Tax Planning for small business.
Not one small business owner that we know enjoys paying taxes. It is always a great feeling when your company has had a successful year and seen an increase in profits. However, some of that joy can fade away when your annual tax bill arrives. The better your business does, the more the CRA wants to take from those profits. It can be frustrating.
You may be wondering what you can do to help offset some of your tax liability, and the answer is simple. Let Numetrica handle your tax planning. You know that paying annual personal and business income taxes is required. Planning ahead and giving some forethought to your business strategy can help you save some serious cash when it comes to tax time.
The Low Down on Tax Planning
The end goal of engaging in tax planning is to save your business money on your annual tax bill. This can be accomplished in several ways such as leveraging tax deductions, reducing your Annual Gross Income (AGI), and taking advantage of many of the great tax credits that may be offered for your business.
Your tax planner may also recommend engaging in strategies such as setting aside money throughout the year to pay upcoming tax bills. making quarterly estimated payments, carefully timing large expenditures as well as income. Hiring Numetrica to be your tax advisor is the perfect way to help your business save money on taxes as well as achieve financial benchmarks.
Strategies to Save
One primary strategy to save money on your yearly taxes is to take steps to lower your AGI. As the owner of your business, you can put money into a RRSP. The contributions are taken out of your paycheck before tax deductions, which decreases your AGI. Another way to lower your AGI is by making income adjustments. These above the line adjustments are not required to be itemized but can be subtracted on your T1 General form.
Some examples of above the line deductions are
- RRSP contributions
- Monies put into a self-employed pension plan
- Self-employed health insurance
- Educational expenses such as student loan interest or tuition
- Self-employed taxes
- Contributions to health savings accounts (HSA)
Want to save even more? Our knowledgeable Numetrica tax planning specialists know how to help small business owners leverage deductions. Once adjustments are made to your income, what you are left with is known as taxable income. Leveraging deductions can help you further reduce this amount.
Deductions are defined as ordinary and necessary business expenses. Here are some examples of commonly used deductions for small businesses.
- Travel expenses, including costs associated with attending trade shows and conferences
- Marketing costs
- Operating expenses including but not limited to utilities, cellular phones, and internet
- Shipping expenses including both packaging and postage
- Technology purchases
- Maintenance costs
As you can see so far, there is a lot to know about tax planning. Here is what our client Debbe of Maid to be Clean Services wanted to share. “As a small business owner, managing finances and maintaining cash flow is always a focus. Investing in tax planning with Numetrica has changed my company’s financial game and given us a firm foundation to grow from. I also sleep better at night knowing there won’t be any surprises when tax time rolls around. I am so thankful for the amazing care and concern the Nutmetrica team has shown towards me and my growing business.”
Taking Credit for Tax Credits
Tax credits are similar to deductions, but differ in the sense that they do not lower your taxable income, but lower the amount that you will owe for your tax obligation. Numetrica’s tax planners can help you to get all the tax credits that your business may qualify for. Some of these tax credits are
- Business Energy Tax Credit: This credit incentivizes making energy-efficient improvements to your business and how it operates. These changes could include investing in things like solar power or purchasing more eco-friendly equipment to be used in your daily operations.
- Lifetime Learning Tax Credit: Taking a collegiate level course, even if it is outside your field should qualify you for this credit.
- Research and Development Credit: This credit comes into play to offset the costs of researching and developing new products, technologies, or procedures to enhance your business.
- Plug-in Vehicle Tax Credit: You could qualify for between $2500-$7500 depending on the battery capacity of your vehicle.
Let Us Help!
Tax planning with the rockstars at Numetrica is a surefire way to save your small business hundreds, if not thousands of dollars. To learn more about how we can help you, call us today!
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Moe and everyone at Numetrica have been incredible at helping with my new corporation and corporate and personal tax returns and my other small business. Their accounting skills are out of this world and the technology they use makes everything so simple and fast. The time you will save will be worth every penny. Thanks again Moe for all your help!
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