Deciding to embark on a self-employment journey in Nunavut is an exciting opportunity despite its unique sets of challenges. With the special landscapes and economic conditions that are set by the North and the province of Nunavut, it’s important to stay informed and understand how to maximize your tax deductions to guarantee financial success.
Not only do these tax deductions reduce your taxable income, but they can also provide you with some resources to reinvest back into your business.
Let’s uncover some of the various tax deductions that are available to you, highlight some of these effective financial management strategies and demonstrate how an accounting firm such as Nasaijit can act as your trusted partner.
Table of Contents:
- List of Deductible Expenses to Consider
- Tips for Proper Record-Keeping and Financial Management
- Services Offered by Nasaijit for Self-Employed Clients
- How Nasaijit’s Expertise Helps Startups Build Strong Foundations
List of Deductible Expenses to Consider:
Running your business in Nunavut comes with its own set of unique expenses that can be deductible. These are also deductible for businesses across the country, but we have focused on the best options for Nunavut businesses.
Let’s go over a few ways to reap their benefits and reduce your taxable income:
Travel and Transportation Expenses:
Nunavut’s unique geography and environment require you to use costly means to travel to your destinations. Whether it’s the use of snowmobiles, airplanes or boats, business-related travel is tax deductible.
In order to claim these travel costs, make sure you keep copies or all receipts regarding travel costs, or purchases of vehicles for the business.
As well, if you are travelling for work in a personal car, make sure you log any kms driven for work and note the total kms driven for the year. This will make reporting the cost to the CRA easier and will ensure you have your receipts and documentation to back any claims.
Home Office Expenses:
Working from home is extremely common for self-employed individuals in Nunavut. A portion of your rent, mortgage interest, utilities, and maintenance costs can be deducted based on your office size in your home.
This designated space should be only used as your office space to maximize these deductions. You can also work with your accountant or a professional to confirm which costs can be deducted.
As an example – if your office is 10% of your household, you can claim 10% of these costs assuming the office is used for business purposes only. This can be a significant tax deduction for business owners.
You can also claim a part of your internet, phone bill, and utilities (among other expenses) based on the portion of your home and phone used for work. Due to this, any household expenses are worth reviewing with your accountant to see if they can be included or deducted in part.
As always, make sure you have receipts for any expenses claimed in case the CRA requests back-up.
Professional and Business Development Costs:
By investing in your professional growth, you can set yourself up for success both personally and financially! The costs of acquiring licenses, attending workshops, attending conferences and taking courses can all be tax deductible.
As noted previously, travelling for these conferences or workshops can also be claimed as travel expenses.
Not only do these expenses reduce your taxable income but also contribute towards the long-term success of your business by ensuring you’re keeping up to date with the latest skills and knowledge.
Supplies and Equipment:
Whether it’s your computer, printer or specialized tools needed to perform your occupation, it is important to keep these receipts as they are work related and can be included in your tax deductions. Any shipping costs to Nunavut can be claimed as well, such as the cost of the Sealift or Canadian North shipping.
For any larger purchases, such as a computer, this are amortized or expensed over the lifetime of the asset. Your accountant can ensure this is done properly, maximising the expenses you can claim each year.
For smaller purchases, such as office supplies or small tools, these can be fully expensed in the year bought and included in your tax deductions.
READ MORE: Corporate Tax Planning Strategies for Nunavut Businesses
Tips for Proper Record-Keeping and Financial Management
Keeping up with the latest best practices when it comes to proper record-keeping and financial management is important not only for tax season, but to ensure that you’re maintaining your financial health all year-round and aware of your current financial positioning.
Here are a few things you can do to boost your financial health awareness:
Digital Tools and Software:
By using the latest accounting tools and apps such as QuickBooks or Sage 50 to streamline and simplify your bookkeeping habits and process. These tools will help you automate some of the most tedious aspects of running your business.
There are also digital tools to track specific expenses, such as logging kms driven (as noted previously), invoicing, expense tacking, financial reporting, payroll and more. These tools aim to reduce your chances of financial miscalculations.
These tools do a great job of saving you a tremendous amount of time over time through tax season, and the cost of them can be included as a business expense and are tax deductible.
Organizing Receipts and Invoices:
You should do what you can to ensure you are creating an organized system (file system) that sorts your receipts and expenses.
Whether you would like a digital, cloud-based solution or a traditional filing cabinet, it’s important to ensure that you maintain consistency and can easily find any receipts requested by your accountant or the CRA. Working with a firm like Nasaijit will ensure all receipts are properly saved and sorted for any future requests.
Tools and Resources:
You should use various tools and resources to help you with financial management. You may choose to let a professional do this for more effective financial management. Whether it’s for budgeting or business planning, these tools will support your growth as your business evolves.
As noted above, there are digital tools available for record keeping and receipt organization, but there are also tools available for budgeting, business planning and financial management. Your accounting firm can suggest the best tools for your business, and ensure they are being used to give the most value for your business.
Also, any expenses you pay to work with an accounting firm are also tax deductible as a business expense.
Separate Accounts:
You should do what you can to avoid mixing your personal and business expenses. Doing so will simplify tracking and making your financial review for more manageable and better understanding of your financial position.
We recommend having a dedicated business account set up that is used only for the business, and any personal transactions going through your personal accounts instead.
Regular Financial Reviews:
You should also schedule regular monthly or quarterly reviews to evaluate your business’ financial position. Practicing this on a regular basis will help you be more proactive in you decision making, allow you to identify trends, and ensure you can make adjustments before any issues become significant.
Services Offered by Nasaijit for Self-Employed Clients
Our team at Nasaijit is committed to helping self-employed individuals like yourself through custom solutions:
Tax Preparation and Filing Assistance:
By partnering with accountants and tax professionals, you can ensure that your taxes are filed accurately in compliance with all relevant tax laws and regulations.
They will also ensure all filings are prepared on time to avoid penalties and interest, including (if applicable) year-end tax filings, sales tax filings, and payroll filings.
Identifying Overlooked Deductions:
You should also ensure that you are navigating the complexities that come with tax deductions, so to not miss on any opportunities.
By working with Nasaijit, you will be able to get peace of mind knowing that you are maximizing your tax deductions and benefitting from all the tax savings that are available to you. We can ensure all relevant deductions are claimed on both your personal and business filings.
Financial Reviews:
As noted, it is important that you regularly review your financial position to ensure you are able to adjust to any issues. Working with Nasaijit will ensure you receive regular financial statements and reports that you can review and adjust based on.
We will ensure you have up to date financial statements and information and are available to answer any questions or support on understanding what the numbers mean, and how they affect your business.
How Nasaijit’s Expertise Helps Startups Build Strong Foundations
Starting a business is not a small feat. It’s a huge commitment that requires proper planning and a good foundation. Here’s how we help:
Business Registration and Structuring:
The selection of the right business structure for your own business can change the impact that taxes, liabilities and growth potential will have. A proper accounting firm will help you select the structure that aligns best with your goals, financially or operationally.
Scalable Financial Plans:
The growth of a business should be a top priority and included within any business plan. Nasaijit’s accountants will help you create the most appropriate financial strategies in a way that is scalable and customized to prepare for expansion or increase in demand.
Year-Round Financial Planning and Consultation:
Financial success is a continuous journey… It’s a marathon, not a sprint!
By working with our accountants, you get to benefit from ongoing support and guidance.
You’ll get to set realistic goals and create a plan of attack to reach them. A personalized approach will ensure that you are prepared well in advance for tax season and beyond.
To summarize:
To successfully plan and optimize your returns during tax season, you must have a grasp over the available deductions and have a strategy to boost your financial health.
By properly keeping records and with the guidance of a partner such as Nasaijit, you can transform any obstacles and turn them into growth opportunities. You can also optimize your tax deductions and get professional help so you can focus on what matters most to your business.
Ready to take control of your financial future?
Contact Nasaijit Financial Services today for expert advice tailored to your unique business needs. Empower your enterprise with the knowledge and tools for enduring success.