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It’s no secret that tax time can be extremely stressful, especially for already-busy small business owners. It doesn’t have to be a struggle, though, as long as you’re well informed and prepared. Using some simple tax-planning and saving tips will take the stress out of tax time.
Don’t ignore filing deadlines! The longer you wait, the higher the penalties. It’s easiest to just do your return online – you can do it whenever it’s most convenient for you, so you’ll be saving yourself time and hassle.
If your expenses exceed your income, consider what would be the best time to use this loss. Non-capital losses can be used to offset other business income in any tax season – they can be carried back three years or carried forward for up to seven years. It might make more sense to carry the loss back up to three years to recover income tax that you already paid, or use it to offset future tax returns.
Looking for an easy way to boost your tax savings? Take advantage of all eligible tax credits – incorporate any expenses like coffee meetings, dinner expenses, and license and registration fees when you’re filing.
You can take advantage of the marginal tax rate disparities by using the income splitting tax strategy. The higher your income is, the higher your marginal tax rate will be. You can transfer a portion of that income to someone such a spouse or child that has a lower income.
Are you waiting until the last minute to gather all of your receipts? It’s not a good idea to scramble, because you might miss things or misplace important files. Make it a daily routine to account for everything you’ll need at tax time. Using a designated credit card for work makes it easy to separate and track expenses.