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Starting a business at start of the year
Expert: Michael Fromstein
I am planning on starting a business in Ontario. Should I wait to start the business in January for tax benefit purposes. I will want to register the company and run it as separate business. This is going to be run from home. folks
Michael Fromstein answered:
You should start the business when it is good for the business. For income tax purposes, if you do not incorporate the business, you will have to compute your income on a calendar year basis. That means, if you start in December, your first year will be very short, i.e. from the day you start until December 31.
You can claim expenses for a home office subject to a list of requirements (space reserved only for business, depending on type of business you see clients there, etc). However, you cannot create or increase a loss with home office expenses. Those expenses are put on a schedule and you can use them in the future to reduce income when you generate it from your home based business.
About the author
Michael Fromstein is a tax specialist with Integrated Professional Specialist Services.