What are your expenses really worth?

By Randall Orser | Personal Income Tax

Expense word cloud, business conceptTax season is here and for some of you, it might be the first time reporting your online income. Yes, Canada Revenue Agency (CRA) does expect you to pay taxes on your online earnings. However, its not all doom and gloom, just as you pay taxes on income earned, you also get tax relief on business expenses. Knowing your expenses can reduce a tax bill and may even increase a tax refund.

The first thing you should do is find yourself a good tax preparer, not some national, franchise tax service. Those places with a gorilla outside, tossing an arrow sign, cannot advise you, they only record what you tell them. A good tax preparer will sit down with you, talk with you about your business and be able to advise you on what deductions are appropriate for your situation. There are accountants, and bookkeepers, who are able to prepare and file your taxes for you.

Here is a list of some of the things you might be able to claim as business expenses for your online marketing.

  1. The best deduction is your tax preparers fees. Not only will you get great advice but you can claim the cost of that advice too.
  2. The Home Office is always a popular deduction; however, you need to be careful about claiming this. The CRA has very set ideas on what they consider qualifies as a home office. Basically it has to be an area of your home that is exclusively used for your business. So the kitchen table does not count but a desk in the basement could. If you do qualify then you can also claim part of your rent or mortgage, and utilities as business expenses.
  3. Online charges relating to your income. PayPal fees, Fiverrr fees, basically any fees that you had to pay to receive your income could be considered as deductions.
  4. Stationery. Not just the usual printer ink and paper but also business cards, the fliers that you left all over town advertising a CPA offer, envelopes and stamps for those direct mail offers you sent to generate leads for offline clients.
  5. All those WSO’s, Clickbank e-books and online webinars that you paid for can be considered expenses too.
  6. Website costs. Don’t forget hosting, domain name charges, graphics and plugins.
  7. SEO Services. Unlike Google, CRA does not care what services you used to rank your sites, only how much it cost and that it is related to generating income.
  8. Advertising costs: Facebook fees, AdSense fees, paying to have your link on popular YouTube videos, solo ads to build your mailing list, bought traffic via PPV should all be considered.
  9. Website Content: Yes, even those one dollar, 300 word, spun to death articles, have value as an expense.
  10. Online subscriptions for information i.e. SeoMoz, rank checking, backlink analysis and competitor information should be noted down.

This is just a few ideas to get you started thinking about possible online marketing expenses, that you can present to your tax preparer. A good tax preparer is worth their weight in gold. This is their expertise so use it. They can advise you best on which expenses are currently allowed (CRA does like to change the rules) and also what percentage of the expense can be justified as business related. Your cell phone is a legitimate expense but you might only be able to really justify 25% is business use.

Marketing Gurus often talk about “leaving money on the table”, referring to missed income opportunities. However, missed expenses can be just as big a lost opportunity.

About the Author

Bookkeeper Extraordinaire Number Crunchers® Financial Services Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.