How to Write Off Business Expenses

By Victoria E. Turnbull

How To Write Off Business Expenses

Many people think that once they own a business, anything they have can be ‘written-off’ simply by collecting a receipt. However, not every expense can be ‘written-off’.

According to the CRA, a business owner may deduct any reasonable current expenses that have been paid, or will have to pay, to earn business income. This is a vague statement that can get you, as a business owner, in some trouble if you don’t follow a few simple rules.

1. Keep all of your receipts organized in a folder and write the date and reason for the expense on the back of the receipt to help keep track of the expense.
2. If you pay for business expenses out of your personal accounts, keep a record. It is highly suggested that all business expenses run through a business account.
3. Do not mix your personal expenses with your business expenses; remember, you can only deduct  expenses that were used to earn income.
4. If you are logging your motor vehicle mileage, you can only deduct expenses on activities related to earning income; the CRA does not consider driving back and forth from home to work as an eligible expense.

If you use your vehicle for both personal and business use, you can only deduct the expenses related to earning business income. It is highly suggested that you keep a mileage log in your vehicle to record the details of your work trip (Date, time, kilometers driven, & reason for travel). Also keep record of your vehicle expenses such as fuel costs, repairs & maintenance, license and registration costs, etc. so you can claim them as a business expense.

What Are Eligible Business Expenses I can Deduct?

Eligible expenses (listed here on the CRA website) are as follows:

• Advertising
• Allowance on eligible capital property
• Bad debts
• Business start-up costs
• Business tax, fees, licences, dues, memberships, and subscriptions
• Business-use-of-home expenses
• Capital cost allowance
• Current or capital expenses
• Delivery, freight and express
• Fuel costs (except for motor vehicles)
• Insurance
• Interest
• Legal, accounting, and other professional fees
• Maintenance and repairs
• Management and administration fees
• Meals and entertainment (allowable part only)
• Motor vehicle expenses
• Office expenses
• Prepaid expenses
• Property taxes
• Rent
• Salaries, wages, and benefits (including employer’s contributions)
• Supplies
• Telephone and utilities
• Travel
• Other expenses

If you are unsure if your expenses are eligible, keep any documentation or receipts and contact the professionals at Hamilton Accounting Solutions for a no-obligation review of your current allowable business expense deductions.

DISCLAIMER:

THIS ARTICLE deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other
appropriate professional advice should be sought before acting upon any of the information contained therein.

Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or
organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of
liability for its contents or for any consequences arising from its use.