For those of you that want a short answer, the short answer is most likely “Yes”.
As a disclaimer, we are QuickBooks Accountants near Calgary and provide bookkeeping and tax preparationservices, and this information is not to be considered financial nor tax advice. Please keep reading for information and don’t hesitate to call us or a professional of your choice for more information.
In this article, you’ll get the long answer as to whether or not you can deduct QuickBooks fees on your taxes in Canada.
Introduction:
When it comes to managing your finances as a Canadian business owner, QuickBooks is the most likely candidate. Its user-friendly interface and comprehensive features make it a great choice for all your accounting, invoicing, and other financial needs. However, as a business owner, you're likely always looking for ways to maximize deductions and minimize taxes.
Understanding QuickBooks Fees:
Before we go into the tax implications, let's first break down what are all in the QuickBooks fees in Canada.
Nowadays, QuickBooks charges a monthly subscription fee for using its services, with the pricing depending on the plan you choose or your small business.
These fees are going to cover use of the software, GST remittance, updates, customer support, and any add on features such as payroll processing, T4A filing, T5018 filing, and advanced reporting.
As a business expense, these fees are generally deductible, but there are circumstances where they would not be considered an allowable business deduction.
Let’s have a closer look as to how the QuickBooks fees could
Tax Deductibility of QuickBooks Fees in Canada:
In Canada, the legal allowable tax deductibility of QuickBooks fees depends on whether the expense is considered necessary for the operation of your business.
Generally, if you use QuickBooks to manage your business's financial records, track income and expenses, generate invoices, or prepare financial reports, the fees should most definitely be tax deductible.
The Canada Revenue Agency (CRA) allows deductions for expenses that are incurred for the purpose of earning business income, provided they meet the criteria laid out by the CRA.
Criteria for Deductibility:
To determine whether QuickBooks fees are tax deductible in Canada, consider the following criteria:
1. Ordinary and Necessary: The expense must be ordinary and necessary for carrying on your business. QuickBooks subscription fees are typically considered ordinary expenses for businesses that require accounting software to manage and maintain their financial records.
2. Reasonableness: The amount you claim as a deduction for QuickBooks fees must be reasonable relative to the benefits received. Make sure that the Intuit subscription plan you choose aligns with the needs and size of your business.
3. Business Use: Intuit QuickBooks fees are only deductible to the extent that they are used for business purposes. So, if you additionally use QuickBooks for personal finances, you can only deduct the percentage of the fees attributable to your business activities.
4. Documentation: It’s important to maintain accurate records and receipts to substantiate your QuickBooks expenses in case of a CRA audit. Make sure to keep invoices or receipts detailing the Canadian subscription fees paid to Intuit QuickBooks.
5. Proportionate Deduction: Again, if you are using QuickBooks for both business and personal financial record keeping, you should allocate the expenses for subscription fees accordingly. Only the portion related to your business activities is deductible against business income in Canada.
Always Consult a Tax Professional:
While the general guidance provided here can help you understand the tax treatment of QuickBooks fees in Canada, you’ll need to seek some advice from a qualified tax professional.
Tax laws and regulations aren’t always easy to figure out, and the deductibility of expenses may vary based on your circumstances and what type of business you are in.
A tax professional can provide personalized guidance tailored to your situation and ensure compliance with applicable tax laws.
Conclusion:
In conclusion, QuickBooks fees are usually tax deductible in Canada if they are incurred for the purpose of earning business income and meet the criteria outlined by the CRA.
As one of the best tools (in our opinion) for managing the books in your business, QuickBooks subscription fees (or any fees paid to Intuit for business purposes) can contribute to the efficiency and accuracy of your accounting processes.
However, it's important to take care in recording your expenses and always seek professional advice to make sure you are abiding by the Canadian Revenue Agency’s tax regulations.
By taking advantage of all that QuickBooks software has to offer for your small business and understanding its tax implications, you can make the most of your business's financial management while maximizing tax deductions legally and lawfully.
One of the many benefits to using an accounting service is that you'll have help like this to answer any of your tax related questions.
We offer full bookkeeping and tax preparation services in Calgary, Alberta and surrounding area. Get in touch with us today to find out how we can help!
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