Tax deductions for a contractor..

[eblend]

Hi guys,

I started doing contract work and incorporated about 5 month ago, at first I thought it would be a short gig, but have recently been renewed for another year, so I feel I should take advantage of any tax savings I can. I didn't want to bother with much at first as I thought it would be a short term thing, but now that it's longer, the possible tax savings are much higher, and I would like to take advantage of them.

So far, I am keeping a driving log for all my contract related driving (at .55c/km i believe), and I have claimed my incorporation fee, and claim my business account bank fees, but other then that, I haven't done much.

Of the top of my head, I believe I could claim for some of these items and want to see your guys's input.

1. Cell phone. I receive my work e-mail on it and use it for work calls and such. The phone is setup as a standard personal use setup, and I am on a couples plan through Zoomer wireless. Am I able to claim half the cost of this plan? (the other half is wife's phone..) How does this work?

2. I have a study room in my house that I use to conduct work remotely, and regularly meet with another client to discuss work. I believe I should be able to claim this as office space? In addition to that, if I am able to claim it as office space, what kind of deductions can go along with it? I don't have a mortgage as the house is fully paid off. Can i claim portion of property tax...utilities...internet...house insurance? I also have a small room dedicated as my server room/lab for testing products and such (i work in IT)...can that be claimed or rolled up into office space space?

Anything else I should consider that I haven't though about? Can car insurance/oil changes be claimed...or is that all rolled in the mileage credit?

Thanks!

[JRSC00LUDE]

Why wouldn't you just interview two or three accountants and then choose the one you feel offers the most advantage for your set of circumstances? :dunno:

[eblend]

Originally posted by JRSC00LUDE
Why wouldn't you just interview two or three accountants and then choose the one you feel offers the most advantage for your set of circumstances? :dunno:

I do all the accounting myself, it isn't very hard for the most part with Quickbooks. Saving money only to have to pay an accountant isn't my cup of tea. I do have an accountant friend who helps me out with whatever I need, but I prefer to come with ammunition instead of showing up and wasting their time.

[never]

Originally posted by eblend


I do all the accounting myself, it isn't very hard for the most part with Quickbooks. Saving money only to have to pay an accountant isn't my cup of tea. I do have an accountant friend who helps me out with whatever I need, but I prefer to come with ammunition instead of showing up and wasting their time.

Then you either need to do a ton of research/reading (more than asking a question on a forum), or be prepared to leave a bunch on the table. Your questions barely scratch the surface of what a good accountant would be able to tell you.

[Street_Soldier]

You will be saving more money using a good accountant than it cost to pay them.

[gwill]

Just some observations from your post. You have a friend who's an accountant you can rely upon but you didn't ask him these questions? The answers your inquiring about are the simplest things any accountant can answer.

I agree with jrscooldude that you should interview a few accountants. If you do so you'll see right away after meeting with them who you should go with. An accountant isn't expensive and if they can save you from being audited then the little bit you pay them will be well worth it.

When it comes to tax deductions there are calculations that they will use to determine what amount you can write off for your many "expenses". For example if you only need a tiny home office for what you do then writing off some expenses like gas or power requires a lot of calculations as you need to figure out what percentage your office is using. In many cases it might not be worth while.

You are missing tons of things you can claim IMO. Things like meals while on the road, entertainment expenses, perhaps you can lease a section of your house from the wife and claim that, and you could get real tricky and buy gift cards for "clients" but use them yourself and write those off. This is where a good accountant can earn his money's worth.

It seems like your too cheap to do the right thing and you'll probably get yourself in trouble by claiming too much in certain areas or leave too much on the table like others have mentioned.

[Mixalot27]

An excellent source of free information is to just call CRA and ask them your specific questions directly. They have very helpful employees who's sole job is answering tax questions from the public. In my experience they have been very helpful in answering any questions I have had in the past.

[black300]

Like all have stated, using an accountant will definitely benefit you.

....Accountant fees are also to be written off. Its a win:win situation.

[gwill]

yeah call the cra... get stuck in the wrong queue, call the wrong number, get put on hold forever or just call your friend or meet with an accountant. Calling the cra seems like a bigger pain.

[eblend]

I'll get in touch with my friend and go from there. I don't need a full time accountant as this contracting gig is temporary, so don't really want to invest into it more then I need to.

[gwill]

I don't think you understand how little you will pay the accountant or how they work. Its not a full time gig by any means.. you see them once a year. Also if you have money tied up in your incorporated business you may find you want to leave the money in there as you defer your taxes. It's not like you'll be closing your incorporated business the second this gig ends... the longer you defer your money the less taxes you'll pay in the long run.

I stopped using my incorporated business a while back and was going to close it up but my accountant said not to since i had other investment properties we could play around with or i might use the business again down the road. Fast forward to today and I'm glad i listened to my accountant as i needed my business again for an opportunity that came my way.

[stillworking]

There is a distinction between accounting and bookkeeping.

It is straightforward to input values into an accounting system but preparing and filing your Payroll, T2, and GST is a little more challenging.

I've had bad experiences with independent or small firm designated accountants, so this year I've decided to prepare my T2 online with Ufile. I've always done payroll and GST myself anyways.

Regarding the questions about expenses. The answer is yes, you can write it off. If you use it for business charge it to the business.
I charge 30% of home expenses for business use. (garage/storage/office)

It is going to depend on your business on whether it is going to be worth it to hire an accountant.
Do you own real estate?
Do you carry a large inventory?
Do you do business overseas?
Do you have capital assets?
Etc, etc..

If I hire an accountant again it will probably be a mid-large CA firm.

[ExtraSlow]

Agreed that there is a big difference between bookkeeping and accounting. I am fully capable of doing the bookkeeping for any business I might own, but I don't think it's a good use of my time to attempt the accounting portion.


EDIT: Any independent accountants here on beyond looking for new clients?