When it comes to taxes, tax preparer Dalton Green has simple advice.Whether self-employed, an entrepreneur or a small, work-from-home business owner, he says no one’s venture is too small to claim business expenses.
By: Jamie Ross Special to The Star
When it comes to taxes, tax preparer Dalton Green has simple advice.
Whether self-employed, an entrepreneur or a small, work-from-home business owner, he says no one’s venture is too small to claim business expenses.
So don’t be shy – if you use your stapler from the kitchen in your home office, expense it. If you’re going meet a client for coffee, keep a travel log and the coffee receipt, and expense that too. Little things add up, and what you leave out will end up costing you.
“There’s advertising, supplies, travel, rent. It’s all valid, and many times people don’t think of them in that way,” says Green, owner of Green Financial Online Inc. “You’re giving money to the government for no reason.”
To understand which rules apply to you, Green recommends visiting a professional consultant, adviser or accountant to get a firm grasp on what can and cannot be expensed, which rules apply to you, and which ones don’t.
Luke Bailey did just that. The owner of Kempt Productions, a New Brunswick-based musical instruction and production company, Bailey has been in business for five years.
He took his tax claims to an accountant following year one, and got a crash course on filling business taxes.
Now, he claims a percentage of his power bill, his rent, equipment, and other work-related expenses.
“It really is about being organized and focused,” he says. “I make sure I keep all of my receipts categorized, all in one spot. Then when I sit down I can go receipt by receipt, bill by bill.” And he, adds, entrepreneurs should always hold on to receipts for seven years.
“That’s the rule,” says Green.
So, to help you maximise your tax return, here are the top three expenses – as listed by Green – that the self-employed can claim when working from home.
The Car
If you’re heading out for a work related spin, make sure to track the Three D’s
“Date, Destination, and Distance. Don’t BS with it. The Canadian Revenue Agency will rip you apart. ” says Green. “If you’re getting gas, meeting a potential customer, marketing, those are all valid. You wouldn’t have gotten in your car if it weren’t for business.”
The House
The size of your office – relative to the size and number of rooms in your house – is used to determine how much you can claim as a business expense. Cleaning supplies, light bulbs, condo fees, utilities, even a percentage of your rent or interest on your mortgage are all legitimate claims. But it’s best to speak with an expert to determine exactly what those percentages are.
Supplies
“Literally anything,” says Green.
From the desk to plants to the drapes, tables and chairs, it’s a legitimate expense so long as it directly relates to your business.
“I have customers in my own house all the time,” says Green. “The serving tray and the coffee pot, the glasses, those are all business expenses for me now.”
But, he cautions, there is a reasonable limit.
“If you’re claiming a jacuzzi, you’d better be in the right business, or the CRA will rip you a new one.”