on their taxes, and it’s important to understand which deductions are available to you. Here is a comprehensive list of the most common small business write-offs in Canada:

  • Home Office Expenses: If you work from home, you may be able to claim a home office deduction. This allows you to deduct a portion of your rent or mortgage payments, as well as utilities and other household expenses.

  • Business equipment: This includes things like computers, office furniture, and tools used in your business.

  • Business travel: If you travel for work, you can deduct the cost of your travel expenses, including airfare, hotels, and meals. If you use your vehicle for business purposes, you can write-off a portion of the costs associated with owning and operating the vehicle. This includes things like gasoline, repairs, and insurance premiums.

  • Advertising and marketing: You can deduct the cost of advertising and marketing initiatives undertaken to promote your business. These are generally considered to be 100% deductible. This includes things like website design and development, printing costs, and marketing materials such as brochures and flyers.

  • Professional fees: This includes things like accounting and legal fees.

  • Supplies: Office supplies like pens, paper, ink cartridges, and stamps can be written-off.

Visit the Government of Canada’s Business Expenses page to view a full list of what could be considered business write-offs.

If you're unsure about which small business write-offs are available to you, or if you would like help calculating how much you could save in taxes by claiming these deductions, consult with an accountant or tax specialist.

As a small business owner in Canada, make sure you take advantage of these tax breaks. It can help you keep more of your hard-earned money in your pocket!

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