Quick Business Tax Question
 

Hey there, I'm trying to wrap my head around business expenses and there's one big question I have.

Lets say in pretend land, you ran your own sole-proprietorship small business and made $15K only (no GST number to worry about). Lets say of that 15, you got taxed $4,000. You were diligent in recording and archiving all your business expenses for that year, and when you tallied up everything you could confidently write off (equipment for example), the total was more than the $4,000 you owed in taxes (lets say your total expenses were $5,000 for your business that year).

Do you end up paying no taxes that year? What happens to the extra $1,000 in expenses you wanted to write off? Do you have to just eat those costs, or can you transfer them to the next taxable year and subtract them from next years' taxes?

Im confused, any help is appreciated.


Also, to my understanding if you make under $10,000, you wont be taxed anyways. What happens to your business expenses then? Especially if you invest a lot of your income buying equipment and only make say 9,000, then next year do you pay full taxes with no ability to compensate for that initial startup cost?

that's not how tax works...
you made $15K, and has a 4K expense, so you actually made $11K, and you are taxed at the 11K mark based on your personal tax rate if you are a sole-proprietorship.

for equipment you are allowed a certain % of capital cost allowance deduction every year

Go get an accountant

as someone who recently started up a sole-proprietorship small business with alot of expenses, i hope this thread becomes usefull..

write offs don't offset taxes 1:1 LOL... write offs reduce your net income. which then reduces the amount of tax you owe.

expenses and allowable deductions are first taken off your total income, which gets you to your taxable income. that's the amount you apply your personal tax rate/tax credits
to get the amount of taxes you need to pay.

as a sole-prop. you're still consider a individual so you can earn up to $9,600 taxable income before getting taxed

net loss can be carried forward 20yrs or back 3yrs to revise previously filed tax return