What are the allowable expenses for Canadian small corporation
As a Canadian small corporation, there are various expenses that you may be able to deduct when calculating your taxable income. Here are some common allowable expenses for Canadian small corporations:
Salaries and Wages: You can deduct salaries, wages, and bonuses paid to employees, including yourself, as long as they are reasonable and directly related to the business.
Rent and Utilities: Expenses for renting business premises, such as office space or a storefront, are generally deductible. Additionally, utility bills like electricity, water, and internet services directly related to your business operations are also eligible for deduction.
Business Supplies and Materials: Costs associated with purchasing office supplies, inventory, raw materials, or any other consumable items necessary for your business activities can be deducted.
Advertising and Promotion: Expenses related to advertising and promoting your business, including marketing campaigns, website development, printing materials, and online advertising, are generally deductible.
Professional Fees: Payments made to professionals such as accountants, lawyers, consultants, and contractors for services related to your business operations are deductible.
Insurance: Premiums paid for insurance coverage necessary for your business, such as general liability insurance or professional liability insurance, can be deducted.
Travel and Vehicle Expenses: Reasonable travel expenses incurred for business purposes, including transportation, accommodations, and meals, may be deductible. For vehicle expenses, you can deduct costs related to business-related mileage, fuel, insurance, repairs, and maintenance. However, it's important to maintain detailed records to differentiate between personal and business use.
Interest and Finance Charges: Interest paid on loans or credit used for business purposes can generally be deducted. However, interest on loans used to acquire assets that generate tax-exempt income may have restrictions.
Depreciation and Amortization: You can deduct the cost of acquiring and improving assets used in your business over their useful life through depreciation (for tangible assets) or amortization (for intangible assets).
It's important to note that the deductibility of expenses depends on various factors, including the nature of the expense, reasonableness, and adherence to specific tax rules. It's advisable to consult with a qualified tax professional or refer to the Canada Revenue Agency (CRA) guidelines for detailed information and to ensure compliance with the current tax laws and regulations.
