Handling tax has always been a complicated aspect of any business, but it’s especially challenging as a sole proprietor. While it’s easy to overlook until the tax season approaches, keeping up-to-date with the tax deductions your business is eligible for can impact your revenue in more ways than one.
Tax deductibles can make the difference between paying more to the government versus saving hundreds of dollars on taxes. While tax deductibles help any business owner, the list below can help solopreneurs can cut back on costs and dedicate more to your growth in the long run.
1. Automobile Expenses
For home-based, sole traders, using your vehicle to find the optimal spot for your work is considered part of your daily business expenses. This means you can save on the added taxes in automobile costs such as the following:
- Licensing and registration;
- Supplemental insurance for businesses purposes;
- Accident repairs
2. Property Taxes
Seeing as you work from home, your living space is also accepted as a legitimate workplace where your business can thrive. In that regard, you can easily claim your mortgage interest so long as your residence is the primary place of your daily operations.
So long as it contributes to your business income and can be a place where you can conduct meetings with possible vendors, clients, customers, patients, and other consumers, your mortgage interest or property taxes are tax-deductible.
Keep in mind that the Canada Revenue Agency (CRA) will have to take into account the amount of time and space usage dedicated to your business before calculating the tax deduction.
3. Office Expenses
If you are planning to invest in office supplies – be it straightforward organizational accessories such as paper clips to costlier equipment like laptops, printers, filing cabinets are tax-deductible. However, simple office supplies like pens or stamps are claimable anytime, depreciable assets like bigger devices can only be claimed as a portion of its initial cost.
The Bottom Line: Tax Deductibles That Benefit Sole Traders And The Self-Employed
Preparing for the yearly tax season is a complex and stressful ordeal for different industries, affecting start-ups and larger-than-life organizations alike. Leading corporations have a dedicated team of bookkeeping professionals and CPAs to ensure the company is compliant with the ever-changing tax regulations, so it’s no surprise that dealing with all things involving tax feels double the trouble for sole traders.
How Can Measured Growth CPA Help You
Understanding the factors and expenses that are tax-deductible for your business is a crucial part of building your income, which can be tricky to identify without the proper knowledge. With a professional accountant by your side, they can help you apply all the applicable tax deductibles to lower your taxable income.
Speaking of which, our Toronto-based accountants offer premium accounting and tax services that can guide solopreneurs and small businesses alike navigate the complexities of taxing in the workforce. Get in touch with us today and see how our client-driven team can help move your business forward!