Tax Write-Offs for Home Businesses

As a home-based entrepreneur, it's essential to understand what tax write-offs are available to you. One of the key benefits of running a business from home is that you can deduct various expenses on your taxes. Here, we'll explore some common tax write-offs for home businesses.

Professional Fees

You can deduct fees incurred for external professional advice or services, including consulting fees. This includes legal and accounting fees related to your business. For more information, check out Motor vehicle expenses (not including CCA) and Business-use-of-home expenses.

Insurance Expenses

However, you cannot deduct amounts paid to insure personal property such as your home or car. Insurance expenses for fishers are different, though. You can deduct the premiums you paid to insure your fishing boat and equipment. For more information, refer to Interpretation Bulletin IT-309, Premiums on Life Insurance Used as Collateral.

Life Insurance

If you use your life insurance policy as collateral for a loan related to your business, including a fishing business, you may be able to deduct a limited part of the premiums you paid. However, in most cases, you cannot deduct your life insurance premiums.

Business-Use-of-Home Expenses

The insurance costs related to business use of workspace in your home have to be claimed as business-use-of-home expenses. Similarly, insurance costs related to your motor vehicle have to be claimed as motor vehicle expenses.

Advertising Expenses

You can deduct all ordinary commercial insurance premiums you incur on any buildings, machinery and equipment you use in your business. However, there are some restrictions when it comes to advertising expenses. For example, you cannot deduct expenses for advertising directed mainly at a Canadian market when you advertise with a foreign broadcaster.

Other Operating Expenses

Some other operating expenses that may be deductible include:

* Salaries, wages, and benefits (including employer's contributions)

* Extra food and beverages consumed by self-employed

* Meals and entertainment (allowable part only)

* Legal, accounting, and other professional fees

* Interest related to workspace in your home

* Interest on loans made against insurance policies

* Fees, penalties, or bonuses paid for a loan

When determining operating expenses, consider the following:

By understanding these tax write-offs, you can save money on your taxes and invest more in your business. Always keep accurate records of your expenses to ensure you're taking advantage of all the deductions available to you.

Tax write offs for home business