Top 6 Most Commonly Overlooked Tax Deductions For Canadian Small Businesses

Small business owners often put tax regulations last on their priorities because they are too busy managing business operation tasks that enable them to earn revenue. But while entrepreneurs must be focused on the business’ success, failing to properly manage their taxes can have serious consequences on them and their enterprise. They could face penalties, interest costs, late fees, and being audited by Canada Revenue Agency (CRA).

Entrepreneurs can effectively manage their taxes by preparing throughout the year rather than organizing their records a month before or during the tax filing month. Accordingly, to efficiently prepare their financial and other accounting records, business owners must keep track of their business expenses and transactions. Accurate and up-to-date records can help expedite the tax filing process, prevent filing errors, and avoid being audited by the CRA. 

Therefore, to ensure that all the business expenses within the fiscal year are accounted for, businesses need to leverage effective and efficient bookkeeping and accounting systems. They can utilize modern small business bookkeeping app to streamline the recording, categorizing, and analyzing of business transactions. In addition, entrepreneurs can also use free invoice maker app to automate the invoicing process of their business, ensuring that their accounts payable are well managed.

Moreover, preparing for tax filing throughout the whole year can also enable entrepreneurs to track deductible expenses. They should consider keeping tabs on these expenses as tax deductions can help improve their cash flow and maintain business operations. 

Various business expenses can be categorized as deductible expenses, including: 

• Business start-up costs (expenditures that preceded the operation of the business) 
• Business tax, fees, licenses, and dues 
• Interest and bank charges
• Insurance
• Rent 
• Education and Training (such as workshops, conferences, and trade shows that can help expand employees’ knowledge)
• Bad debt (loans that are made to clients, vendors, or employees who did not pay the business back and deduct these amounts from the business’s income to save on taxes)

But, aside from these, there are also other tax deductibles that business owners often overlook. For more information on this matter, see the infographic by KIPPIN provided below: