Tax deductions for home-based businesses
Figuring out your eligible expenses is easy if you keep your receipts and take a little time to learn these tax-saving strategies for home-based businesses.
Figuring out your eligible expenses is easy if you keep your receipts and take a little time to learn these tax-saving strategies for home-based businesses. Of course, it’s always best to consult a qualified tax specialist for expert advice.
There are more advantages to working from home than a short commute.
Running a business from your home offers numerous advantages. You can work when you want, you can blend your personal and business life as you wish, and you can deduct some of your household expenses against your taxes.
If you are starting your business from home, you may be pleasantly surprised to learn what expenses are deductible.
Canada Revenue Agency (CRA) offers clear guidelines concerning allowable expenses for entrepreneurs who choose to operate a business from home.
To begin, calculate the amount of space in your home you’ll be using.
Let’s say you’re using a spare bedroom as your office plus a portion of your basement to store products, marketing materials and supplies. Add up that space and divide the number into the entire square footage (or metres) available within your home. For example:
You should be able to deduct 16.6% of all eligible home maintenance costs as home business expenses. (Be sure to check the CRA website for any recent changes to these allowances.)
That can add up if you remember to include receipts for:
Think about the items you use in your home office. As with any business, your expenses are tax-deductible. Do your costs include:
And, don’t forget about automobile-related expenses. CRA is very clear on these particular deductions.
Disclaimer: This article is for information purposes only. Keeping up with current tax rules can be challenging. That’s why it’s best to work with a qualified tax specialist who understands current tax rules and how they may apply to your business.