Many Canadian small business owners are worried about the yearly costs of income tax. And they have good reason to!
The current small business tax rate is at 11%, and according to the Financial Post, the Canadian Federation of Independent Business (CFIB) has been working for years to get that lowered.
The general corporate tax rate, according to the news outlet, has been decreased by 7% across the past 6 years - but the rates for small businesses have only gone down by 1% during the same timeframe.
"There is a little bit of a growing degree of impatience for the government to get back to some broader tax measures for smaller firms," Dan Kelly, president of the Canadian Federation of Independent Businesses, told the Financial Post. "What we're hearing from members is that they are anxious for the federal government to, once we pull out of deficit, to look at some tax reductions to the small business rate itself."
While there are tax advantages to incorporating, there are still steps that a self-employed person can take with their businesses to save as much as possible when it comes time to pay their taxes.
Listed below are 4 tax saving strategies for small business owners - with these tips, you'll be deducting more off your payments than you or your business ever has before.
1. Keep Your Receipts
You never know what costs you'll be able to deduct from your taxes at the end of the year
Business expenses for meals, lodging, equipment and much more may potentially be able to be claimed on your return, allowing you and your business to save a massive amount of money.
Of course, in order to obtain these savings, you'll need to save all your receipts - and you'll also need to make sure the numerous required forms are filled out and filed in good time.
2. Make Use of the Capital Cost Allowance
The Capital Cost Allowance (CCA) is a tax provision that allows business owners to deduct costs from their taxes related to property and equipment that is depreciating in value.
This can be hugely significant for farmers, whether they've recently purchased land or not - so if it applies to you, make sure to speak to a tax professional about your options shortly.
3. Donate to Charities, When Tax-Deductable
Many charitable donations that your business makes can be claimed later as tax deductions, so don't feel bad when you plan them out for that specific purpose.
If you give back to the community, you may be able to save yourself some money in the process.
4. Split Your Income
If you have a high income that puts you into a tax bracket with high costs, that's something you can rectify.
Farmers and small business owners, for instance, can split their income among family members or partners, thus helping them to stay in lower tax brackets - and keep their overall expenses as low as possible.