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3 Best Small Business Tax Deductions and Preparation Tips in Toronto
Nearly all businesses in Toronto are considered small businesses, representing a crucial segment of the city’s economy. As a hub of innovation and commerce, Toronto’s economic landscape provides unique opportunities and challenges for local entrepreneurs. To function most optimally, small business tax deductions and preparations are essential for Toronto businesses’ financial soundness.
Toronto’s small businesses have several ways they can take advantage of tax deductions, most of which are fairly simple to accomplish. But whether you’re a new business owner or you’ve owned your business for decades, it’s always a good idea to explore how you can save money. Here’s how you can boost your bottom line with small business tax deductions.
Deduction #1: Operating Expenses
This is the easiest, most straightforward way businesses can take advantage of tax deductions. While there are seemingly countless operating expenses, even the most common expenses count, including:
- Utilities
- Rent
- Renter’s insurance
- Essential operational software
- Delivery services
Businesses can also deduct expenses like purchasing essential supplies from other businesses. In short, virtually anything your business must have to function can count as a tax deduction.
But whatever essential supplies you need, it’s important you keep impeccable records of these purchases and their purposes. The team at Leonard Tam, well-acquainted with the Toronto business landscape, can assist with your tax preparation and strategy, helping you navigate the intricacies of local tax regulations and maximize your deductions.
Deduction #2: Insurance Policies
As a business owner in Toronto, you must comply with both provincial Ontario regulations and federal Canadian laws that mandate comprehensive insurance coverage for businesses. This is crucial not only for legal compliance but also for safeguarding your venture against the unique risks of the Toronto market. Most insurance offerings for businesses extend well beyond just protecting consumers; it’s essential that you understand the differences in policy offerings, as they can vary widely.
Some of the most common types of business insurance policies that are tax-deductible include:
- Property insurance: these policies cover the property on which your business stands.
- Business interruption insurance: these policies cover your business during fires, floods, and other natural disasters.
- Business liability: this insurance protects you in the event of a lawsuit related to a workplace injury.
- Life insurance: businesses may only benefit from this deduction in the event that it is used to back a business loan.
These policies are just a few from which you may benefit from tax deductions. It’s essential that you check with tax experts like Leonard Tam to ensure that your policy qualifies and you are eligible to benefit from any association deductions.
Deduction #3: Automobile Costs
Many businesses rely on vehicles to function, whether it’s a single car, truck, or van, or a small fleet of automobiles. Because these vehicles are essential for many businesses’ functionality and operations, they may offer tax deductions.
Most costs associated with your vehicle may be tax-deductible, including:
Most costs associated with your vehicle may be tax-deductible, including:
- Insurance
- Parking passes and fees
- Upkeep and repairs
- Gas
Trust Leonard Tam for Your Tax Preparation in Toronto
Whether you’re a new business owner or you’ve been around for decades, it’s essential that you have a tax plan in place. The Leonard Tam team can help with tax preparation to ensure proper alignment with Canadian law. Reach out to us today to get started.