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accounting

How does the new tax reform bill affect small business?

If you’re self-employed, you likely know a critical way to maximize your deductions is to claim your business expenses. However, did you know you could be missing out on major tax deductions? Without a smart expense management system, you could be leaving money on the table.

On average, QuickBooks users saved $19,290 in deductions per year by using QuickBooks’ cash flow management tools. QuickBooks Self-Employed helps you organize your expenses and save money. The software is also tax-deductible, which means you can write off the cost of the software, in turn lowering your tax bill.

Test drive QuickBooks Self-Employed for free.

Why is QuickBooks Self-Employed an Eligible Expense?

It’s important to be careful about which items you claim as business expenses to stay compliant and avoid penalties. To get a better understanding of why QuickBooks Self-Employed is a business expense, refer to the Canada Revenue Agency (CRA) guidelines. In short, according to the CRA, you can deduct any reasonable cost that you use to earn income.

QuickBooks is eligible because it is an expense related exclusively to your business that helps you manage your bookkeeping, invoicing and more. Get more insights on the CRA’s expense guidelines for self-employed professionals with this handy guide from TurboTax.

Note: When deducting the cost of QuickBooks (or any other eligible business expense) you can also claim the cost of GST/HST, minus the amount of any input tax credit claimed.

Who Can Claim QuickBooks Self-Employed as an Expense?

If you are a self-employed professional such as a contractor, freelancer, or a landlord, then accounting software subscriptions, such as QuickBooks Self-Employed (QBSE) and TurboTax Self-Employed, are eligible business and rental deductions.

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TurboTax Pro Tip: If you are filling out a T2125 form, make sure you deduct QuickBooks Self-Employed or TurboTax as a business expense.

How to Write Off QuickBooks Self-Employed

Once you sign up for QuickBooks Self-Employed, here is how to categorize your purchase of QuickBooks Self-Employed as an expense:

  1. Sign in to your QuickBooks account.
  2. Connect your bank account to the app.
  3. Once your bank transactions are downloaded, categorize your QBSE bill transaction under “business taxes and fees.”

Note: If you don’t have your bank connected, you can manually enter the transaction (QBSE bill) on the app by going to the transactions tab and following the steps below:

  1. Click on the green (+) button on the lower right-hand side.
  2. Click on “add expense manually.”
  3. Input the vendor name (Intuit) and amount.
  4. Categorize the expense under “Business taxes and fees.
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On the web, if you don’t have your bank connected, you can manually enter the transaction (QBSE bill) by:

  1. Going into the transactions tab.
  2. Clicking on “Add transaction” on the upper right-hand side.
  3. Inputting the transaction name and amount.
  4. Categorizing the transaction under “Business taxes and fees.”
  5. Sign up today with QuickBooks Self-Employed and start managing your expenses and maximizing your deductions.
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Disclosure

[i]Based on TY17 CA subscribers that have identified >$10k in income and >$0 in business expenses.

  1. Note: QuickBooks does not provide tax advice. For tax advice, consult with your tax professional.

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