Business Expenses Can Help You Reduce Your Taxes
Whether you are a brick and mortar business or an online business, there are many ways to write off different expenses to reduce your business taxes. As most of my clients run an online business, let’s review how and when an expense is good strategy.
Tracking your business expenses is certainly not exciting or interesting. I do like to think of it as fun though because it gives you an excuse to go shopping and spend money! This is so you can write it off for your business as a way to reduce your taxes.
Unsure of what you could possibly claim as a qualifying expense with your online business? Here are some suggestions…
Conferences and Training
Knowledge is power and there are so many excellent conferences or courses you can attend in a year. Make sure to choose your top two for claiming as an expense. Your accountant or your bookkeeper will probably advise you not to claim any more than that. This is due to the fact if they are reviewed by the CRA they will probably be refused and you would have to pay back the amount of tax credit you received.
Also, be mindful of training or retreats out of country. If something similar is offered locally Revenue Canada will deny your claim.
So go ahead and book that Video Marketing Conference you’ve always wanted to attend!
We all work with computers and monitors. So, how often do you replace your computer?
Does your spouse use your computer? If so, they would need a separate one so you can keep your dedicated one. Or how about a bigger monitor?
I often host group training virtually for my bookkeeping products, so I have no problem justifying a really large TV to which I can hook up my laptop. These are just some examples of the purchases you can claim as an expense for your business.
There are so many small purchases you may not think of as claimable expenses in your online business, such as:
- Fees for website hosting, Paypal, Stripe, etc
- Online training programs
- Software licenses such as Quickbooks or Asana
I'm going to say this in every post and video: Make sure you're tracking! Track, track, track, track, track.
Find a system that works for you. Use FreshBooks or Wave, use a spreadsheet, use pen and paper, use Xero (my absolute favorite), use QuickBooks...it doesn’t matter which one. There are so many tools out there: use something, or get help with it. Track your expenses because it saves you money, instead of giving it to the government. Who wants to give them more than you have to?
Just like anything else in life or business, don’t wait until the last minute!
September rolls around and you try to jam in everything before year end. Keep in mind, if you have anything that's under $500 you need to buy for your business, if you buy it at the end of December, you get the same credit on your taxes as if you'd bought it in January. So, you've had that money all year without getting you any benefit, and you still only get to write off 50% of it, whether it's January or December.
Tax Expense Checklist
Curious about the most common kinds of expenses when you're running an online business? Check out my list below including links to more details withing the CRA website.
Adjust your mindset to the idea that certain expenses will benefit you as well as your business. If you think about your purchasing decisions that way, they can be really useful to your business along with saving you money.
If you found this information helpful, like and share it with somebody else that needs to know! Did you know I'm available to do group training with anyone: entrepreneurs, employees, members, students...if there's an area that you’re struggling with and I can come in and give some value and help. You can reach me here.