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3 Tax Planning Tips for SMBs

When it comes to running a successful small business, ensuring tax efficiency is essential. If you fail to maximize savings and cut down on losses, you’ll struggle to sustain your business in the long run. We’ve rounded up some tax planning tips to help you reduce your taxable income and improve your bottom line.

 

1. Have a Strong Grasp on Your Eligible Expenses

 

It’s important to note that you can claim a tax deduction for certain business-related expenses. For instance, if you use a car for business meetings, you can deduct the mileage used.

Start off slow. Track every expenditure in relation to your business, whether you work at or outside home. As long as you have a seamless record of each expense, you’ll manage to get the right deductions.

Safely store your receipts in case of an audit. From the parking fee for an important meeting to the receipt for the coffee you just restocked, each expenditure should be documented with proof.

 

Recommended Read: 5 Mistakes to Avoid When Filing Taxes as a Small Business and How a CPA Firm in Edmonton Can Help

 

2. Maximize Capital Cost Allowance (CCA)

 

small business owner maximizing capital cost allowance (CCA)


CCA is the annual tax deduction for assets that depreciate over time, e.g. furniture, equipment, buildings, etc. As a rule of thumb, buy the required depreciable assets before the year ends, as opposed to waiting until the next year. Work with a tax accountant to make the most of the CCA deduction.


3. Consider Splitting Your Income


As one of the most effective small business tax planning strategies, income splitting is a great way to reduce the marginal tax rate. The reasoning behind this is simple: any portion of your income that is transferred counts as a business deduction, provided that it’s reasonable.

Hire a family member but make sure the income offered matches the service. If you end up paying them an exorbitant monthly sum for basic administrative services, you’ll most likely get your claim rejected.

We suggest going over the updated CRA guidelines for more insight.


Tax Accountants in Edmonton


Need help with tax planning? Our experts can help you get started!

We specialize in helping small businesses optimize their tax position. Our team assiduously reviews your tax returns and identifies opportunities for tax savings. We ultimately want to help improve your bottom line by making sure you’re only paying what’s required by the law and nothing more.


If you need help with your tax filing and compliance, give us a call at 780-863-2224.


We also offer bookkeeping services, payroll services, startup planning services, and more.