Cleaning can be a bit of fun, a lot of exercise, and a lucrative business. When tax time comes around, you have to report your income and pay taxes to the Canada Revenue Agency. As a business owner, you can deduct expenses from your income, and there are other ways to save at tax time as well.
Claim Cleaning Supplies
As an independent cleaner, you can deduct all the money you spend on cleaning products, mops, and other supplies. This deduction directly lowers your business income. For example, if you spend $500 on supplies and earn $12,000, the CRA only considers $11,500 as income.
If you drive to clients’ homes, you can also claim motor vehicle expenses. To claim this deduction, track how many kilometres you drive your car over the year write down the odometer reading at the beginning and end of the year. Also, jot down the miles you drive to and from clients’ houses each day. If you divide your annual kilometres driven by the distance you drive for work, the result is the percentage you have used your car for work. You can claim that percentage of your annual vehicle expenses (fuel, insurance, etc) as business expenses. That also helps reduce your tax bill. You can also use an app like QuickBooks Self-Employed to track work-related mileage automatically using your smartphone.
Use Tax Prep Software
If you do the hard work of tracking your expenses through the year, tax prep software can help you pull it all together. Most software works on a question-and-answer basis; it asks questions, you answer them, and it fills out your tax forms based on your answers. As an added bonus, you can write off any money you spend on accountants or business software.
Hire Your Kids
To further reduce your tax bill, consider hiring your children. In many cases, children who work for family businesses are exempt from minimum age requirements, but you should check the local laws in your area. For example, children under age 16 are often barred from running dangerous machinery, such as floor polishers. If you’re already giving your kids an allowance to do chores around the house, you may as well bring them to work, pay them, and reap the rewards of another deduction.
Remember the Home Office
The home office deduction allows you to write off a portion of your home expenses based on the size of the office relative to your home and how often you work there. If you spend most of your time cleaning other people’s homes, you typically don’t qualify for this deduction. To claim it, you must spend the majority of your work time in the office. There is one exception: If you meet clients in your office regularly, you can claim this deduction. If you eventually hire other cleaners and spend most of your time in your home office behind the scenes or meeting clients, then you should definitely start to claim this deduction. With a bit of preparation and information about business deductions, tax time doesn’t have to be messy. If you keep these tips in mind, you can streamline tax filing and reduce how much you owe.