Maximize Your Savings: Must-Know Write-Offs for Small Businesses in Canada
Running a small business is no easy feat. Between managing day-to-day operations and keeping customers happy, tax season can feel like a daunting task. But here’s the good news: knowing your eligible tax write-offs can lead to significant savings, putting more cash back into your business.
Whether you’re just starting out or looking to tighten up your expenses, understanding what you can deduct is key to lowering your tax bill. Let’s break down the essential write-offs every small business owner in Canada should know.
What Are Write-Offs?
Write-offs, also called business expense deductions, are legitimate costs you incur while running your business. These expenses reduce your taxable income, meaning you’ll pay less tax and keep more of your hard-earned money.
Common Tax Write-Offs for Small Business Owners
- Office Supplies & Equipment
Think of all the day-to-day essentials you use to keep your business running:
- Pens, paper, notebooks
- Printer ink, postage, and envelopes
- Software subscriptions
Pro Tip: Larger purchases like computers, office furniture, or machinery aren’t immediately deducted in full. These are considered capital assets and are depreciated over time using the Capital Cost Allowance (CCA) system.
- Home Office Expenses
Working from home? You might be leaving money on the table if you’re not claiming home office deductions.
If you use part of your home exclusively for business purposes, you can write off a portion of:
- Rent or mortgage interest
- Utilities (electricity, heating, water)
- Home internet and phone
- Repairs and maintenance
Example:
If your home office takes up 10% of your living space, you can deduct 10% of these expenses from your business income.
- Business-Related Vehicle Expenses
If you use your vehicle for business, those costs can add up quickly—but the good news is, they’re deductible:
- Fuel
- Insurance
- Maintenance and repairs
- Lease payments or loan interest
- Parking and toll fees
Important:
You can only claim the portion of vehicle expenses that relates to business use. Keeping a mileage log is critical to track your business trips and calculate your deduction accurately.
- Marketing & Advertising
Getting the word out about your business is essential, and the costs associated with it are fully deductible:
- Social media ads
- Website development
- Graphic design and branding
- Business cards, flyers, and promotional materials
Pro Tip:
Advertising outside of Canada may not qualify, so check the CRA rules before investing in foreign marketing platforms.
- Professional Fees & Services
Expert help often pays for itself, and the CRA lets you deduct the costs of:
- Accounting & bookkeeping services
- Legal advice
- Business consulting
- Bank fees & loan interest
If you take out a business loan, the interest you pay on that loan is also deductible.
- Insurance Premiums
Protecting your business often means paying for different types of insurance, such as:
- General liability insurance
- Property insurance
- Business interruption insurance
- Life insurance (if required for securing a business loan)
These insurance premiums can be claimed as business expenses.
- Salaries, Wages, and Employee Benefits
If you have employees, the following are all tax-deductible:
- Wages and salaries
- Employer contributions to Canada Pension Plan (CPP) and Employment Insurance (EI)
- Health and dental plan premiums
- Employee training and professional development costs
Pro Tip:
Even if you hire family members, their wages are deductible—as long as the work is legitimate and their pay is reasonable for the tasks performed.
- Travel & Meals
Business-related travel can quickly rack up expenses, but many of these costs are deductible:
- Flights, hotels, and transportation
- Meals while traveling for business (50% of meal costs are deductible)
- Conference fees and industry events
Important:
Entertainment costs (e.g., treating a client to a concert) are often not deductible, so review CRA guidelines before claiming.
Tips for Maximizing Your Write-Offs
✅ Keep Detailed Records
Good record-keeping is your best defense in case of a CRA audit.
- Keep all receipts, invoices, and bank statements
- Track mileage for vehicle expenses
- Use accounting software to stay organized all year
✅ Separate Business & Personal Finances
Open a separate bank account and credit card for your business.
Mixing personal and business expenses can lead to errors and missed deductions.
✅ Know What You Can’t Claim
Not everything qualifies as a business expense. Avoid common mistakes like:
- Personal groceries
- Clothing (unless it’s protective workwear or branded uniforms)
- Club memberships
✅ Consult a Tax Professional
Tax rules can change often, and some deductions can be tricky.
Working with an accountant can help you claim every dollar you’re entitled to, while staying compliant with CRA rules.
Final Thoughts: Keep More of What You Earn
Understanding and claiming all the write-offs available to your small business can significantly lower your tax bill. Whether it’s home office costs, marketing expenses, or vehicle costs, every deduction adds up—giving you more money to reinvest in growing your business.
💼 Need Help Navigating Your Business Taxes?
Let our team handle the numbers so you can focus on growing your business.
Contact us today for personalized tax advice and support tailored to Canadian small business owners like you!