Does Using Your Home for Business Have any Tax Advantages?
A lot of your time is consumed when owning a business. At least in the beginning, when you may be the only worker or only have one or two individuals working for you, then you may be working a lot harder. Most likely you spend your 8 or 10 hours at your business establishment then have to bring perhaps the administrative work home with you so you can do it in the evenings from home and on the weekends.
With this type of schedule it is almost like a section of your home has turned into a second office. As such you may be wondering if some of the expenses of your dwelling can be written off as a tax expense.
The CRA has several rules in place regarding this, and if you don’t know them then you could end up making errors on your tax return.
In order to be business tax applicable the space you are using in your home that is specifically dedicated to your business has to either be the main place where you conduct your business or the space is only used to earn your business income and it is used on an ongoing basis to meet with your clients.
For example, if you are a Doctor and you have space outside of your home that you are using for your office for seeing your patients, and are not seeing them in a designated space in your residence, then your residential expenses would not be eligible pertaining to that space. It doesn’t matter that you may be doing your reports from home, or making your return phone calls to your patients. You are not seeing patients here at your home, nor is it it your principal place of business.
Now if you have met this criteria for home business use there are even more rules that you must follow in regards to what you can claim in regards to the business expenses. You need to think about how much of the space your home is dedicating specifically to your business, and how much time is spent there conducting your business.
Home business tax obligations can get complicated yet they are worth knowing about because of the expenses you may be eligible to claim. Having a good quality accountant tending to your taxes will help you with this particular matter as well as all of the other business tax necessities.