10 Tax Time Tips for Small Businesses

By Stefanie Neyland, Small Business Content Developer at Bizlaunch.com

For those who aren’t good with numbers (and even for those who are), tax time inevitably brings about a certain degree of stress and anxiety—and not to mention headaches. But the truth is that tracking your company’s finances is key to maintaining a healthy business.

With so many opportunities to save a dollar or two, getting a handle on exactly what you can and can’t claim can be taxing (ahem...); and with the dreaded deadline on the horizon, many business owners become overwhelmed and find themselves frantically sifting through that box-come-black-hole crammed full of receipts. The good news is that it doesn’t have to be this way. Here are ten tax time tips to ensure you get everything back you’re entitled to.


1. Hire a good accountant

First things first: Start off by employing a good accountant that can educate you, save you money, and keep you on the right side of the law.


2. Be systematic

Keep all receipts, bank statements, credit card statements, accounts receivable, accounts payable, payroll records and communications from Canada Revenue Agency organized, and  as a back up, scan all receipts. In doing so you’ll be making it easier to retrieve information when you need it.


3. Go the extra kilometre

You can make big savings by keeping a log of the distance you cover. Any travelling you do in your car for business purposes is tax deductible, and there are two options for claiming it:


●     Claim mileage: for each mile you drive from your workplace to a client’s office or on other business, you can claim the set mileage rate per kilometre.

●     Actual expenses: you can keep track of costs like car maintenance, gas, insurance, and repairs, and claim those as a deduction on your taxes.


4. Good food, good company

Food and drink, when associated with business, is tax deductible. Consider offering to pay for a meal with a client, employee or business contact—you’ll enjoy some great grub and with the benefit of claiming it as an expense. What better excuse could there be to chow down?


5. Profit from your property

If you operate a business from home, you’re entitled to deduct a portion of your total annual expenses proportionate to the space you use—but be sure to discuss the ins and outs of this rule with your accountant before you claim.


6. Family values

If a spouse, common-law partner or other family members work for your business, a reasonable salary may be deducted. This can be a great tax savings strategy for income splitting and reduction of your family’s overall tax burden—and the salary paid to a family member may allow him or her to become eligible for CPP and RRSP contributions, to boot.


7. Mix business with pleasure

While you don’t want to abuse your rights, if you can add on a little business to a pleasure vacation you may be able to deduct a portion as a business expense. Find a client who is based in a city you’d like to travel to and arrange a meeting.


8. Big purchases, big savings

Before buying any assets for your business, discuss the investment with your accountant as they’ll know the tax benefits, depreciation rate allowed and the best time to make any purchases.


9. Get incorporated

If you’re running a very profitable business, it may pay to incorporate it. Discuss the pros and cons of incorporating your company with your accountant and lawyer. Small business owners that are incorporated can take advantage of the Small Business Tax Rate which is far lower than the average tax rate.


10. Embrace the cloud

Stop scrambling to find missing receipts at the final hour and instead consider using cloud-based financial management software. It’ll allow you to easily track your expenses and will save you valuable time when the tax deadline is looming.


By Adam

May 29, 2013