Why is it important to keep records? This is because it helps you identify the sources of your income and help you in deciding whether you should apply for a GST/HST.
4 SMART TAX STRATEGIES FOR BUSINESS OWNERS
With proper planning and execution, you can get decent tax savings. Reduce the balance you owe and
increase potential tax refunds.
Most small business owners think that they should spend all out before the end of the year to reduce
their tax bill. We do not agree with that! You don’t want to spend money on things you wouldn’t
originally buy to minimize your taxes. You don't want to spend $100.00 to save $30.00, that’s not smart
We can't avoid taxes, what we can do is to minimize the tax payable. Here are 4 wise business practice
that will help you reduce your income taxes and get a jump on next year's tax planning.
1. Year-End Investments
List any purchases you anticipate to make next year and consider making them before the end of the
year to maximize deductions.
2. Old Inventory and Bad debt
Inventory only gets expensed when it's sold, but what if it can no longer be sold? Well, you can get rid of
it and deduct the original cost you paid for them. The same process applies to uncollected debt, just
make sure you have proper records to prove both situations. Both are not ideal for any business, but they
are deductible so take advantage of it.
3. Maximize your Retirement Contribution
Small business owners have several options for employer-sponsored retirement savings plans, each
contributions you make for yourself and your employees are tax-deductible. If you are running a Sole
Proprietorship or Partnership, maximizing your RRSP contribution is an excellent way to reduce your
taxes and save for your retirement, you can contribute up to 18 percent of your income.
4. Consult your accountant
Most of us use accounting software, and we are our own bookkeeper and tax preparers. Though,
overpaying taxes is one of the biggest challenges on a small business owner’s cash flow. Consider getting
a second opinion, having a second set of eyes at your tax situation can often uncover tax deductions and
potentially get you a refund.
Ask your tax professional to check the last 3 years of taxes, you can file amendments and get a refund if
she finds new deductions that were missed from previous tax returns.
Most tax professionals simply act on the information you bring them. Try to find a tax professional
who is concern about your business, ask questions, and probes. A great tax preparer uncovers tax savings
that most CPA’s miss.