Self-Employed or Small Business Tax Prep Checklist
- Business Name, Phone Number and Address
- GST/HST Number
- Partnership Business Number (If applicable to the business being a partnership)
- Percentage of Partnership Documents (official)
(If you provide non-physical products i.e. services – like digital marketing, graphic design or business consulting, you can skip this part)
- Opening Inventory (if dealing in physical goods)
- Purchases of inventory
- Closing inventory
- GST / HST Collected on sales
Expenses can roughly be categorized in the following 4 areas
- Business Operating Expenses
- Home Offices and Office Expenses
- Capital Property / Assets (subject to Capital Class Allowance or CCA*)
- Miscellaneous Business Expenses
*CCA is a yearly deduction allowed by Revenue Canada (CRA) to expense a portion of an asset over its life. The entire cost of the asset cannot be claimed as a business expense in the year the asset was acquired, since the asset will be used up, wear out or become obsolete after a number of years.
For example, if you buy office furniture, the entire cost cannot be claimed in the first year. Rather the CCA will be based on the category of asset and its estimated useful life.
Some examples of business expenses are:
- Advertising expenses
- Meals and entertainment
- Bad debts
- Private health premiums
- Interest and bank charges
- Office expenses
- Office stationery and supplies
- Property taxes
- Maintenance and repairs
- Salaries, wages, and benefits
- Seminars and training
- Telephone and utilities
- Other expenses
- Business fees, licenses, dues and subscriptions
- Professional fees (for legal and accounting services)
- Management and administration fees
- Delivery and freight (postage, courier)
If you are self-employed, and work out of your home, CRA gives you the benefit of apportioning a reasonable part of the home expenses as business expenses.
You have a personal car, but that car is also used for work trips, client meetings. You are required to maintain mileage reports, calculate the portion used for work, and submit only the business part of expenses to CRA.
The simple formula would be = (Total miles driven for work / Total miles driven) x 100 and you get a percentage of how much your car was used for business purposes.
You then use this percentage to work out the “business expense” part of the following expenses:
- Interest charges (if the car is leased)
- Fuel and Oil
- Auto Insurance
- Parking fees (during business trips)
- License, registration and taxes
- Maintenance and Repairs
You home doubles as an office space for you as a self-employed person. To claim any expenses as “business expenses”, the simple formula would be (Total area of office space / Total area of house) x 100 and you get a percentage or ratio that you can apply to the following home expenses:
- Utilities (Heating, Water, Electricity)
- Home / Rental Insurance
- Mortgage Interest or Rent
- Property Taxes
- Maintenance, Repairs, Cleaning
If you use your cell phone or internet for both work and personal use, and it may get tricky to apportion the expense, then discuss with your accountant a reasonable split that can be applied as a business expense.
If you have any questions about your tax reporting, give us a call today. We are here to help and guide you in every way we can, so that your tax structuring, reporting and filing is expertly managed and submitted on time, by our team of professionals.
We at Taxvisors have been providing exemplary services in the areas of personal and corporate tax, bookkeeping, and accounting within Mississauga and The Greater Toronto Area for over 20 years. Our expert teams are adept at dealing with Canada Revenue Agency (CRA) to provide resolution for Tax Reporting, Filing, Reviews, Compliance Checks, and Audits & Appeals.