What Can Help Your Tax Savings When You Start Your Own Business
Simple ways to save on taxes when starting a business in Canada or the US: keep clean records, track mileage, claim home office costs, handle equipment right, and avoid missed deductions.
When you start your own business, tax savings comes from one thing: clean proof. If you track income, expenses, and mileage the right way, you usually pay less tax and spend less time fixing mistakes.
This is a practical guide for Canada and the US.
1) Pick a business setup that fits your stage
Your business setup changes how you pay tax and what forms you file.
Canada often starts with sole proprietor, then some people move to a corporation later. If you have a Canadian-controlled private corporation and you qualify for the small business deduction, CRA lists a lower net tax rate on that income.
The US has common setups like sole proprietor, LLC, and corporations. The key point is the same: the setup changes the tax rules.
2) Register for the right tax accounts on time
Canada: GST/HST registration often becomes required once you pass the small supplier threshold. CRA explains the $30,000 threshold rules and when you must start charging GST/HST.
Even if you are small at the start, track revenue so you do not miss the moment you must register.
3) Keep records from day one
This is the base of every deduction.
Canada: CRA says you are required to keep records of all your transactions to support income and expense claims.
US: the IRS explains that everyone in business must keep records, including records that support deductible expenses.
Clean records also protect you if you ever get reviewed.
4) Track mileage and vehicle use (high-impact for many businesses)
If you drive for work, mileage is one of the easiest places to lose money, because people forget trips.
Canada: CRA says for each business trip, keep a log with date, destination, purpose, and kilometers, and record odometer readings at the start and end of the period.
US: the IRS says you generally calculate business car expenses using either the standard mileage method or the actual expense method.
Use MileLog to keep a real mileage log
MileLog is your mileage tracking app. It is built to reduce the work so you keep the habit:
- Automatic trip detection (tracking starts when you drive)
- Swipe to classify business vs personal
- IRS-compliant reports and CRA-ready reports
When mileage is captured and classified while it is fresh, your deduction becomes real instead of a year-end guess.
5) Track "ordinary and necessary" business expenses
Most tax savings is not one big thing. It is many normal business costs added together.
US: the IRS explains that an ordinary expense is common in your industry, and a necessary expense is helpful and appropriate for your business.
Canada: CRA lists many common deductible business expenses and expects you to support what you claim.
Common categories many new businesses miss:
- software and subscriptions used for work
- marketing (ads, design, printing)
- accounting and legal help
- supplies and small tools
- phone and internet (business share)
6) Handle equipment the right way (laptop, camera, tools)
Big items are often not deducted the same way as small supplies.
Canada: CRA explains capital cost allowance (CCA), which spreads the cost of depreciable property over time.
US: Section 179 may allow expensing qualifying property up to an annual limit ($2,500,000 for tax year 2025, with a phase-out above a threshold).
The simple rule: keep receipts, note what the item is used for, and track when it was put into business use.
7) Claim home office costs only with clean rules
Home office costs can matter if you work from home.
Canada: CRA allows business-use-of-home expenses if the workspace is your main place of business, or used only to earn income and used regularly to meet clients/customers/patients.
US: the IRS has a simplified option: $5 per square foot, up to 300 square feet.
The IRS also explains how part of your home can qualify as a principal place of business for admin/management activities when there is no other fixed location for those activities.
8) Set aside money for tax during the year
A new business often has uneven income. If you do not set money aside, tax time becomes a cash problem.
A stable approach is to treat part of every payment as "not spendable" and keep it separate.
Summary
Tax savings when starting a business comes from routine:
- keep records
- track mileage
- capture real expenses with proof
- handle equipment and home office the right way
MileLog helps with one of the highest-impact routines: keeping a complete mileage log for business driving.