Each year, small business owners incur a ton of transactions to keep their business on track. Whether it’s rent, office supplies or internet costs, there are a lot of expenses to manage. To add to this fire, there are expenses that are forgotten and go unclaimed each year.
With the tax season upon us, we’ve compiled a few of the common business expenses that can often be overlooked:
Business-Use of Home Expense
Are you a new business owner who will be working in your home before officially renting a formal office space, restaurant or studio? Or a contractor, where you primarily run your business from home? If you answered yes to either of these options, you could be eligible to claim part of your home maintenance costs for the use of your business workspace.
If you’re wondering what the acceptable home maintenance costs are, this includes heat, home insurance, electricity and cleaning materials.
In order to deduct home expenses for the business use of a workspace, you must meet one of the following conditions:
- Your home is your principal place of business
- You use the space only to earn your business income, and you use it on a regular and ongoing basis to meet your clients, customers or patients
If you use part of your home for both your business and personal living, the calculation for deduction must be based on the actual space used for your business, for example, a single bedroom.
To learn more about how to calculate how much you can deduct and to see an example calculation visit this CRA webpage.
Office Expenses
As office expenses are smaller and recurring, it’s easy for them to be overlooked.
Office expenses include office supplies and small items such as pencils, pens, paperclips, postage stamps, and other stationery items.
Keep in mind that this does not include any larger or big furniture and equipment pieces that are being used for more than one year.
Management and Administration Fees
Another expense that is commonly forgotten but can provide a significant rebate is management and administration fees.
This primarily includes the bank charges or fees that allow you to operate your business. For example e-transfer fees, monthly account fees, and deposit or processing fees.
As small business owners have recurring transactions each month, these charges can quickly add up and are a line item you do not want to miss!
Travel Expenses
Have you ever wanted to attend a conference or travel to meet customers, but found it to be too large of an expense? Claiming a portion of these travel expenses can make these trips more affordable, and is key for supporting your business growth.
Example travel expenses include public transportation fares such as taxis or flights, hotel accommodation, and meals.
When traveling for business, do keep in mind that a 50% limit is applied to the cost of your meals, beverages, and entertainment. And the travel expense must be incurred to help you earn more business and income.
Need a hand managing your expenses?
While these are only a few examples of expenses that small business owners can claim, you can view a full list here.
If you’re looking for a way to help you manage these expenses, hiring a bookkeeper can provide great relief and allow you to focus on other key areas of your business. Learn more about what a bookkeeper can do for you, in our last blog post.