The deadline to file your taxes is fast approaching. Have you filed your taxes for your business yet? If not, you'll want to be sure to go through your records carefully so that you are deducting all of the business expenses you possibly can.
Whether you own a physical storefront that has a website associated with it or run a blog that you receive income for, you can claim your web hosting fees, domain purchase fees, and any other fees relating to your website and its maintenance. You didn't know that? Well, here are a few tax deductions to take advantage of you might not know about.
Tax Deduction Tips: Reasonable Business Expense
What, exactly, does the CRA define as a business expense? You are able to deduct “certain costs that are reasonable for a particular type of business, and that are incurred for the purposes of earning income.”
So basically, you can deduct anything but your own personal and living expenses, nothing unrelated to the business.
Tax Deduction Tips: Website Hosting Deduction
As long as you are receiving income from your website, all costs associated with it's creation and maintenance are covered.
You can deduct items such as the design fees associated with the creation of your website, if you hire a professional graphic designer; website hosting fees and any related charges, such as domain name purchase and registry; any software purchased exclusively for business use; fees charged by payment sites like Paypal that are incurred when making a sale if you use this service.
As long as your website or blog is making you money in some way, you can write off all expenses related to its creation.
Tax Deduction Tips: Other Deductions
If you use your home to conduct your business, CRA has a simple formula to calculate what portion of your household expenses qualifies as a business deduction. Determine how many hours per day are spent in the room dedicated to work; divide that by 24 hours; multiply your answer by the business-specific portion of your overall household expenses. This is the amount you can deduct when filing your return.
Only those who call home their principal place of business or the only place one's income is earned. If you work from home but have an office in another location that you could be using, your home space won't qualify. All business must be conducted at your home.
Tax Deduction Tips: Advertising
So you had to upgrade your web hosting package to acquire more bandwidth earlier this tax year. You have more customers than ever browsing and buying, but it still isn't enough to cover the cost of the package you'll require.
Did you know that any advertising you place, whether online or in print, can also be deducted? Use the advertising to help recoup your advertising costs prior to filing when you need it the most, and claim the advertising as a deduction at tax time.
Please note that there are certain rules. You may deduct 100% of advertising expenses as long as the advertising is aimed towards the Canadian market, and the content in the magazine or associated website is 80% or more is actual content, and not more ads. If it's less than 80% but still aimed at the Canadian market, you are able to deduct 50% of advertising expenses. If you are advertising to attract non-Canadian customers, you do not qualify for a deduction.
Additional Tax Tips
It would be best to hire an accountant or other tax professional to help you navigate all current tax laws to assure you're deducting all you possibly can.
Be diligent in your record keeping. Save any receipts associated with your business. This means keeping receipts when you start up your website, receipts for Paypal transactions if you send or receive money this way to keep track of fees accrued throughout the year, and receipts for all costs associated with building and maintaining your website.
Lastly, keep in mind that these are all deductions. Do not expect to receive a refund for any of this. If your business is profitable, you'll likely be reducing the amount you pay in taxes rather than getting any money back.