Small Businesses Can be a Great Tax Write-off

Depositphotos_2072662_lThere are many reasons to start a business — to earn extra money, be your own boss, do something you love, even change the world.

But as we approach tax time, many of you may not realize that a small business can provide significant tax benefits as well. Because a small business can incur significant costs during startup and beyond, these expenses can be written off against the business’ and even your personal income.

Now, before we continue, I want to provide the disclaimer than I am not an accountant, tax attorney or even a bookkeeper – and I cannot legally provide tax advice. I will however, talk about my own experiences. I have been an entrepreneur for many years, and have benefitted personally from small business write-offs (mostly from part-time businesses).

While there are advantages and disadvantages of different business structures such as partnerships or corporations, for tax purposes I prefer the simplest of all business structures – the sole proprietorship.

“The owner of a sole proprietorship has sole
responsibility for making decisions, receives

All the profits, claims all losses, and does

not have separate legal status from the business”.

 – Canadian Revenue Agency

 

In a sole proprietorship, any business losses are written-off against your personal income. In other words, if expenses exceed revenues (considered a business loss) in your business, then the loss can be used to actually lower your taxable income.

Depending on the type of business you are in or plan to start, the expenses involved in buying equipment, software or tools could be significant. Not to mention other costs like rent, advertising, and high-speed Internet. All of these expenses, especially in the first few years, may result in a business loss (on paper) which in turn may provide a write-off against your income.

Do you run the business out of your home? Then the portion of your home utilized for the business – a home office, garage or kitchen table may be written off. In other words, based on the square footage of that work space (let’s say 10% of the home’s square footage), a percentage of your utility bill, Internet, telephone and other costs may be eligible. These deductions can really add up.

Do you use your personal vehicle for business? Do you drive to client meetings, travel for your business, or make the odd delivery? Then a portion of the costs of operating the vehicle for your business may be deductible as well. But make sure to keep accurate records of the mileage, fuel and other costs associated with the vehicle. A log book is handy to record mileage each time the vehicle is used for business.

While some costs can be directly deducted against revenue, others like equipment and other assets need to be amortized over several years (capital cost allowance or CCA), based on Canada Revenue Agency rules. For example, typically a computer is considered a Class 10 property with 30% CCA. In other words, 30% of the cost of the computer is deductible each year – however, in the first year of use only half of that can be deducted. Therefore, for a $1,000 laptop purchased for the business, $150 is deductible the first year, $300 the second year etc. until the full amount is deducted.

Sound complicated? To ensure you are following the rules, as well as maximizing small business write-offs, I highly recommend the use of a bookkeeping or accounting firm. In my case, I have utilized bookkeeping services from Marian’s Bookkeeping for many years – for both business and personal taxes.

Often times running a part-time or side business can provide the greatest tax benefits, because of the additional deductions, which in the end are applied against your salary or personal income from your full-time job.

But before you decide to turn a hobby into a part-time business or start a business just so you can write-off all of your electronic gadgets, consider this. For the CRA to consider your business as “real” and allow you to utilize small business deductions, your business must have a reasonable expectation of profit. In other words, turning a hobby into a new business (photography for example) is ok, as long as it is not just an excuse to buy all of the latest camera equipment for your own personal use. You must actually be attempting to bring in revenues and eventually earn a profit. This is an important distinction – one to definitely keep in mind.

So if it wasn’t already a fantastic idea to start your own business, tax deductions can make the idea even sweeter. Think about that as you write that cheque to pay your taxes this spring!

 

About Startup Sault:

Startup Sault connects new entrepreneurs with the small business resources available in the community, and provides the support of existing entrepreneurs who are building successful companies.

Our community enterprise partners include the Sault Ste. Marie Innovation Centre (SSMIC), Sault Ste. Marie Economic Development Corporation (SSMEDC), Community Development Corporation of Sault Ste. Marie (CDC), Sault Ste. Marie Chamber of Commerce, Sault College, Social Entrepreneurship Evolution, Business Development Bank of Canada and Village Media Inc.

For more information about Startup Sault, visit www.startupsault.ca.  Follow us on Facebook (www.facebook.com/startupsault) or Twitter (www.twitter.com/startupsault) to keep up to date on Startup Sault events, startup tips and other useful information.

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About the Author: Nevin Buconjic is an entrepreneur, author, consultant and community builder. Nevin is the founder and community lead for Startup Sault. Find him at www.nevinbuconjic.com

Taking the Next Step – Starting Your Own Business

business man writing business strategy concept

business man writing business strategy concept

Originally Printed in Northern Ontario Business, July 2015.

I often meet people who are intrigued by the idea of starting their own business, but are intimidated by the fact that they have no experience or simply don’t know where to begin.

What I say to these people is, “Start slow, focus on your idea, and ask for help when you need it.”

In my last article (in Northern Ontario Business) I talked about all of the free resources available to entrepreneurs in Northern Ontario. I encourage everyone to take advantage of the programs, funding and business advisory services available in their communities.

The act of starting a business use to be inherently more risky than it is today. With the Internet and social media, today’s entrepreneurs have access to knowledge, tools and resources that never existed before.

Where market research may have once involved going to the library to look up company (competitor) information, or annual reports, or conducting a survey via mail or the telephone, today budding entrepreneurs can access incredible volumes of information, news and data as they research their ideas and potential markets from the comfort of their home or even on their mobile device.

Also available is access to customers, friends and colleagues who can provide feedback in real-time. Online survey tools such as Survey Monkey allow users to effortlessly capture both quantitative and qualitative data and valuable customer feedback – and the results are compiled into fancy graphs and charts for you.

Social media provides unprecedented access to millions of people, celebrities, friends, customers and even competitors. Social media offers a powerful platform for building brand awareness and crafting both creative and inexpensive marketing.

Through the Internet, one can launch a new business practically overnight. Online tools like Wix (www.wix.com) allow you to build a website, and even take online payments in a matter of hours.

For literally a few hundred dollars you can launch a new online business and test your business concept in the real world.  No more spending hundreds of hours and thousands of dollars to launch a new business that may fail in the end.

Now don’t get me wrong. I am not suggesting that entrepreneurs skip the whole research component of their business concept, or fail to crunch the numbers to see if their idea is feasible. But just as times have changed, full-blown business plans are also becoming less popular – in favour of faster, more valuable tools such as one-page business plans, or a business model canvas.

Today entrepreneurs are encouraged to launch quickly, get customer feedback and then refine their product or business model accordingly.  Whether launching a new mobile app, a digital ebook or a physical product, today it is easier than ever to gain valuable feedback directly from customers, and use that feedback to make your product better before investing too heavily.

I recommend that you pick up a copy of The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future, by Chris Guillebeau, if you’d like some inspiration about launching a new business for very little money. The author interviewed thousands of entrepreneurs who launched meaningful businesses for a very modest investment. The book is both insightful and inspirational, as these entrepreneurs launched successful businesses doing what they loved or are passionate about.

I can hear many of you saying to yourselves, “I would love to start a business, but I have a full-time job or I work multiple part-time jobs just to make ends meet.”

Starting a simple business now can be a stepping stone for later.

Get your feet wet with a low-cost, part time business.‎ In my Amazon.com best-selling book, 25 Money-Making Businesses You Can Start in Your Spare Time, I share 25 business opportunities that you can start part-time, and in most cases with very little capital. These are businesses that can put you through school, provide extra income, or lead to bigger and better opportunities down the road.

Just a few examples include providing virtual assistant services, affiliate marketing, writing ebooks, offering tutoring services and even selling physical products on Amazon.com.

Most of the ideas in my book come from my own personal experience or that of my clients, colleagues and fellow entrepreneurs. I have met many individuals who started with a hobby or a passion and turned it into a full-time business – one that exceeded all of their expectations. In many cases they were able to leave their full-time jobs as the business grew.

To read up on even more business ideas you can use today, feel free to check out my book on www.amazon.ca or www.amazon.com, available in paperback and Kindle ebook.

If you’ve ever considered starting your own business, now is the time. Take the next step…get started today!

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About the Author: Nevin Buconjic is a serial entrepreneur, author, consultant and Strategic Business Advisor with the Ontario government. Nevin is the founder and community lead for StartUP Sault (www.startupsault.ca). Find him at www.nevinbuconjic.com

Let’s take risks, generate some big ideas

SONY DSCThe importance of small business to our country, province and community cannot be overstated.

Small business drives innovation, leads job creation and builds wealth like no other economic engine in our nation.

This space, every other month, will be used to provide you with the resources you need to start a business, grow an existing business, and help drive an entrepreneurial culture in our community.

Did you know that 98 percent of businesses in Canada have less than 100 employees, and almost 70 percent of the private workforce is employed by small businesses?

Small businesses created over 75 percent of all private jobs in Canada over the last decade.

Sault Ste. Marie has done a good job of diversifying its economy since the 1990’s.

Through Destiny Sault Ste. Marie, the Sault Ste. Marie Innovation Centre and other initiatives, the city has been able to grow various sectors including Information Technology, green energy, education, and more – lessening its reliance upon the steel and forest sectors.

Along the way the small business sector has developed and changed, and Sault Ste. Marie has been recognized nationally as a top 100 Entrepreneurial City in Canada (ranking as high as 23rd in 2012).

There are numerous resources available to entrepreneurs and small business in our area, including Business Sault Ste. Marie – a division of the Economic Development Corporation (SSMEDC), the Sault Ste. Marie Innovation Centre (SSMIC), the Community Development Corporation of Sault Ste. Marie & Area (CDC), Sault Ste. Marie Chamber of Commerce (SSMCOC), and more.

These organizations provide business startup assistance and other resources to new and established businesses in the community.

They provide an essential role in our small business community.

But there is more we can do as a community to ensure we build an entrepreneurial community within Sault Ste. Marie that is strong, supportive, vibrant and inclusive.

An entrepreneurial community led by entrepreneurs.

Startup Sault is doing just that.

Startup Sault is a volunteer–led movement to bring together entrepreneurs, investors, mentors and small business service providers in Sault Ste. Marie to create a supportive and knowledgeable environment where business startups can flourish.

We are part of the Startup Canada network – a pan-Canadian network to provide entrepreneurs with a single doorway to enter their local entrepreneur community to access mentors, space, funding and support to start and grow their businesses and to connect with other startup founders online and on the ground.

Startup_CanadaStartup Canada is a national entrepreneur-led undertaking to enhance the nation’s competitiveness and prosperity through uniting and strengthening Canada’s entrepreneurship ecosystem and promoting a vibrant entrepreneurial culture to create a unified brand as a rallying point for Canadians.

Startup Canada has the support of more than 85,000 Canadians, 400 partners and 300 volunteers across the country and in its network of over 20 thriving startup communities. To learn more about Startup Canada, watch this video.

With the support of this national movement, and our amazing team of local entrepreneurs and volunteers, Startup Sault will help build a strong and spirited entrepreneurial community in Sault Ste. Marie.

Since our launch in March 2014, Startup Sault has held a number of unique networking events including Startup Drinks, a casual, fun networking opportunity to meet and hangout with other entrepreneurs.

In May, Startup Sault offered a 5-day training session from the Canadian Entrepreneurship Institute via live streaming.

The training featured keynote lectures by world-leading innovators, entrepreneurs, educators and policy makers; attendees gained the knowledge, tools and network necessary to make a meaningful impact in advancing innovation and entrepreneurship in their community, as well as their own business or organization.

On October 9th we held a Startup Drinks event at the Water Tower Pub, and our fall line-up of events includes the next Startup Drinks, November 20th, as well as our newest program – Startup Book Club, October 29th (kick-off ) and December 3rd.

Startup Book Club participants will read and discuss the latest business-related books (as well as classics) to glean tips, models and strategies to take their business to the next level.

Startup Book Club will create an opportunity for local entrepreneurs, students, small business owners and others to discuss not only the content of each book, but their own strategies and experiences as well.

I hope you will join us in our movement.

Together, let’s take risks, generate big ideas, and push the economy forward.

About Startup Sault:

Startup Sault connects new entrepreneurs with the small business resources available in the community, and provides the support of existing entrepreneurs who are building successful companies.

Our community enterprise partners include the Sault Ste. Marie Innovation Centre (SSMIC), Sault Ste. Marie Economic Development Corporation (SSMEDC), Community Development Corporation of Sault Ste. Marie (CDC), and Sault Ste. Marie Chamber of Commerce.

For more information about Startup Sault, visit www.startupsault.ca. Follow us on Facebook (www.facebook.com/startupsault) or Twitter (www.twitter.com/startupsault) to keep up to date on Startup Sault events, startup tips and other useful information.

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About the Author: Nevin Buconjic is an entrepreneur, author, consultant and Strategic Business Advisor with the Ontario government. Nevin is the founder and community lead for Startup Sault.

My New Business

I recently launched a new business, and I am excited to tell you all about it! Stay tuned…

FREE Book Giveaway!

I am giving away my 4.4/5.0 star #Kindle book on How to Start a Business for FREE!

Learn how to:
  • Come up with a great business idea
  • Start and grow your business without funding
  • Build an online presence to maximize success
  • Market and promote your business for little to NO COST
  • Harness social media to drive traffic, get customers and make sales

Download your copy!

http://www.amazon.com/Starting-Your-Own-Business-Entrepreneurs-ebook/dp/B00A7NTN0I
UK: http://www.amazon.co.uk/Starting-Your-Own-Business-Entrepreneurs-ebook/dp/B00A7NTN0I
Canada: http://www.amazon.ca/Starting-Your-Own-Business-Entrepreneurs-ebook/dp/B00A7NTN0I

Launch of My Latest Ebook

Last week I released my latest ebook on Amazon Kindle, entitled “25 Money-Making Businesses You Can Start in Your Spare Time”.

The book will help anyone looking to start a small business, or just earn extra money in their spare time.

For those struggling to make ends meet in today’s tough economy, these 25 ideas can lead to some great opportunities for the future.  I hope that this information will provide a needed push to those currently on the fence or wanting to start a business but just aren’t sure what kind of business is possible.

You can find my book here on Amazon.com.

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