What do SME owners miss when deducting their income taxes?
Despite everyone telling us that tax season is upon us, SME owners still don’t know they’re eligible for tax deductions and often miscalculate their deductions. In Canada, the law requires SME owners to pay income tax at the federal, provincial, or territorial levels.
SME owners constantly struggle to maintain a positive cash flow and their tax deductions perfect, especially in the post-COVID situation. One thing all SME owners can agree on is that the tax bill is always high. Yet SME owners often overpay on their taxes every year because they don’t know what expenses are tax-deductible.
If you’re an SME owner, your business is taxed on profits, not revenues. This is a crucial factor when understanding how to make your tax deductions. If you fail to disclose your earnings accordingly, you will be overtaxed. Here we offer some standard tax deductions for SME owners that will help you leverage your liability and avoid being over-taxed.
Vehicle Expenses
Even with gas prices soaring through the skies, vehicle purchases are being held every day. The interest payments are tax-deductible if you’re planning on financing your car using a loan. Also, you might be eligible for the trip expenses deduction depending on the type of vehicle you own.
Office Supplies
Daily use of office supplies can also be deducted. From pencils and folders to highlighters and notebooks. All the basic everyday office supplies.
Computers, laptops, tablets, and fax machines can be deductible if you classify as a commissioned employee.
Telephones And Utilities
After the initial wave of COVID-19, a vast majority of the population started working from home and has stayed that way. Freelancers and SME owners have been working from home to make a living. If this is the case, phone and utilities, such as gas, oil, electricity, water, and cable expenses, can be tax deductible.
Communicating with clients and coworkers can be expensive. The good news is that these expenses are tax deductible. Office landline costs are 100% deductible. This includes any mobile phone under the company name as long as the “personal” use is kept to a minimum.
We can help
Yubilly offers a simple way of tracking your expenses. You can get all your electronic receipts safely stored and displayed in the same place by using the unique mailbox Yubilly gives you. Yubilly also helps you filter out all marketing and spam emails and shows you only your tickets.
In your dashboard, you can see your monthly or yearly expenses line by line. This is incredibly helpful when filing for taxes, as the paper trail can be enormous if you choose physical receipts.
Everybody hates tax season. It’s full of endless paper trails that lead nowhere and is very time-consuming. Organizing your expenses and transactions in the same place will help you find each item easier and faster. Making this season less of a hassle.
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