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    Your home office: how to get organized and claim small business expenses

    If you’re like most of us, you’ve been spending a lot of time in your home office lately. Whether you have a makeshift setup at your dining table or dedicated space with a fancy standing desk, there are probably a few things you could improve in your remote workspace. (Note to self: remember to move the baby’s crib out of view for the next webinar!)  


    In this blog, we’ll help you start the year right with the following: 


    Home office essentials you may have missed

    You have your laptop and decent Internet service, but there are a few items you may not have needed pre-pandemic that are super useful now. 

    Wondering what items you can claim as expenses when you are self-employed? See our Help Centre

    A proper desk chair

    If you’re going to be spending upwards of eight hours a day at your desk, you’ll want to invest in a comfortable, ergonomic chair. Herman Miller’s are amazing, but you can find more affordably priced ones too. 

    A webcam and good lighting 

    Your laptop has a built-in camera, but with all the Zoom and Google Meet calls you’ve been doing, a dedicated webcam can work wonders. You can position it where you need to and greatly improve the quality of your video and audio.

    Another option is to use a video conference light to illuminate your face in a more flattering way (no more shadows!).  

    A wireless headset 

    If you’re interested in improving sound quality and productivity, a wireless headset lets you wander around your home office when needed and block out the noise around you. This is definitely useful if you’re sharing your workspace with your partner or kids doing online school. 


    How to organize your digital documents 

    Let’s face it, paper is the number-one enemy making small business owners anxious in their home office. Our advice? Go digital where possible. 

    Learn what documents you should keep, and what you can safely shred. 


    Use Hubdoc to organize your digital documents for you: collect all your receipts, bills, and bank statements here, and Hubdoc will read the documents, name them, date them, make them searchable, and sort them into a folder structure that you can customize.

    It works with you wherever you are. Snap pics of receipts from your phone and forward emailed invoices to your account. Hubdoc will organize your documents, store them safely and give secure access to your bookkeeper and accountant. (And if you’re already using Xero, it’s included with your account!)  

    What makes Hubdoc extra special is that it will send your receipts and documents to Xero to be matched to bank transactions, which audit-proofs your books. It also fetches bank and credit card statements automatically so you’re not chasing them down at year-end to give to your accountant.

    If you still like having your office full of paper, try using a rainbow file folder system

    Need a hand with organizing physical files? See our blog on home office organization

    Organize your emails 

    You should use folders for your emails as well. You can tag your emails or have them redirect to the appropriate folder. While getting your inbox to zero isn’t always possible, at least unsubscribe from emails that don’t add value to your life. 

    Have you heard of the FAST system? After you read an email, decide if you need to File it, Assign it to someone, Store it for reference or Trash it. 


    Ways to minimize paper in your office 

    Now that you’ve organized your paper and digital files, think about ways to minimize new paper from accumulating. This isn’t just about saving money and trees, it’s about saving time and effort for you and your business.  

    Sign documents digitally 

    Get your signature on file and use it to sign documents that are sent to you digitally. HelloSign is what we use for electronic signatures. 

    Go paperless 

    Select the paperless option for any accounts you can: bank and credit card statements, phone and cable company bills, utilities, etc.

    Digitize your documents 

    Digitize your paper by scanning it. The best way to do this is with Hubdoc — it will name and sort everything into folders, a task that would take hours of diligence if you just used tools like Apple Notes, Scanbot, Dropbox or Google Drive. Even a desktop scanner would add hours to a task that Hubdoc does in seconds.

    Back it up, back it up, back it up 

    If you don’t use Hubdoc, you’ll want to make sure your digital files are saved somewhere safe in the cloud in the event that your computer crashes, or your laptop goes missing. Google Drive, Dropbox, iCloud and OneDrive are all free or cheap options for storage. These providers all have proper security and redundancy so you don't have to back up your files to an external hard drive. 

    If you do use Hubdoc (and want to make sure a second copy of your files are saved), it integrates with Google Drive, Dropbox, Sharefile and Box. It will use the Hubdoc naming and folder structure, and copy all your source documents to a backup location. 

    Don't forget your passwords!

    We don’t have to tell you how important it is to keep all your business and personal online accounts safe. We all know we’re not supposed to use the same password, but who hasn’t when there is so much to keep track of? 

    Lastpass (for Windows) or 1Password (for Mac) are two apps that will save you so much time as you make strong, unique passwords for all your accounts. You sign up and create one long master password. Then log every password for every online account (making sure they’re all unguessable and unique). Boom. Your passwords are unique, safe and you never have to remember them again. 

    See more of our favourite free apps for small businesses.


    Home office expenses you can write off 

    You can usually only claim home office expenses if you have business income and your home is your primary place of business. However, the CRA has released new work from home deduction guidelines for employees as well (see below for more details). 

    The general rule of thumb for home office expenses is to take the square footage of your dedicated home office and divide it by the total square footage of your home. You can claim that percentage of your home expenses as a business expense. If you don’t have a dedicated office space (say you’re working from the dining room table), you’ll have to figure out the percentage of time you use that space for work.

    TIP: Don’t claim more than 15% for home office if you want to fly under the radar of the CRA.

    These are the home office expenses that you include in this calculation: 

    • Interest on your mortgage payment (not your entire mortgage payment) or your entire rent payment
    • Utilities
    • Property taxes
    • Insurance

    For example, if your home office is 120 square feet and the total square footage of your home is 1,200 square feet, you can claim 10% of the expenses listed above. 

    There are certain grey areas when it comes to home office expenses. For example, these home expenses should be calculated separately: 

    • Home internet: You need that internet to run your business, so it seems quite reasonable to write off 50% of internet costs. 
    • Security system: If you need the security system for your business, then a larger portion may be reasonable.
    • If you regularly see clients at your home (weekly), then your field of write-offs opens up: coffee, magazines, cleaning, snow shoveling, yard maintenance, etc.  

    You may claim 100% of the supplies and furniture for a dedicated home office space: furniture, iPads, headphones, even houseplants! Renovations to the dedicated space can also be a business expense. 

    Learn about other home office and vehicle expenses that may be grey areas. 

    Work from home deductions for employees

    If you worked from home during the COVID-19 pandemic, there are two ways you can claim tax deductions: 

    1. Claim $2/day flat rate to a max of $400. There is no documentation or employer sign-off required. You must have worked more than 50% from home, for a minimum of four consecutive weeks. Read all the qualifications.
    2. Claim actual expenses. You'll need a T2200 form from your employer with their sign-off. 

    Note: You don’t qualify for this deduction if your employer reimbursed you for your expenses. 


    Did you find this blog helpful? Read more about Small Business Basics topics that may be relevant to you and your small business. 

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