Over the past year we’ve witnessed a seismic shift in the workplace, with people switching careers and industries, and many opting to become self employed, or solopreneurs, striking out on their own and taking full advantage of the opportunity to work from home.

In fact, you may be surprised to learn that solopreneurs account for 73% of all self-employed Canadians.

There are many advantages to working for yourself, including control over your hours, how hard you work, who you work with, how you operate. Also on the plus side: the amount of expenses you can claim against your tax return to mitigate tax payable.

Here’s a summary of the expenses you can deduct as a solopreneur, or sole proprietor.

Expenses deductible at the full amount paid:

Accounting and legal fees – in the normal course of your business, including preparing tax returns

Advertising, promotion and marketing – online advertising is fully deductible, including domain registration and web hosting. Television, radio and print advertising is fully deductible for Canadian media buys.  Depending on the advertising method used by your small business, advertising expenses can either be fully or partially written off.

Bank charges and business interest – you can deduct bank charges for your business account as well as interest on money borrowed for business purposes or to acquire property for business purposes

Premiums paid to a private health services plan – you can deduct these under certain circumstances outlined by the CRA.

Delivery and freight expenses incurred in the operation of your business.

Insurance – including general business liability insurance, business property insurance and business interruption insurance. You are not able to deduct life insurance unless your policy is used as collateral for a business loan (you may then be able to claim a portion of the premium paid).

Office supplies – items used to run your business on a day to day basis – these do not include equipment or equipment rental.

Purchases of goods for re-sale – if you intend to sell the products as part of your business earnings.

Rent and utilities – if you operate part or all of your business out of a rented space.

Sub-contractor fees – to service providers assisting you in your business.

Travel – you can deduct travel expenses you incur to earn business and professional income, including public transportation and hotels. The 50% limit applies to the cost of meals, beverages, and entertainment.

Meals and entertainment – you can deduct 100% of the cost of meals or entertainment for staff events or parties (up to 6 per year) and meals and entertainment provided for a registered charity fundraiser.

Expenses you can claim a portion of the amount for:

Motor Vehicle – fuel and oil, insurance, parking fees (deductible in full), repairs and maintenance, toll charges and vehicle registration fees.

If you own your vehicle, you can claim depreciation for 30% of its cost, otherwise known as the Capital Cost Allowance. If you lease your car, you can claim a portion of the lease payments.

The amount of the vehicle expense you can claim is determined as a percentage of your business mileage for the year, for example, if you drove your car for business use 60% of the year, then 60% off the expenses above can be claimed.

Record the odometer reading of each vehicle at the start and end of the year. Keep an accurate logbook of your mileage on hand should the CRA want to assess your claim. We suggest that for each trip you record the date, destination, purpose, and number of kilometres you drive.

If you change motor vehicles, note the dates of the changes and the odometer readings when you buy, sell, or trade.

Cellular Phone – if you have a personal cell phone that you use for business, you can claim the percentage of use – for example, 50% of the cost of your monthly plan.

Internet Access – if you have internet access for your home that includes personal use, you can claim the percentage of the cost that relates to your business use.

Meals & Entertainment – deduct 50% of the cost.

Business & electronic equipment – deductions range from 1% to 100% off the cost, depending on the type purchased.

Home office expenses – limit your claim to the space used for the business. Whether your desk takes up half the kitchen area, or if you have a room dedicated to your business, measure the space and apply it against the total square footage of your home to calculate the deductible portion of utilities, mortgage insurance, property tax, strata fees and home insurance. Note that you cannot claim renovation or improvement costs.Tax depreciation – you can depreciate office furniture and fixtures, equipment, computers and more over a period of time, based on the CRA’s specified rates. Check their website to find out what the rate is for specific tax years.

Business taxes, licenses, and memberships – including annual dues or fees to keep your membership in a trade or commercial association, as well as subscriptions to publications.

Bad debts – you can generally deduct an amount for a bad debt if you had already included the account receivable in income and if you had determined that an account receivable is a bad debt in the year.

We’re experts at navigating the CRA’s constant updates and changes to their rules. Don’t get overwhelmed with deduction details. We can take the paperwork off your hands, ensuring you take advantage of all the deductions you’re entitled to and maximizing your tax return to your best benefit. Contact our team today to talk about how we can help you get ready for tax time.

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