Tax Tips for Small Canadian Businesses

tax tips for small Canadian businesses

As a small business owner in Canada, you know that you are entitled to certain tax deductions. Still, there may be some unknown or new tax saving tips that you are completely unaware of. We have complied a few here so that you can look forward to tax time instead of dreading it!

Separate Business from Personal

Many times, small business owners who are new to the game make the mistake of pouring business profits and individual funds into one account. The importance of having a separate credit card and bank account for your business cannot be overemphasized. When the time comes for working on deductions and managing your accounts, having the two individual statements will allow the head of the company to submit documents that will unmistakably support the costs that are legitimately business-related expenditures.

Stay Organized

tax tips for small Canadian businesses

Most entrepreneurs are aware that keeping vital information concerning their businesses organized is critical, particularly when tax time rolls around. The necessary steps for achieving order include:

  • Having an expandable folder for each month that is filled with every receipt, ATM withdrawal slip, deposit slip, and any other relevant paperwork for that period of time. You can organize the folder according to the categories listed on the Canada Revenue Agency website.
  • Setting up specific times each month during which you, a bookkeeper or an accountant can organize your paperwork and reconcile your accounts. 

Invest in Accounting Software

Using accounting software is the easiest way to quickly find and claim all your business’ deductions. Other advantages of using this type of software include:

  • fast creation of financial statements
  • quick transfer of information to your tax professional or CPA
  • offering your tax preparer direct access to your software

We highly recommend using Sage 50, however there are many great programs out there such as Quickbooks, MYOB and PC Law.

Standard Small Business Deductions

The following deductions for small businesses may be familiar, but are certainly worth repeating!

Home-Office Expenses: Allow small business owners who work from home to deduct mortgage interest, utilities, property taxes, repairs and maintenance, and home insurance. In some cases, the percentage of the total size of a home vis-a-vis the size of the home office is used to determine which write-offs are appropriate.

Vehicle Expenses: These expenses include car insurance, fuel and oil, repairs, parking fees, and other deductions. The time that the vehicle is used for business purposes determines the portion of the total car expenses that may be deducted.

Business-Related Meals:  One-half of meals or entertainment with clients may be deducted. In some cases, 100% of the expense for employee events or registered charity fundraisers paid for out of a business account, may be subtracted.

Accounting and Legal Fees may be claimed.

Advertising, including online ads, television and radio advertisements, and magazine and newspaper ads may be deducted if a Canadian market-based ad agency is used.

Insurance can be a write-off in the following circumstances:

  • General Business Liability Insurance
  • Business Property Insurance
  • Business Interruption Insurance
  • Life Insurance

Capital Assets, such as furniture, fixtures, equipment, computers, and other items may be eligible for deduction. These items are written off over a period of time that matches the CRA’s specified depreciation rates.

tax tips for small Canadian businesses

Take time and perform your due-diligence before you send off your small business tax return. File on time, ask questions, get explanations, and invite expert advice. It is always a good idea to visit the Canadian Revenue Agency website to familiarize yourself with the world of small business tax codes. If finances and taxes are not your forte (and not what you signed up to do as a small business owner) then contact us at and we’d be happy to help!