Everyone knows that they have to pay their taxes at the end of the year. For Canadians, that means a notice of assessment, a tax return, an audit or even some combination of the three.
For many of these people, these things happen during "tax season." But a smart businessperson knows that "tax season" really stretches all year long.
Whether you're running a farm by yourself or a large corporation with a team of partners, tax planning has to be an integral part of your day-to-day operations. If you're not taking steps all year-round to minimize the amount you'll eventually have to pay in taxes, then you're costing your business huge amounts of money that it will never get back. That's cutting directly into your profits.
There's a way to avoid that problem, however: keep your taxes in mind all year long.
Listed below are just 4 ways that you can keep active in regards to minimizing tax costs during your regular operations. Consider at least a couple of these options - and you'll surely see much less money leave your pockets come tax season next year, as a result.
1. Look Into Research Opportunities
There are many tax incentives available to farmers who are interested in doing some work on the government's behalf. For instance, farmers can sign up to allow their crops and livestock to be analyzed or researched, and receive significant tax credits as a result.
So, if you're looking for one way to save on your farm taxes at the end of the year, consider what incentives the government is currently offering in exchange for research collaboration - you may find that the added work is well worth the investment.
2. You May Want To Consider Income Splitting
Often used among Canadian farmers, the process of income splitting refers to individuals who redirect their farm's income to others within the family group. This allows them to take advantage of lower tax brackets, or to claim additional deductions to which they would not be entitled to regularly.
So, if you have family members who pay taxes at a lower rate than you do, you may be able to defer some of your income to them - and then pay much lower rates at the end of the year as a result.
3. Is Your Farm Incorporated?
Another way to save money on your taxes could be to incorporate your farm. In some situations, organizing and registering your farm as its own corporation could pay off in the form of much lower tax rates. However, that's not always the case - so investigate the possibility with someone who specializes in farm taxes before making a decision one way or the other.
4. Consider Investing in Accounting and Bookkeeping Services
Some of the processes detailed above - such as incorporating your farm, or splitting your income - are quite complicated. Someone busy with the day-to-day maintenance of their farm may not be able to find the time required to investigate whether or not incorporating their farm would be a smart financial move. For those individuals, there are accounting and tax services firms ready and waiting to provide help.
Minimizing taxes and maximizing tax credits is something that all business owners - from farms to brand-name executives - need to do all year long. With the help of a firm that will minimize Canadian farm taxes on your behalf, your organization will be able to bring in more money this year than it ever has before.
So, while tax payments, and all the processes required to minimize them, may seem complicated, there's no need to worry: accounting and bookkeeping firms are ready and waiting to offer priceless support.