Can I claim my business liability insurance when doing taxes and how much would I get back?

  • by Kaitlyn
  • Dec 20,2017
  • 9 answers

I have a small business that I just started and will make less than $30,000 in the year. I need liability insurance as I make children s products and it s expensive. An insurance broker recently told me that I can write off the insurance come tax season (I live and operate in Ontario). The cost of the insurance will either make or break my business so if I can write it off that would make the difference of if I get insurance or not (which I definitely want). I m wondering how much of it I would get back if any? It will likely cost close to $5,000.


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Insurance Answers (9)

car253 5 months ago

Something wrong with that picture. You are only making $30,000 a year and it cost $5,000 for insurance? Is your stuff make in China? Shop around for better insurance. Or, make your stuff in the USA and save money on a business policy.

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Insurance Pickle.com 5 months ago

You should talk to somebody. Rare is it that someone incorporates before having a viable business.

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Casey Y 5 months ago

You're seeing Product Liability (not general liability, they are different) for $5k on a children's product...I might question the offer itself as that number seems low to me.

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Dan B 5 months ago

Tax laws allow you to deduct from your gross business income any and all expenses related to the business of generating income. That includes insurance, operating and maintaining equipment (computer, vehicle, etc). But you need to keep very accurate and detailed records (and receipts) to prove those expenses. Personal use of that equipment is not deductible.
In the USA, you have to show a taxable profit in 2 (or maybe 3) of the previous 5 years o r you lose the deductions.
Depending upon how your business is set up, your salary can be deducted from the business's income, but you'll have to pay personal income tax on that salary.

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lucy 5 months ago

You need to make an appointment with a Tax CPA to get a better idea. Unknown how US and Canada tax laws are the same or different, but with most business, can write off or deduct expenses to run your business.
But, $30,000 income for the business, can you live on that plus run your business?
You might want to re-post your question under taxes in Y/A.

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No Bozos 5 months ago

Liability insurance is a business expense in the U.S. I can't say for sure if the same is true in Canada.

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Max Hoopla 5 months ago

Insurance premiums are just one of your many expenses.

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P 5 months ago

You can deduct insurance the same manner you should be deducting your cost to make these children's products. It's not about how much "you get back" it lessens the amount of your sales revenue you will have to pay taxes on. How much taxes you pay on your business profits can depend on however much your entire family files for come tax time, so you really would need to talk to an accountant to get a better answer.

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ibu guru 5 months ago

For your small business, you file Schedule C. Yes, you report how much your various business expenses are, including insurances, legal, accounting fees, etc.
Considering liability issues, you really need to talk to an attorney about incorporating instead of operating as a sole proprietor. If you do not properly set up your business, accounting & tax matters, handle potential liability & tax issues, etc, your business is going to die a very painful death.

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