Running a business out of your home can be incredibly fulfilling. Think about all the different businesses that have started in someone’s garage; most of today’s uber tech giants were started as home businesses. That means there’s no telling how large your home business will grow – you might have to move out of the bedroom office you’ve made for yourself sooner than you think! One way of creating growth for your company is to use all of the tax write-offs you’re entitled to. There are quite a few that help home businesses in particular!
This is the big one; business-use-of-home expenses can be deducted on your taxes. You qualify if the space in your home is your principal place of business, or if you use the space only to earn your business income, and you use it on a regular and ongoing basis to meet your clients, customers, or patients. There’s a lot you can deduct; part of your maintenance costs like heating, electricity and home insurance, as well as part of your property taxes, mortgage interests and capital cost allowances.
In order to know how much you can deduct, you might take the space that you use for work, divide it by the amount of space in your home, and multiply the result by the expense that you want to deduct. When you use that space in your home partly for work and partly for recreation, you might calculate how many hours you use for each and add that as a factor in how much you can deduct. To be absolutely certain, you can employ an efficient Winnipeg tax accountant from Compass Accounting.
When you have a home-based business, it’s a really good idea to get home-based business insurance; in fact, some home insurance policies are invalidated if you’re running a business from your home for which you don’t have insurance – talk to your insurer (it often depends on occupancy). Your business insurance can be deducted from your taxes, and home based business insurance is no different.
A home-based office is still an office, so you can deduct office supplies as business expenses. It’s important to keep in mind the difference between depreciable assets, like laptops and filing cabinets, and regular office expenses, like pens and stamps. Depreciable assets fall under capital cost allowances, which follows different rules than office expense deductions (depreciable assets are claimed over time).
You might use your personal vehicle to get around for business-related purposes; when you do, you can deduct a portion of your fuel costs, your insurance and even the cost of repair. Of course, you can only deduct the portion that’s equal to how much you use the vehicle for business; track how many kilometres the vehicle is used for business, divide that by the overall use, and multiply the expenses with the result to know what might be eligible to deduct.