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Working and Running a small business

Expert: Donna Lee

Chris asked:

I started a take out restaurant business 6 months ago (sole propriorship), Victoria BC. I kept my regular job and hired people to run the buisness and it was starting to show a little profit. I signed a 1 year renewable lease, 6 months in the Landlord informs me that he has sold the building and will not be renewing my lease. After I sell the assets of the business I will be showing a $25,000.00 loss.

Question: I have a full time job working for someone else. I make approx $100,000 a yr and pay approx $25,000 in income tax.

Can I write off the business loss on my income tax and get it all back?

Donna Lee answered:

Sole proprietorships are businesses carried on by an individual. As such, the proprietor enjoys all of the profits from the business, but is also personally liable for all of its debts and obligations.

To the extent that your business is operating at a loss, the loss can be applied against your other sources of income. If your business loss is more than all of your other sources of income, you may have a "non-capital" loss for the year which can be applied against income from the previous three years or carried forward for 20 years.

About the author

Donna Lee is a Senior Tax Manager at Meyers Norris Penny LLP in Calgary, AB.

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