Top 10 Best Deductions for Small Businesses

If you’re a small business owner or self-employed, you understand how fast business expenses can add up. Fortunately, you can write off some of those expenses. The best deductions relate to small business expenses, reducing your taxable income and so lowering your tax payments.

Each dollar you spend on a valid expense becomes exempt from taxes. For example, if your tax rate is 20 percent, a one-dollar deduction lowers your taxes by 20 cents. It adds up quickly.

While every small business owner would like to minimize tax expenses, understanding the Canadian tax laws is difficult for the average individual. TaxAssist Accountants works with many small business owners across Canada to find the best deductions. When you leave your taxes to the professionals, you make business ownership more rewarding.

What Deductions Relate to My Business’s Operating Expenses?

All payments you make toward running your business are tax-deductible. The THREE best deductions relate to your operating expenses, such as:

1. Salaries. The cost of paying your employees is deductible, including any employer contributions you make.
2. Office supplies. The small items your office buys on a recurrent basis — like pens, paper and staples — are deductible. Durable items — such as chairs, filing cabinets and desks — aren’t deductible.
3. Advertising. Payments for ads in Canadian radio stations, television stations or newspapers are also deductible.

Just bear in mind that operating expenses aren’t the same as capital expenses. Operating expenses are ongoing costs for running your business. Capital expenses are one-time costs for fixed assets.

What Are the Best Deductions Related to My Place of Business?

The money you use toward running your place of business is deductible from your taxable income. The next three best business space deductions include:

4. Interest on loans from buying property for your business. The principal payments of your loan are non-deductible, but the portion you pay toward interest is deductible.
5. Rent for your business place. Even if you have a home office, the portion of your rent for your office space is deductible.
6. Repairs and maintenance performed at your place of business. If you paid for upkeep or had to fix things for your business, those costs are deductible from your taxes.

Generally, payments you make towards the property where you conduct business are deductible. These deductions can add up and save you on your tax burden.

Can I Deduct the Fees I Had to Pay for My Business?

Many of the fees you pay for your business are deductible. Fees that are necessary for you to conduct business don’t count toward your tax burden, so each dollar you spend on these fees reduces your taxable income. The last four deductible include these fees, and they include:

7. License fees. Payments to operate your business or be in a commercial or trade association are deductible.
8. Accounting fees. The cost of your business tax preparer is deductible.
9. Legal fees. If your business hires an attorney, those costs are deductible.
10. Insurance fees. Premiums you pay for machinery, equipment and buildings used for your business are deductible.

Tax preparation seems like an impossible maze to most people. But doing taxes correctly keeps more of your business’s earnings available for future costs and growth. Contact TaxAssist Accountants  to let the experts find the best deductions to help your business achieve success.

Date published Jul 5, 2022

This article contains general information only and should not be relied upon for accuracy or completeness. You should seek appropriate tax or accounting advice from a qualified accountant before you take, or refrain from taking, any steps based upon this article. This article should not be construed as tax, accounting or other professional advice and QX Franchise Limited (Master Franchisee for TaxAssist in Canada) disclaims liability for any loss, howsoever caused, arising directly or indirectly from reliance on the information in this article.