As a self-employed individual in Canada, it's essential to take advantage of tax planning strategies to reduce your tax bill and maximize your deductions.
Here are some tips to help you prepare for tax season and ensure that you're taking advantage of every opportunity to save money.
- Claim Business Expenses
As a self-employed individual, you can claim a wide range of business expenses on your tax return. These expenses can include everything from rent to office supplies to travel expenses. But to claim these expenses, you need to have the receipts. That’s why it’s so important to make sure you hang onto your receipts and invoices throughout the year.
If you’re watching the tax deadlines fast approach and are regretting all of the receipts you have thrown out that may have qualified for business tax deductions, don’t beat yourself up quite yet. While you may not be able to get a hold of some receipts, like meals out, you can still get your hands on some of your old receipts.
Start by checking your email to see if any of your receipts were emailed to you. Some businesses, like Home Depot or Mark’s Work Wearhouse, will send you an e-copy of your receipt if you’ve signed up for this service.
Next, login to any suppliers that you buy from online. This could include Amazon, Staples, and a plethora of other businesses. So long as you ordered through an account, you should be able to find a copy of your invoices. Similarly, if you purchased products or services from a business under your personal or business name, contact them to see if they can quickly pull up your transaction and send you a copy.
- Take Advantage of the Home Office Deduction
If you work from home, you may be eligible to claim the home office deduction on your tax return. This deduction allows you to claim a portion of your home expenses as a business expense, including your mortgage or rent, utilities, and property taxes.
To claim the home office deduction, you'll need to calculate the percentage of your home that is used for business purposes. This can be done by dividing the square footage of your workspace by the total square footage of your home or by number of rooms.
You can then claim that percentage of your home expenses as a business expense on your tax return.
- Hire a Professional
If you're not confident in your tax planning abilities or are unsure of what deductions you're entitled to, consider hiring a professional accountant to help you with your tax planning. An experienced accountant can help you maximize your deductions and ensure that you're taking advantage of all the tax planning strategies available to you.
As a self-employed individual in Canada, taking advantage of last-minute tax planning strategies can significantly reduce your tax bill and increase your deductions. While the options are limited after March 1 (the final date for RRSP contributions), there are a few ways to help ensure you make the most of your after tax position.
By following these tips, you can ensure you're fully prepared for tax season and maximize your tax savings. Need further help? Contact Koroll & Company today.
