15 Business Expenses you may not know are tax deductible or write offs

Deductions… They’re something that should be, and often are, at front-of-mind for most small business owners and small business accountants.

After all, if there’s a way to (effectively) get money back in your pocket, or even pay less come tax time, you bet it’s important.

However, most small business owners may not all of the different expenses that are tax deductible.

That’s because when most small business owners in BC think tax deductions, they often think about those more strictly-business expenses like taking a client out for a meal, going to a networking event, or expensing office supplies.

This, of course, is in the case that a small business owner thinks about tax deductible expenses at all!

However, we’ve compiled a list of 20 different tax deductions that you, as a small business owner in BC, may or may not have known about – and why they’re important to know about!

1. 1. Your home & utilities

Yes, you read that right. You can in fact write off your home and utilities… Or, at least a portion of it.

Now, this is something that we’ve talked about before, but it’s something that we always want to revisit, because with so many small business owners working from home and often running their business from their homes, there’s an opportunity here!

In B.C., you calculate how much you write off my dividing the square-footage of your home office by the total square footage of a house, and multiplying this by the total cost of rent or mortgage and utilities.

For example: if your home office is 120 square feet in a 1,000 square foot apartment, with a total rent and utility bill of $2,500, here’s how much you can write off:

(120 / 1,000) x $2,500 = $300 per month deductible.

1. 1. Your car

Now, let’s say you don’t work at home, but you use that car for business purposes.

Notice, how we didn’t say to commute to work. That’s a whole different story that gets into mileage expenses, and more.

Nevertheless, if you use your personal care for both yourself and for business operations, you can write off the mileage, as well as repairs and gas.

Say, for example, that you drive about 500 kms per month personally, and you drive an additional 500 kms per month for your local Vancouver flower delivery business.

Great! That means you can write off half of those maintenance and gas bills that you rack up month-after-month for your small business.

1. 1. Travel

Just like your car, you can write off travel expenses, so long as its for business purposes.

Just as you know you can write off the coffee and food that you purchased at that Vancouver small business summit, you can also write off the travel that got you there.

Whether that was an Uber crawling through downtown, a train fare, or even a plane or ferry. If you traveled for business purposes, you can legally write off those business-related travel expenses in B.C.

1. 1. Professional services

Now, you may be thinking, why would professional services be tax deductible? After all, you’re paying another individual or business for services in your business.

Well, the long and short answer is exactly that.

If a professional service is deemed necessary for the business, like legal counsel, accounting, or other services – it’s technically able to be written of as a tax deduction.

The government of Canada even agrees:

Deduct the fees you incurred for external professional advice or services, including consulting fees. You can deduct accounting and legal fees you incur to get advice and help with keeping your records. You can also deduct fees you incur for preparing and filing your income tax and GST/HST returns.

1. 1. Salaries

This may seem silly, but yes. The same salaries that you’re paying your employees can technically count as a write off for your business.

However, the same rules as professional services apply.

If an employee’s salary is “deemed reasonable” to the Government (which, really just means it falls within industry averages and standard pay for locations and roles), and the work that employee put in was necessary to the business, it’s a deductible salary.

1. 1. Childcare

As a business owner and parent, you’re really working 2 full-time jobs, and having to take care of a child can make running a small business next to impossible.

Luckily, you can write off the expenses for childcare and babysitting, if you’re a small business owner or a business owner looking for employment.

So long as you are working full time and own a business, the child that you’re paying for actually lives with you, and you don’t have a nanny who is a relative under the age of 18 (say, an older sibling), you can write off that expense.

That childcare expense could be anything including a nanny, daycare, cay camps, caregivers, or boarding schools.

1. 1. Education

Education is something relatively new to the realm of tax dedications in B.C. and Canada. The reason being; is that since just 2021, education courses taken in B.C. are in fact tax deductible.

The only stipulation, according to the Government of Canada, are that the course must be taken at an accredited institution in Canada, and it must be taken by someone 16 years or older for the purpose of learning, developing, or improving relevant skills to their occupation.

For example, this means that a pastry chef in Vancouver wouldn’t be able to write off their music education, or the education for their 14-year-old child.

But, that same small business owner could write off a cooking course that they took in a university or college in Vancouver.

1. 1. Advertisements

For many local businesses that focus on local advertisements, there may be an opportunity to write off and deduct some advertisements from your taxes.

Small business owners that run corporations or sole proprietorships are eligible to write off advertisement expenses if they are run through Canadian sources, directed at Canadian markets.

For a small business owner, this is a dream, because it means channels like newspapers, local magazines, and other highly localized advertisements can be written off.

However, there are some other stipulations:

1. 1. • If the original content in the editorial or source is more than 80% of the advertising content, and it’s directed at a Canadian market, all of the advertisement can be written off.
      • If the original content is less than 80% of the non-advertising content, then up to 50% of the advertisement can be written off.

Regardless, it’s great news for small business owners, and a great incentive for small business owners to market locally.

1. 1. Health and fitness memberships

Now, before you go around writing off and deducting your golf club membership for your business, there’s some stipulations on writing off these memberships.

In B.C. and Vancouver, a gym membership can be written off in a couple of instances.

For a small business owner running the show by themselves, if they are diagnosed with a condition that can be treated or at least helped by going to a gym, pool or other facility; this qualifies as a medical expense necessary for the operation of the business, and can be written off.

As well, membership to a gym, pool or other fitness facility can also be written off for employees of a small business if the business subsidizes, reimburses, or completely pays the cost of that membership.

1. 1. Ransomware

Ransomware, much like a professional service or other expenditure for a small business can be a write off.

The reason for this simply is because of the fact that it is a necessary investment for nearly all businesses today, with the digital age that we live in.

Because of this, ransomware can be written off if it can be shown and determined that a majority of a small businesses’ operations take place digitally, and it it can be shown that ransomware would protect the business from potentially disruptive and harmful cyber-attacks.

1. 1. Cryptocurrency

With the rise of crypto in Canadian markets, an increasingly popular question is whether or not crypto can be written off as a tax deduction.

Well, the simple answer is yes. Here’s how.

If crypto is used as a source of income or investment of a business, then it is deemed to fall in the same category as just about any other investment of a business.

This means that any losses in crypto can be tax deductible just like any other capital loss that a business incurs and can be helpful to offset capital gains to lessen the financial blow to the books come tax time.

1. 1. Hair dye and clothing

Clothing may make sense… but hair dye?

Well, hair dye is just an example, but the point is – if a piece or set of clothing, certain discernible features, or other things that stand out about a business owner, employee, mascot, or other person in a business may classify as branding and advertising.

And, as we learned above, that can be written off.

Generally, so long as those different pieces of branding are used to market to Canadian audiences, they can be written off.

But what does this include? Things like uniforms, hats with logos on them, or the hair dye for a certain someone who is the face of your business. These things all stand out as branding and advertising and can be written off as such.

1. 1. Home improvement

Remember how you were able to write off a percentage of your rent or mortgage, along with your utilities? Well, you can actually do the same with home improvement – so long as it applies to your home office.

You won’t necessarily be able to write off the landscaping for your brand new back patio and backyard pool, but if you’re renovating the inside of your home, especially if those renovations overlap with your home office.

Generally, the same deduction rules apply to writing off home improvements and home costs alike.

1. 1. Start-up costs

Start-up costs fall into a very similar category as professional services.

For most small business owners, start-up costs like incorporation fees, legal fees, internet, essential supplies, computers, and other professional fees are completely able to be written off.

The reason being – if it’s essential for the start-up and operations of the business, it can act as a tax deduction.

This may come as a big relief for small business owners to help provide some financial relief during the start-up phase of a new small business.

1. 1. Your bicycle

Last, but not least (and extraordinarily applicable to business owners in Vancouver), are bicycles.

As a small business owner in Vancouver, let’s assume that you live downtown, and cycle to get to work, and your business relies on you having to get to work.

Well, you’re not necessarily able to expense the gas you’re putting into your bicycle (because, at that point, it would be a motorcycle, and fall into the same category as a car), but you can expense a portion of the repairs and maintenance put into your bike.

So, fret not cycling small business owners, you’re able to write off a portion of those expenses.

Need help from an expert?

Taxes and deductions can get complicated, so let one of our experts at Valley Business Centre help. For over 30 years, Valley Business Centre has been providing comprehensive bookkeeping, payroll and tax services to our clients in Whistler, Squamish, the Sea to Sky Corridor and metro Vancouver B.C. areas. Valley Business Centre provides reliable and effective services to all clients.

Disclaimer

This article is written for informational purposes only. It is current at the date of posting and changes to laws and regulation may result in the information becoming outdated. It is not intended to provide legal, tax, or financial advice. It is recommended that readers get advice from a tax professional before making any final decisions.