Year End Planning for Small Businesses to Save Taxes
Like any other Tax paying entity, even Small Businesses can also save taxes without adopting any unfair mean. All they need to do is to look around for options and ways, consult an expert and wear their thinking caps.
Some of the Tax Saving Tips are mentioned Below:
- Small Business Deduction: it is a Canadian Income Tax deduction Plan which is provided to the Canadian controlled private corporations throughout a particular year of tax. The rate of deduction is almost 17% which is applicable for the first $500,000 income of a given Corporation.
- Maximizing Capital Allowance Claim: At the end of the year when you are about to pay the taxes, buy more and more of equipment and technology instead of purchasing them in the new year. This would help you to claim 50% of the Capital cost, but that is quite a large amount and you would be strengthening your capital assets too.
- Accounts Updating: You must understand the actual financial status of your company before the year comes to an end. You can take help of your accountant for making a research and preparing the same.
- Do not dispose depreciable assets: Any manufacturing equipment or any such capital asset should not be disposed before the arrival of New Year. Otherwise, you may land up losing upon the “Capital Claim Allowance” for the current year and will have to pay taxes.
- Defer your income: It is a smart move to defer your income in the year end otherwise your tax will get appreciated by a large amount.
- Spend more on your business: Year end is the best time to spend more on your business and show on paper that you have made huge expenditures on the company. The expenditure should not be lopsided and unjustified.
- Make charitable donations: Make charitable donations for enjoying tax reliefs and preserve the receipts of such donations.
- Make contributions in RRSP: Starting investment and making contributions in the existing Retirement Savings Account is a great way to reduce the tax burden, provided it is done before the year comes to an end.
The given tips will help a Small business Owner to save Taxes to a great extent and divert the same for the growth of his own business.