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8 Tax Write-Offs You May Not Know About & How They Apply to Your Vape Business
Come tax time, a collective groan can be heard from business owners across the country. Knowing what you can and cannot write-off as an expense is confusing — to say the least. There are countless obscure tax write-offs that a business owner can claim but sorting through the if, then statements to figure out whether they apply can be such a Herculean task that many end up simply claiming the bare minimum. If this sounds like you, don’t worry. We’ve been there. Which is why we thought it would be helpful to put together a list of commonly overlooked tax write-offs to help you get what you are owed!
8 Tax Write-Offs You May Not Know About
An amazing and little-known tax deduction for small businesses is on advertising expenses. These costs can be partially or fully written off depending on the medium. For example, your website’s domain name registration and web hosting? Fully deductible!
How this Applies to Your Business: Do you have a website for your vape shop? Are you a juice maker who advertises their flavors online? Keep records of those costs and make sure you claim them. Keep your eyes open for any other costs associated with marketing your company; even samples, giveaways, swag, rewards programs... All these things are potentially deductible!
2. Accounting & Legal Fees
Did you know you can actually claim what you paid your accountant for preparing your income tax return as a deductible? As a business owner, you shouldn’t have to pay to have your taxes done, and similarly, you can write-off whatever you spend on legal fees in the ordinary course of operating your business.
How this Applies to Your Business: Did you use an accountant to do your taxes this year? Did you pay a lawyer to deal with anything? Think about your agreements, incorporation docs, other filing fees, annual filing, annual reports and more — all these expenses are 100% deductible.
3. Capital Assets
What’s a capital asset? Furniture, fixtures, equipment, computers and more all count as capital assets. Because the value of these items depreciates over time, you can write-off that depreciation as deductible. The caveat is that you can’t write all these items off at once, but rather, you can claim these over a set period of time as specified by the CRA.
How this Applies to Your Business: This one’s straightforward. If you are a vape juice maker, you have a lot of equipment. Make sure you claim it! If you are a vape shop owner, this applies to everything from your POS system to your in-store furnishings. Think about all the items that you use including things like tester devices, special shelving, etc.
Let’s say you took a client out for a nice dinner... You can deduct 50% of the amount that you spent on that meal because it is considered a business expense. So, make sure you keep your receipts! For internal entertainment expenses, it gets even better. You can deduct 100% of the cost of entertainment and meals for staff parties and events (max. 6 a year), and any costs associated with a registered charity fundraiser.
How this Applies to Your Business: From your annual business Christmas party to your event marketing initiatives, you can claim everything from the cost of a caterer to the taxi service you provided for your employees to get home safely!
There are two instances where insurance is not a pain. When something bad happens and come tax time! As a business owner, many types of insurance are deductible including general business liability insurance, business property insurance and business interruption insurance. If you used your life insurance policy as collateral for a business loan, then it’s possible that you can claim a portion of that premium as well.
How this Applies to Your Business: This is hopefully the only time having liability insurance will come in handy! Claim it on your next tax return, and while you’re at it, don’t forget to add your general business & property insurance to that claim.
6. Office or Business Space Rent
If you pay rent to a landlord, then you can claim that cash as tax deductible. Pro-tip: keep copies of all your payments and your lease agreement, as you may need these documents as proof if ever you get audited by the CRA! If you own property, unfortunately, you can’t claim the mortgage, but you can depreciate the building every year and you can also claim all other costs associated including legal/accounting/realtor fees, mortgage interest, property tax, utilities, etc.
How this Applies to Your Business: If you rent your vape shop space or are a juice maker who rents a warehouse, make sure you write these expenses off. They are blessedly tax deductible.
7. Vehicle Expenses
This one is pretty straightforward. If you are a small business owner in Canada, you can deduct a percentage of your vehicle expenses. A portion of your fuel & oil, insurance, lease payments, parking fees, repairs & maintenance, toll charges and vehicle registration fees can all be written off as they relate to your business. If you own your car, you can also claim Capital Cost Allowance, which is equal to 30% of the cost of your vehicle each year.
How this Applies to Your Business: Whether you are delivering vape juices to a shop, attending a vape expo or canvassing for new clients, keep a record of how far you go and how much you spend on fuel. Any business-related driving expense is write-offable friends! Just make sure to keep a mileage log to be able to justify the business/personal ratio you choose to go with.
8. Other Expenses to Consider
As a small business owner, there are so many things you can claim. The government happens to be nice that way! Sit down and make a list of all your assets and expenses then look them up. Chances are a good portion of that list can be written off.
How this Applies to Your Business: There’s a lot of moving pieces to running a vape business, whether you are a shop owner or a juice maker. Remember that a large portion of these expenses is tax deductible. Things you may not have even have thought about like photographers, sponsors, samples, coil building equipment, tester devices and drip tips, etc... It’s all fair game!
At VanGo, we’re all about supporting small businesses. We’ve been there, and we know how expensive getting started can be. Making sure you write-off everything you can come tax time can help. We’re blessed enough to have a few ex-accountants on our exec team, so we know the difference a little money-managing can make! If you have any questions or are opening a vape shop of your own, feel free to reach out here. We'd be happy to chat!
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