Confused

by Sheena
(Drayton Valley)

We are a LDT company that is run out of our home and I'm not sure what we can write off on the business books. How do you know what kind of expenses can be run through the business books?

All expenses pertaining directly to your business can be deducted on the business books. Typical expenses include Advertising, Automobile, Bank Charges, Finance Charges, Insurance, Inventory Purchases, Office Supplies, Salaries & Wages, Taxes & Licenses, Business Telephone, etc.

For a more detailed list of the different kinds of deductible expenses, check out this page on income tax deductions.

Otherwise, the rest of your office in home expenses (such as business portion of rent or mortgage payments, insurance, repairs and utilities) are deducted on your income tax return and so are not typically run through the business books. If you are a sole proprietor and pay for any of these expenses from your business account, they should be coded through equity as an Owners Draw and so would show up on your Balance Sheet.