11 Tax Deductions Every Startup Should Know About Specially The Initial Investments

Eleven Tax Deductions Every Startup Should Know About Specially The Initial Investments

It is extremely important for start-ups, entrepreneurs and even business pros to keep track of their business expenses. These expenses will reduce your taxes when it comes to file your personal tax returns (t1) or corporate tax returns (T2).  When tax season starts the deductions will help and forms your strategic plans to perform tax planning, maximize tax deductions and minimize tax owing. So here are some categories that already exist. All you must do is take advantage of any or all of the following expenses that apply to your business.

Startup Costs

Startup costs are the initial costs that you have made.  Which includes:

• Incorporation fees,
• Franchise fees and purchase of an existing business or assets,
• Opening your business location,
• Market research and analysis,
• Business plans write ups,
• Marketing and advertising,
• Employee training,
• Professional fees, such as lawyers, accountants,
• Initial travel expenses
• Website development
• Assets roll-overs to the business
• Goodwill
• Home office expenses

SRED (read as SHRED) or SR&ED Scientific Research and Experimental Development Tax Credit

Accelerated CCA Calculations

Professional Fees

Home Office

Home office expenses include almost any of the physical costs of running an office, such as interest mortgage, property taxes, lease costs, utilities, office supplies, cleaning services and internet fees, home phone. However, there are specific rules for you home space to qualify as a legitimate home office. A home office must be a principal place for doing business and a site that you use on a regular basis.  To calculate the costs, for some it is very straight forward, for example if WIFI is used for the business significantly then it is 100% expensed however for others, what you need to do is measure the total area of your home and your office.  Obtain the percentage for home office, ie, 20% then 20% of your home costs can be expensed. One more note, create a habit of calculating these costs on a monthly basis and sending an expense report to your company/corporation and get reimbursed.  To make this easy for our clients, we have created an excel template which includes a lot of possible items that could potentially be used in the business. When they had the data, the spreadsheeted gives them the total and calculates the HST.  This practice also creates a great audit trail in case CRA is asking for details of home office expense.

Sub-contractor Costs

Software Subscription Fees

Any software subscription fees that you are using in your business can be written off. For instance, Microsoft, antivirus, QBO fees, Receipt bank fees, google G Suits, …

I suggest that you go through your credit card statements and flag fees that you are uncertain and tell us what the fees are for. We will have a look and can tell you if you can claim them or not.

Holiday Parties

Travel

Travels in relation to running, managing, and growing your business is considered tax deductible. I.e., driving to see your accountant, lawyers, marketing expert, going to the bank, post office, network parties, trade shows, seminars … you can also claim the miles you drive to meet clients and for other business purposes.

Marketing and Advertising

Banking and Interest Expenses

Numetrica