Top 11 Business Deductions


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At ATS Accounting & Tax Edmonton, we know that often business owners are troubled by the amount of taxes they have to pay, along with the expenses that were made for the development of the business and maintenance of machinery in the business. The general thought of any business owner is to save enough from the business transactions that allow them to have financial freedom even after filing the taxes. This is the reason why you should know about the tax deductions that your business is liable to.

There are many transactions and purchases that are not supposed to be listed in the tax filings. These expenses are done to run your business with all the machinery and manpower you need. So the business owners must take care that they note down every tax business deduction they can make by law to protect their capital for business operations and development. Such expenses are not considered in the tax reports of a firm. So what are the top business deductions that you can make from your tax filing?

1) Car and Truck Expenses

Almost all businesses have to get raw materials, goods, or workers in and out of the workplace or factory. The cost applied in the use of vehicles and gas used for the business as a mode of transport can be deducted from the taxes you pay. Since vehicles used for the transit of raw material or delivery of goods to customers are taken as capital invested in business operations. If you bought a vehicle in a financial year, a percentage of the cost of the vehicle is deducted from the taxes. The amount of gasoline used in the vehicles used by a business can also be deducted from the taxable amount. Apart from this, even if a firm leases a vehicle for certain tasks and deliveries at hand, the cost of transportation can be taken out of the business deductions.

2) Salaries and Wages

When you’re running a business that requires the use of manpower. The salaries and wages that you pay to the employees are not supposed to be noted in the tax filings. All the payments made to your employees like salaries, incentives, bonuses, commissions and retirement funds can be deducted from the tax. Although the payments that you make to the sole proprietors and business partners are not under the business expenses bracket so you cannot be in your business deductions account.

3) Contractual Labour

Many businesses use freelancers and contractual labour to get some of their work done. The salaries or wages that you pay to the labourers or workers. There has to be some paperwork from the contractor that shows proof of you hiring labour on a contractual basis.

4) Workplace Supplies

The supplies used in operating business every day is a deductible cost. Cleaning supplies, toilet supplies, postage stamps, office stationery, vacuum-cleaning cost, etc. are all deductible from taxes.

5) Depreciation

This is the most important business deduction from the taxes you pay. Depreciation is an amount deducted from the accounts of machinery, property and other such assets that depreciate in value with time. A piece of machinery in a small factory, for example, is used every day and the parts of the machine go through wear and tear. So when the machine is sold out to attain capital for new machinery, the cost for the machinery won’t be the same as it was bought for. So the depreciation in value of assets and business property can be deducted from taxes as they are business expenses.

6) Rent on Business Property

If your small business uses a place on rent for everyday operations, the rent on the property can be fully deducted from your taxes. Many businesses like boutiques, salons, spas, etc. use the rental property. The yearly rent on the property is paid out of the profit which makes it a business deduction.

7) Utilities

The everyday operational activities of a small business or a midsize business require utilities that are charged for by the authorities. Electricity, for example, is fully deductible in the taxes. Another business deduction that can be deducted from the taxes is mobile phone bills used by you or you or your staff for the business. If you have a landline for domestic use you cannot deduct the bill from the tax but in the case of a second line for business use, it can be deducted as business expenses.

8) Other Taxes

Other taxes, like personal taxes that are not income tax or small business taxes, can be deducted from the tax filing list. Licensing and regulatory fees along with taxes on a property in the name of the business are tax-deductible. Your employer taxes and state unemployment taxes are deductible from taxation. Self-employed business owners, however, cannot benefit from tax deductions from half of their self-employment tax. It is a gross deduction on your income tax returns.

9) Insurance

Insurances are another important business deduction that you can make from your taxes and save significant amounts from your taxes. All kinds of business insurances like, malpractice coverage, flood insurance, cyber liability insurance, business continuation insurance, and the owners’ insurance cover is counted under business deductions. A small business may also claim a deduction of 50% of the health coverages for employees if you provide one.

10) Repairs

Common repair jobs in the office building or manufacturing plants are deductible from taxes. Although the depreciation value of the machinery and other assets are accounted for in the business deductions, urgent repairs that might sometimes become fatal accidents can be deducted.

11) Travelling

Business owners or staff might require time to time travelling for a meeting with clients or for checking a machinery unit that they have sold. If you or your staff travel out of the state for business, transportation, flight expenses and accommodation are fully deductible from taxes. Although the local commute is non-deductible.

Understanding the rules of tax accounting can be challenging, however, at ATS Accounting, our tax accountants can take care of all your tax filing paperwork and business’ tax deduction accounting. If you wish to have helpful advice regarding your business deductions, contact ATS Accounting for queries and book your Free 15-Minute Consultation.

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