Every business owner knows you can write off things like meals, mileage, and supplies.

But how you label those write-offs can quietly trigger an audit — or worse, deny you deductions you actually deserve.

Not All Write-Offs Are Created Equal

Let’s say you buy a $300 chair for your office.

• If you call it “furniture”, it’s a capital asset.
• If you call it “office supplies”, it’s a regular expense.
• If you call it “decor”, CRA might wonder if it’s personal.

Same chair. Three totally different implications.

This matters because capital assets are depreciated over years. Supplies are deducted right away. And anything personal? Not deductible at all.

The CRA Is Watching for Patterns

The CRA doesn’t just look at the dollar amounts.
They look at your ratios.

• Too much in “meals” and “travel”? Red flag.
• Lots of “miscellaneous” entries? Red flag.
• Big expenses labeled vaguely like “other” or “general”? Definitely a red flag.

Even if you're doing nothing wrong, poor categorization makes your business look sloppy — and that’s when auditors start poking around.

Clean Categories = Fewer Questions

Here’s what clean expense categorization tells CRA:

✅ You’re organized
✅ You understand your business finances
✅ You’re not trying to fudge the numbers

That builds trust. And trust means less scrutiny.

The Fix: Build a Chart of Accounts That Actually Makes Sense

Most business owners inherit messy categories from QuickBooks or a DIY setup.
Instead, build a custom chart of accounts that reflects how your business actually runs.

• Group expenses logically (e.g. "Online Software Subscriptions" vs. just “Computer”)
• Avoid catch-all categories like “Other”
• Split mixed categories (like “Marketing & Meals”) into separate lines

It’s a small fix — but a powerful one.

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