Taxes can hit small business owners hard, and have a dramatic impact on their bottom line. However, there are some steps you can take as a small business owner, to reduce your tax bill, and hang onto more of what you’ve earned.
Working with a
corporate tax accountant can help you lower your corporate tax bill, and here are 10 simple steps they may guide you towards taking:
- Organizing your business records
By keeping meticulous records of all business transactions, including expenses, income, invoices and receipts, you can lighten the load when it comes to tax season. Keep in mind that the Canada Revenue Agency (CRA) has the right to request your business records at any given time, and that by law, they must be accurate and well-maintained.
Being organized also enables you to check for deductions and credits that you might be eligible for, which could lower your tax bracket and save you money on your tax bill overall.
- Filing on time
When you hire a corporate tax accountant, it’s unlikely that you’ll file your tax return late, which means you can avoid penalties for late payments, and stay in the CRAs good books, literally!
- Hiring a member of the family
You may be able to benefit from a tax-saving perspective when hiring family members, as a certain amount of their earnings will be tax-free, while their salaries are tax-deductible for your business. To find out the latest information regarding this, arrange to speak with a local CPA.
- Separating your personal expenses from those of your business
Did you know that by law, business owners must use a bank account and credit card dedicated for their business, and keep their personal finances entirely separate from this? In doing so, business expenses are easier to track, and legitimatizing them is also easier should you be asked to by the CRA, so you should want to comply with this.
- Writing off losses as tax deductions
If your business has been the victim of a theft or capital losses, you can use these to help reduce your total taxable income, as per the CRAs guidelines.
- Deducting home office expenses
If you run your business primarily from your home, and you have an income from it, you may be eligible to claim some use-of-home expenses, such as property taxes, utilities, and home insurance, among others.
- Claiming moving costs
If you relocated due to business-related reasons (and did so within at least 40 kms of your original address), you might be eligible for deductions based upon moving expenses, such as realtor commissions and moving services.
- Choosing the ideal business structure
Advice from a lawyer or accountant can help you choose the most tax-beneficial structure for your new business, whether that be sole proprietorship, partnership, or corporation.
- Investing in RRSPs and TFSAs
Registered Retirement Savings Plans and Tax Free Savings Accounts can help you save money towards your retirement, and reduce your tax bill. Consult with a local accountant to find out exactly how you could benefit from these investments.
- Keeping up-to-date with changes to tax laws
If you don’t want to read up on tax legislation and stay updated with any changes, you can simply schedule an appointment with a
corporate accountant, who can advise you of any updates that might have an impact on your business.
Lowering your corporate tax bill is entirely possible, and to check whether any of the steps above are applicable to you and your circumstances, schedule a consultation with an experienced CPA.
