Minimizing costs as a business owner should include taking steps to lower your tax liability. Luckily, that’s relatively easy. The Canada Revenue Agency allows you to claim tax deductions for all eligible business expenses. That includes advertising, wages paid to employees, office supplies, rent and utilities for your business space, and inventory costs. On top of those popular expenses, you can also claim deductions for accounting and legal and professional fees incurred on behalf of your business. You can even write off half of certain entertainment and travel expenses. As a general rule of thumb, you can deduct any expenses that are necessary and usual for your industry
To make it easier to track your business expenses, you may want to use an app. Apps such as Apptivo Expenses let you scan or snap a photo of your expense receipts with a smartphone, and apps such as TripLog help you track vehicle and travel expenses. When choosing an app, make sure it can sync with your accounting software. That way you can upload everything with the tap of a finger rather than spending countless hours on manual entry.
If your business expenses are saved in your accounting software, filling out your tax return is a lot easier. This process helps to ensure you don’t overlook any expenses and inadvertently increase your tax burden. At the same time, you also don’t want to accidentally claim any expenses that aren’t legitimate. To avoid that risk, you may want to do internal audits. Especially important if you have multiple employees entering business expenses, an internal audit is where you go over receipts and expenses for your business to ensure each expense is compliant with CRA regulations and hasn’t been entered twice. With these elements in place, you are well on your way to turning your expenses into tax deductions.