What can you deduct as a business expense?

As a business owner, there a number of expenses you are entitled to deduct when doing your taxes. Here’s some information to guide you.

If you’re running a business, you are well aware that there are a number of things you have to pay for every year to keep your business afloat.

• This applies to almost all businesses—from flower shops and restaurants to contractors and personal trainers.
• Savvy business owners know that many of these expenses are deductible.

So you may be wondering: What can you deduct as a business expense? Here’s a guide for helping you determine what a valid deductible expense is.

Essentially, it’s any expense that is necessary for you to do your job and run your business. Some expenses are fully deductible, such as office supplies, parking fees and delivery charges. But some are only partially deductible.

Here are some popular categories of deductible business expenses, as outline by the Canada Revenue Agency:

• Advertising your business
• Costs associated with business start-ups
• Business tax, fees, licences, dues, memberships and subscriptions
• Business-use-of-home expenses
• Delivery, freight and express
• Fuel costs
• Insurance
• Interest
• Legal, accounting and other professional fees
• Maintenance and repairs
• Management and administration fees
• Meals and entertainment
• Motor vehicle expenses
• Office expenses
• Prepaid expenses
• Property taxes
• Rent
• Salaries, wages and benefits
• Supplies
• Telephone and utilities
• Travel

Not all of these expenses are 100 per cent tax deductible. Ask your accountant for more information.

Meals and entertainment are common expenses for a lot of businesses.

• The most you can claim for expenses incurred when purchasing food, drinks and entertainment associated with your business is 50 per cent.
• One popular exception to this rule is staff parties. You can deduct 100 per cent of food, drink and entertainment expenses when you host a work party with all your employees present. However, you can only claim for fewer than seven of these parties in a year.

So now that we've determined that there are several expenses you can “write off” as a business owner, it’s important to remember to keep track of these expenses.

• Not only is it imperative that you keep track of the dollar value of the expense to include when you do your taxes, but you also need to keep your receipts in case you are audited by the government.

In conclusion, there are several things to remember when determining what you can deduct as a business expense, but what’s equally important is to remember to keep those receipts.

And if you’re unsure about if something is a valid deductible expense, the best thing to do is ask your accountant or call the Canada Revenue Agency.