The Truth About Vehicles Used For Business Purposes!
Did you know that most business owners do not know how they can benefit from claiming the usage of director vehicles in their business? That’s right! Companies can claim vehicles equal to the number of directors the company has (proportionate to the percentage of use for business)! Unfortunately, as many business people are unaware of this, they lose out on the opportunity to save money.
To shed some light on how you can make the most out of your vehicular usage as a business, the experts at Taxxlution Accounting Professionals have listed a few tips to help you out. Please keep reading to learn what they are.
1. Claim mileage on the vehicle
For business owners whose vehicle value is less and the mileage on the vehicle during the year is way too much, we suggest that they claim mileage, which will benefit them more. But, to receive any tax benefits, they have to maintain a proper logbook mentioning dates, the odometer reading at the start, the purpose of the visit, the starting point, place of the visit, the ending point, the total kilometers driven, and the ending date of the trip.
2. Leased vs. financed or owned vehicles
This is one of the top tips for business owners who own vehicles (Class10.1) over the value of $30,000 and want to use it for the business. If you’re going to claim all of your expenses into your business, there are two ways to do it. If the value of the vehicle is less than $30,000, then you can choose either method, but if the value of the vehicle is more than $30,000, then we would suggest that you opt for a leased vehicle as the maximum depreciable value of a passenger vehicle allowed by the CRA is $30,000.
3. Claim vehicle expenses during slow business periods
You will get various suggestions from different accountants about this. Some will say you can claim it while some will say you can’t. But, determining whether you should or shouldn’t is not that complicated. Claiming an expense is very simple if you are using your vehicle for your business even during slow times like for getting jobs, for buying equipment and supplies, or getting ready for a good business season. Like this, there are a lot of reasons for you to claim the expenses incurred during that period. Also, if there are fixed expenses incurred, whether you have sales or not, but are directly related to your business, it is claimable. For example - insurance on your vehicle, which is solely used for the business, can be claimed fully even if it were not operating.
4. Choose a good accountant
When filing your business taxes, make sure you use a good accountant, or if you are really low on your budget, please refer to the CRA website for the best possible advice and confirmation. Do not attempt to sort out your taxes on your own if you don’t fully understand the process, as it will only lead to problems with the government.
To learn more about business taxes and how to file them correctly, reach out to Taxxlution Accounting Professionals. We are a boutique accounting and bookkeeping firm in Edmonton, AB, and we offer our services to small businesses and individuals. Our team is made up of exceptional professionals with extensive experience in accounting and Canadian tax legislation. They also possess updated knowledge of how to file corporate income taxes and offer excellent bookkeeping services.