The cost of doing business is an important part of calculating your small business tax deductions. Use this checklist to ensure that you're maximizing your deductions in this category of business expenses.
1) Have you deducted all of your business taxes, and business-related dues, memberships and subscriptions?
No one forgets that business licensing fees or business taxes are deductible expenses, but sometimes people overlook some of the annual membership dues they pay to business-related organizations. If you're like me, you belong to several - so make sure you're deducting all the appropriate fees on your income tax.
2) If you've borrowed money to run your business, have you deducted all the interest and all the related fees?
Generally, the interest you pay on the money you borrowed to run your business is tax deductible. You can also deduct related fees, such as a fee you've paid to reduce the interest rate on your loan, or a fee related to your purchase or improvement of a business property, if that's what the loan was for, including application, appraisal, and relevant legal fees. For more information on this tax deduction, see the Interest section of the CRA's Business and Professional Income Guide.
3) Have you deducted all your insurance business expenses?
Although life insurance premiums aren't a permissible deduction, you can deduct the insurance premiums you've paid for insurance on the building(s), machinery or equipment you use in your business.
4) Have you deducted all your management and administration business expenses?
Whatever management and administration charges you've incurred over the past year are legitimate business expenses and legitimate income tax deductions, and this includes bank charges!
5) Have you deducted all your relevant maintenance and repair business expenses?
You can deduct the cost of the maintenance and/or repairs you've made to the property you use to earn income over the past year. In most cases, the full cost of both labour and materials will qualify as a small business tax deduction, unless you did the work yourself, in which case you'll only be able to deduct the cost of the materials on your income tax.
6) Have you deducted the full cost of all your office business expenses and supplies?
If you have a traditional office, the cost of all those paper clips, staplers, pens, and computer paper can really add up over the course of a year. Depending on your business, you may also have supplies expenses, such as the cost of film if you're a photographer, or the cost of drugs if you're a veterinarian. Generally, supplies are defined as items consumed indirectly to provide the goods or services a business provides, and should be part of your income tax deductions.
The next page of this article deals with home business expenses. Click to continue on to page 3.