Business Write-Offs for Sole Proprietorship & Partnerships
What Small Business Owners Need To Know About Tax Write-Offs
Contrary to what David Rose may think… You, not the “write-off people,” are responsible for your business write-offs!
It is vital for businesses to accurately document and record expenses that are considered eligible by the Canada Revenue Agency (CRA). By doing so, you can lower your tax burden and gain insight into the direction of your business.
To be clear, writing off something on your taxes means deducting an amount (permitted by the Canada Revenue Agency) to reduce your taxable income.
Here are a few tips on write-offs:
- To claim your business expenses on your taxes, you must keep records of all your expenses and provide supporting documentation. This includes receipts and invoices.
- There are limits on the write-offs you can claim. For example, you can only claim a home office deduction if you use part of your home for business purposes and there are limits on how much you can deduct for entertainment expenses.
- If you are unsure about which expenses are eligible for write-offs, consult a tax professional or refer to the CRA website (or IRS for the US). They can help you understand the rules and ensure you are taking advantage of all the write-offs you are eligible for.
In short, write-offs are a valuable tool for small businesses to reduce their tax burden and improve their bottom line.
By understanding what expenses can be written off and maintaining good records, you can maximize the benefits of these deductions and manage your financial affairs more effectively.
To make sure you don’t miss out on any tax breaks, here are some common expenses that small businesses often forget:
- Home Office Expenses: If you have an office in your home for business purposes, you may be able to claim a deduction for a portion of your mortgage interest, insurance, utilities, etc.
- Vehicle expenses: If you use your personal car for business purposes, you may be able to claim a deduction for the business-related portion of your vehicle expenses such as gas, maintenance, and insurance.
- Professional fees: Fees you incurred to start or register your business are write-offs that are often forgotten.
- Office Supplies: If you bought pens, pencils, paper, laptops, or any other equipment or supplies for your business, make sure you count those too!
Keep in mind that while write-offs can reduce your tax burden as a small business, it is not recommended to spend money carelessly just to decrease your tax bill.
Remember that any money spent is money spent.
Indigo Bookkeeping works within a variety of industries to help business owners organize and prepare for tax time in a less stressful manner. Contact Indigo Bookkeeping to find out how we can help you!