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Koroll & Company Blog

5 Steps to Help Small Business Owners Plan for the Tax Season

[fa icon="calendar"] Nov 19, 2018 11:00:00 AM / by Allen Koroll

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If you are a small business owner, you have a lot of responsibilities – one of which is planning for the tax season so that you can optimize your after-tax position and have more money to put back into your business. 

To help you with this, Koroll & Company has created a list of five steps to consider when getting ready to file your taxes:

1 - Keep Track of Your Receipts

If you want to take advantage of all of the tax credits and deductions available to you to reduce your tax owing, you need to collect all of your business-related receipts. Even if you are not sure, it is better to keep the receipt and ask your accounting and tax professional at a later date, they can always exclude it if it’s not eligible.

Allowable business expenses can include but are not limited to:

  • Parking fees from a meeting
  • Letters you mailed
  • Supplies for your office
  • Rent and related utilities
  • Advertising
  • Start-up costs
  • Meals and entertainment
  • Cost of operating a business vehicle
  • And more.

Not only will keeping your receipts ensure you claim every amount possible, it will also ensure that you are prepared if the Canada Revenue Agency (CRA) comes knocking.

2 - Take Advantage of the Tax Credits and Deductions

There are a lot of tax credits, deductions and benefits available to small business owners but, unfortunately, not everyone is aware of them and sometimes they get missed.

Before filing your taxes (and even earlier so you can ensure you have the right documentation), research the available tax credits and deductions or reach out to a tax planning professional to find out what you should be claiming.

From the basic business expenses listed above to special credits for small business owners to claiming a home office, there are several saving opportunities that will ensure more money goes back into your business.

3 - Optimize CCA (Capital Cost Allowance)

As a business owner, you likely have capital assets - assets which have a life longer than one year and are not planned to be sold in the course of the year – this includes equipment, machinery, vehicles, computers, buildings, furniture, etc.

These assets are treated differently than operating expenses such as ink, pens, stamps, rent, etc. as the value of these expenses is not deducted in a single year but throughout the life of the asset.

When deciding how much CCA to claim, you will want to consider whether you have any non-capital losses, which exist when your expenses exceed income. This is because non-capital losses have defined carry-forward and backward amounts while CCA has no such limitations – it is not a mandatory deduction. As such, it may be a good idea to wait until these non-capital losses have been claimed before claiming CCA.

4 - Consider Contributing to Your TFSA and RRSP

As a small business owner, you will want to consider your savings strategy each year.

Contributing to an RRSP means that you are deferring the payment of tax on income contributed until it is withdrawn later, usually during retirement when your income and marginal tax rate is lower.

TFSAs on the other hand are a great tool for shielding savings and investment income from tax.

The decisions you make will depend on your lifestyle and tax position at the end of each year. A tax professional will be able to help you decide what the best strategy is.

5 - Consider Incorporating

There are many benefits that can be taken advantage of if you decide to incorporate your business, one of which is a lower tax rate. In Ontario, an incorporated business pays 13.5 to 26.5% on business income while sole proprietors can pay upwards of 50% (see CRA website for most up-to-date tax rates).

Incorporating also provides limited liability so that your company is considered a separate entity from your personal assets, adding additional protection in case of an accident or lawsuit.

For more information on record keeping, claiming business expenses, CCA, RRSPs, TFSAs, incorporating or any other business-related questions, contact us today!


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The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.



About Koroll & Company

At Koroll & Company we grow our firm through satisfied clients referring us as a trusted accounting firm to their friends, family members and associates. The only way we know how to achieve this is strive to exceed your expectations and provide you with exceptional service. We have 20+ years servicing Newmarket, ON and the surrounding areas, and look forward to servicing you next. So give us a call and speak to a friendly staff member from Koroll & Company today!

Topics: Small Business

Allen Koroll

Written by Allen Koroll