What is a business?
A business is an activity that you intend to carry on for profit and there is evidence to support that intention. A business includes:
a profession
a calling
a trade
a manufacture
an undertaking of any kind
an adventure or concern in the nature of trade.
If any of your income earning business activities takes place on a reserve, some of your business income might be exempt from tax.
Business income includes income from any activity you do for profit. For example, income from a service business is business income. However, business income does not include employment income. Therefore, you need to know if you are an Employee or Self-Employed .
You must know the date when the business can be considered to have started. Generally, Canada Revenue Agency (CRA) considers your business to have started when it begins some significant activity that is a regular part of the business or that is necessary to get the business going. They look at each case on the merit of its own facts.
For example, you decide to start a merchandising business and you buy enough goods for resale to start the business. At this point, CRA would consider the business to have started. You can usually deduct expenses you have incurred to earn the business income from that date. You could still deduct the expenses even if, despite all your efforts, the business ended.
As another example, you review several different business prospects in the hope of going into a business. In this case, CRA would not consider your business to have started, and you could not deduct any of your incurred costs.
For more information on starting a business, contact us today.
