Incorporated Businesses and Contractors in BC: How to Handle Expenses and Taxes
- BoostBC
- Sep 7
- 2 min read
If you’re an incorporated business or contractor in British Columbia, understanding how to manage expenses and taxes is essential for running a smooth operation. Whether you work from a home office, meet clients in person, or a mix of both, this blog post covers everything you need to know to stay compliant and optimize deductions.
Writing Off Expenses in Your Corporation
To be deductible, an expense must meet three criteria:
Reasonable
Incurred to earn business income
Properly documented (invoice or receipt)
Personal expenses are not deductible.
Common Deductible Expenses in BC
Office supplies: paper, pens, software subscriptions, postage
Utilities: phone, internet, hydro, water (business portion only)
Rent or mortgage: interest, property taxes (home office portion)
Wages and salaries: (employees, contractors, yourself)
CPP/EI contributions: (if on payroll or self-employed EI program)
Professional services: legal, accounting, consulting
Marketing and advertising: digital ads, print, swag, business cards
Insurance: general liability, business, equipment, home office portion
Travel: flights, hotels, taxis, car rentals, mileage for personal vehicles
Meals and entertainment: (50% deductible unless for staff events)
Bank fees and interest
Training and education: directly related to your business
Capital assets: computers, cameras, furniture (claimed over time using Capital Cost Allowance)
Vehicle and Travel Expenses
Deductible if used for client meetings, sales calls, or business events
If personally owned, track business vs personal kilometers
Parking is fully deductible; traffic fines are not deductible
Home Office Expenses
Deduct a portion of home costs if:
It’s your principal place of business, or
It’s used exclusively for business and client meetings
Deductible home expenses include:
Rent or mortgage interest
Utilities (heat, electricity, water, internet, phone)
Property taxes
Home insurance
Maintenance and repairs
BC-Specific Considerations
Corporate Tax: Small business corporate rate: 2% on first $500K income, plus federal 9% = 11% total
GST: Businesses earning over $30K/year must register and charge GST; Input Tax Credits can be claimed
PST: 7%; some professional services are exempt — verify for your services
Working With or as an Incorporated Contractor
For Hiring Businesses:
Payments to contractors are deductible
No payroll remittance (CPP, EI, or income tax)
Keep invoices with GST number if applicable
For Contractors:
Report payments as revenue
Deduct expenses including:
Operating costs (software, office supplies, phone, internet)
Travel/vehicle expenses
Marketing and promotion
Professional services
Home office portion
Capital assets
Salaries or dividends
Important: Only the party who pays a specific expense can deduct it — avoid double-dipping.
Avoiding Personal Services Business (PSB) Issues
CRA may reclassify a contractor as an employee if:
They work exclusively for one client
Client controls work schedule/methods
Contractor uses client’s tools
Contractor bears no business risk
Tips to Avoid PSB Classification:
Clear written contract defining supplier–client relationship
Contractor controls how work is done
Maintain multiple clients
Invoice like any other vendor
Key Takeaways
Hiring businesses can deduct contractor invoices as expenses
Contractors report income and deduct business costs
Both sides benefit when done correctly, avoiding overlapping claims
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