Busted! Don’t Believe These Business Expense Myths
During turbulent times such as the collapse of the economy or being a victim of fraud, we all wish for comfort and guidance. At times like these, an accountant can be your knight in shining armor, and provide clinical advice that maximizes business potential and keeps profits above water.
An accountant can also help turn the tide with more mundane tasks such as filing tax returns correctly, to avoid a government audit. One of the perks of being an entrepreneur is the tax reliefs we believe that we are eligible to receive.
Unfortunately, in the absence of consulting an expert, there is much misinformation that gets circulated regarding what can and cannot be a business expense. To quell the spread of incorrect information, Crosby Business and Tax Services Ltd. have debunked three of the most widely believed business expense myths.
Myth 1: You can claim expenses for any vehicle.
An asset, such as a vehicle has special rules on the amount that can be spent. The GST on these purchases can also vary significantly. Often the use and type of vehicle can lead to a taxable benefit on the business owners T4 slip. It’s important to recognize that the remoteness of your work or kind of industry will also have an impact on your vehicle allowance.
Myth 2: All self-employed or small businesses can have a home office.
There are different tax principles to account for home offices. The fact that you do your invoices from home doesn’t make it an eligible expense. The amount of time spent earning from home, size of space utilized, nature of work and storage of special materials are factors taken into consideration. The CRA commonly challenges home expenses, and so keeping good logs and records is essential.
Myth 3: Taxes can be treated like any other bill.
This cannot be further from the truth. The practice of regarding taxes as regular bills that can be pushed aside during difficult times often creates situations where businesses never recover. If you’re facing challenges in meeting your tax responsibilities, contact the CRA immediately. Your accountant can assist you in dealing with the CRA. You will be surprised how many people ignore the notices and find out the hard way when their accounts are frozen. When it comes to government tax debt, it’s better to be proactive than passive.
Everyone enjoys the luxury of having an expense account, but don’t put your livelihood at stake. If you prefer getting your teeth into a loin steak rather than be served a lien, avoid these myths and reach out to Crosby Business and Tax Services Ltd. Our team located in Calgary AB, our wealth management consultant team specializes in income tax preparation, income tax strategies and bookkeeping services. We provide our accounting services to professionals and small businesses across Airdrie, North East, and North West Calgary.