“In all toil there is profit, but mere talk tends only to poverty.” – King Solomon
The ancient King Solomon was a pretty smart guy. Since I was young I always realized that consistent hard work has always produced the best results in my life. I have a tendency to like to try new things and talk about different possibilities to either make money or grow a business, but often it ends up as just talk. At some point a plan needs some toil to get it to work. Talk is fun, but toil pays the bills.
Every year (especially with new clients with small businesses) I get the question about what receipts a small business owner should keep in regards to their vehicles. For the majority of my clients it works like this:
Keep all of your:
- Gas Receipts
- Repair Bills
- Insurance Bills
- License and Registration Receipts
- Car Wash Receipts
- Parking Receipts
- Lease Payments and Lease Paperwork
- 407 Bills (That apply to business travel)
Other expenses to take note of:
- The Fair Market Value of your vehicle when you started your business
- Interest costs on any loans against your vehicle loan if purchased
Even if you only use your vehicle for small trips and your business is small, keep all of your receipts. I always recommend keeping an evelope in the visor of your car and as soon as you pay a car bill put it straight into the envelope.
The next step is important if you want to keep the government happy. You need to have prood of all the business driving you drove throughout the year. The best way to prove that you made business trips is with a mileage tracker. Throughout the year if you kept good records you should know how many kilometres you drove for business and how many kilometres you drove in total.
Ex. 2,000 kms for business driving divided by 10,000 kms of total driving equals 20%. Therefore we would be able to apply 20% to all your vehicle costs.
Ex. Your vehicle costs $5,000 to drive throughout the year and your percentage is 20% therefore I can reduce your taxable income by $1,000 ($5,000 x 20%).