One of the questions I get a lot, is “what kind of expenses can I put against my business”?  I’ve got a whole list of 101 costs you can write off – download it HERE, but let’s run through some big ones.

Assets

Assets are things that you buy for your business that you don’t use/sell right away or that you use for longer than a year.  Did you buy a new computer? Printer? A fancy piece of manufacturing equipment? What about a new desk or display items for markets? These computers, equipment, furniture and such are all assets and they can totally be used as expenses in your business.  We don’t use the FULL amount of these each year, but spread it across the “life” of the item.

Also don’t forget – if you purchase items for resale, or raw materials, and they’re still sitting unsold or “unmade” at the end of the year, those need to be captured in your assets too.  They don’t help to reduce your taxes owing but you’ll need them tracked for future years.

Cost of Sale

These are your costs to make or deliver your product or service to your customers.  If you have a physical product, this could be raw materials, packaging, freight or delivery (of those raw materials/packaging shipments), or items that you buy for resale. 

If you’re a service business, this could be subscription costs, or things like printing or advertising charges you pay for you clients.

Overhead Expenses

There’s a whole laundry list of these (seriously, download the cheat sheet), but here’s some that I often get questions about:

Phone – heck yes, you write that off!  Most of us run our businesses from our phones so definitely include that bill.  Don’t worry about “who” actually pays the bill (i.e. a business account vs. personal account); as long as you’ve got the original bill, you can use it.  One thing to note is that often we have our phone bills linked up to others in our family.  Make sure that you’re only including YOUR portion of the bill…a $500 family plan bill each month wouldn’t fly

Car – there’s a lot of ways that you can include your travel costs.  If you have a corporation and your car is registered to the corporation, then it’s a whole different story, but for those without “company vehicles” here’s my suggestion on what to do…Keep a log (i.e. google sheet or doc works great) of all your driving around.  Include things like date, reason, and km’s.  For the km’s part, I just use apple maps to give me the to/from driving distance.  And, just FYI, I have never done this in “real time”.  Anytime I’ve created my “log” its 6-12 months after the fact, and I’m searching through my digital calendar to figure out where I went. These km’s add up, so while it might seem like a PITA, it can save you a lot at tax time.  And if you want to use “an app for that” – Mile IQ is my fav.

Courses & Training – your growth as a business owner is a definite investment in your business so ALWAYS include any courses, programs, mentorship, or development work that you take.  Don’t try including a “learn to salsa” class you did with your bestie…unless of course you’re in the performance industry ;) – just make sure its actually for the benefit of your business.

Travel – ok we talked about km’s above, but let’s talk about other kinds of travel costs.  Of course, things like parking are legit. And if you’re having to overnight somewhere for a market or meetings, your hotel, uber’s/cab’s, and even flight costs if needed, are all allowed.

Here’s the grey area…you’re on vacation or road-tripping with your family and when overnighting at a hotel, you pull out your laptop and get some work done.  Can you write off your hotel cost??  If you ask CRA, likely not.  Have I done it? Yes (shhhh, don’t tell).  It’s my hope to one day be somewhat of a nomad, so I’ll want to make this work properly.  I’d look at these business/pleasure travel expenses in a percentage kind of way – how much time did I spend working vs. playing on vacay? I’d apply that percentage to any accommodation expenses and call it a day.  Now if you reply to an email or two and barely clock in for an hour, I’d likely skip it…but if you crack open your laptop while the kids get worn out on the pool waterslides for 3 hours and then another couple when they crash in bed…yep add those $$$’s up!

I wouldn’t get too brazen with it by charging my flights and meals as well, but I figure that I charge home office rent to my biz, so this would ultimately be just that…”office rent.”  Speaking of home office….

Home Office Expenses – if you’re a corporation, make your life easy and just choose a monthly rent to charge.  This is not “rental income” that you then need to claim on your personal taxes, though.  Think of it as an expense reimbursement – you’re invoicing your corporation for its portion of your home costs each month and the corp is reimbursing you for it.

It’s the same idea if you’re a sole proprietor, except this time you have to detail the ACTUAL home costs.  At the end of the year, you add up all your utilities, property taxes, insurance, internet, security systems, condo fees, and rent or mortgage interest.   You don’t get to claim 100% of these costs; generally its between 10-20% that we claim for your “business use”.  Anything above that can get you flagged for an audit, so if you want to claim more than 20%, make sure its all legit, business-only space.

Those are the common questions I get. Do you have others? Shoot me a DM on Instagram and pepper me with your questions! 

You never want to be paying more taxes than you need to, so making sure you take advantage of all the expenses you can is critical.  Be sure to download the cheat sheet for more ideas and WRITE IT OFF!!!