If you are considering starting a bed and breakfast, it is important to be aware of the tax benefits that can be obtained. These include:
Input Tax Credits
If you operate a B & B, you may be eligible to claim input tax credits for the GST/HST paid on certain purchases and expenses that you use in your business. This could be a great tax benefit to you!
If your bed and breakfast has any long-term assets such as buildings, furniture, or equipment, you can deduct the value of those items from your gross income. In addition, you may be able to claim deductions for capital expenditures on renovations and improvements to your property.
In most cases, bed and breakfast owners can deduct the cost of their health insurance premiums on their personal taxes. However, this can be a difficult deduction to take if you have low income or a small business.
Travel for Research and Development
If you own a bed and breakfast, you might be required to take frequent trips out of town for business purposes. For example, you might need to do research on how other inns and B&Bs do things or what the best strategies are for your business.
Bed and breakfast owners should consider obtaining insurance for their businesses in order to protect themselves from lawsuits. Having general liability insurance is recommended, but you should also consider obtaining other types of coverage such as commercial auto, crime, and workers’ compensation.