Taxes can be intimidating for a new small business. Staying on top of the tax return process will help you to save money and keep the CRA at bay. Here are some tax tips for small businesses that will help you to manage your responsibilities to the CRA.
Track Expenses Daily
One bad habit that small businesses can get into is to save their auditing tasks until it's time to do taxes. Instead, you can work these tasks into your daily routine. For instance, place any deduction receipts into a special file while doing your bookkeeping.
While you may send most of your accounting work to a third party, it can still be helpful for you to keep everything organized. When the tax accountant receives a file that's organized by date, it will be much easier for them to help you find discounts and tax credits for your file.
Sharing Income with Another Person
Canada's marginal tax rates make your tax bill higher as your income increases. Some small business owners choose to transfer part of their income to another person, such as a spouse or a dependent. However, this amount needs to be reasonable; be sure to document any time that your family members spend on the business.
Claim Your Credits- But Don't Overdo It
As a business with many related expenses, you can do yourself a favor by contacting a tax specialist to see which ones you should and shouldn't claim. If you miss some opportunities to write off business expenses, you could end up paying much more than you should; on the other hand, being too liberal about writing off expenses can lead to an audit and penalties. Consulting a professional for your first several years in business is the best way for you to find where that line is.
Hire a Tax Professional
Several of the suggestions above will require that you understand the tax laws thoroughly enough to take full advantage of them and to know what your legal rights and responsibilities are. Especially as a new small business, it's a great idea to use tax professionals to help you put together a solid tax return. The money and time that you can save is often well worth the cost of hiring a tax firm to do your returns. Especially if you can roll your accounting, payroll, and other financial processes into one professional, it's worth it to get the extra financial consulting to save your business money. For more information, contact a professional like Tax Professionals Padgett Business Services.