Paying less on business taxes is desirable and well within your reach. However, it takes some planning, discipline, knowledge and awareness, tax health checks, and proper consultancy.
If you can manage your taxes well, you will ensure business success and more savings for growth.
The first thing that you should do is to organize your books and data and make sure you are always prepared for the upcoming tax season. It is important to understand that you must avoid tax penalties and interest at all costs. Because expenses increase exponentially, they can disturb your whole tax planning.
You also have to make sure that you read and understand the correspondence that you receive from the CAR. This way, you will be able to ensure that you know beforehand about any new tax laws and regulations and check if there are any penalties or interests piling up against you.
This is to guarantee that you do not continue to sit idle while the governmental debt piles up against you and, at worst, your account gets frozen.
Often, small businesses ignore installment payments, and because of this, punitive actions become a part of their journey to full shop, leading to colossal imbalances in their budget. Therefore, you must ensure that you make the installment payments on time. Particularly regarding GST and HST, you must do a self-assessment and submit the payments. if you do not do that, Tax debt will continue to mount and eat up large chunks of your money
There will be some customers who will not pay what they owe you no matter what you do. It will become an unnecessary tax burden for you. Therefore, it is better to write off those debts and declare them as bad debts so you can get some tax reduction on them. Also, you should reverse the sale transactions to claim the return of the sales tax you paid.
Just like some customers, there will be some goods you cannot sell no matter what you do. Towards the end of the year, you should list all the items and sell them for whatever you can get out of them. It is another way to provide you with some relief over these items you are hopeless about.
Tax-free Saving Accounts:
These are excellent vehicles for saving a lot. A tax-free saving account is one in which your interest, gains, funds, income and revenue accumulate free of any tax liability. However, you have to keep in mind the yearly limits so that you do not over-deposit because if you do, the penalties can be significantly high.
Registered Retirement Saving Plan:
Registered Retirement Savings Plan is an account registered with the Canadian government in which you accumulate cash for your retirement. It can save your taxes manifold.
Donations are a great way to help others and give you personal financial benefits. Although the new capital gains tax law has made the conditions for tax saving on donations quite stringent, there is still a lot of room for you to donate money and save taxes.
Stay current. You should know laws that are particular to you and learn from your accountant which taxes are payable so that you do not miss any taxes. You might have to pay the following taxes:
If you are an unincorporated business, you will be personally liable for paying the taxes. In this case, you should ascertain which taxes you must pay in a particular financial year. There are also some online calculators that you can use to calculate the amounts due.
If your business is incorporated, you will not be personally liable to pay those taxes because your company is not passing through. However, there will be more unique taxes that you will be liable to pay, such as GST, HST, and others, some of which may be similar to an unincorporated business. Whatever the case, you must keep yourself aware of what you owe.
Following is an overview of the rates of these taxes.
As Benjamin Franklin once said, “There are only two certainties: death and taxes.” Your taxes payable may not be that big an issue until you show some slackness or negligence, and those penalties start to hit you. So, planning ahead and being disciplined is worth it.
