Many small business owners adopt a reactive approach to their taxes, whether this is because they underestimate the importance of strategic tax planning and the opportunities for reducing their tax liability, or whether they simply hate dealing with their taxes and so leave them to the very last minute.
Even if using accounting services in Langley BC, some small business owners still only connect with their accounting team once a year, and could well be overpaying as a result.
Whatever the reason for taking a reactive tax approach, swapping to a proactive, year-round approach, will very likely pay dividends, and here’s how to do it:
Don’t get caught in the SBA trap
The Small Business Deduction, or SBD, helps to keep federal tax rates at a low 9% for all Canadian Controlled Private Corporations, or CCPCs. It’s no wonder it’s so popular. But this year, the CRA are scrutinizing ‘associated corporations’ and passive investment income. This could mean that if your business has recently grown, you might inadvertently lose access to this lower rate.
To avoid this, schedule a mid-year review with your accountant, who will assess your corporate structure and make sure that your growth doesn’t trigger a tax bracket that’s higher.
Make the most of the Capital Cost Allowance
Maybe you’re planning to buy new equipment for your business or upgrade your tech stack? Time those purchases right, and you may be able to claim a bigger deduction in the first year, through the Accelerated Investment Incentive.
For instance, if you invest in costly equipment on the last day of the year, as opposed to the first day of the next year, your 2026 tax bill will be huge. But by timing such purchases strategically, you can reduce that amount.
Identify tax breaks unique to your industry or niche
While a one-size-fits-all approach might work for businesses in some sectors, for specialist firms, there may be a range of tax breaks that are unique to them:
- Tech startups – talk to your accountant about SR&ED credits
- Medical professionals – work with accounting professionals to minimize TOSI, or ‘tax split on income’ through intelligent payroll and dividends handling.
- Real estate investors – an accountant will help make sure that new build GST/HST returns are correctly filed so that you aren’t targeted for an audit.
Take advantage of modern accounting and bookkeeping tools
Making decisions based upon numbers that aren’t accurate or up-to-date, is what you’re likely doing if you’re not using Cloud accounting tools to give you a clearer picture of your tax liabilities in real-time.
Using modern tools coupled with professional tax services in Surrey BC, stops unpleasant surprises from ruining your year, every tax season; helping you see, well in advance, exactly what you will be expected to pay.
Without strategic tax planning that takes place consistently throughout the year, you could be paying more than you need to in taxes. Continue approaching taxes reactively, and you’ll lose more of your hard-earned money, while inadvertently stunting your company’s growth.