As small business owners, you know that every dollar counts. We want to help you minimize your taxes for the year by staying on top of the tax laws and using tax-saving strategies that will put more money back into your business.
In this blog, you’ll learn about small business tax breaks:
- Incorporating your business
- Tax credits for small businesses
- Income splitting
- Maximizing deductible expenses
- Deferred income
- GST/HST and input tax credits (ITCs)
- Instalments
- Retirement savings plans
If you have more questions about your specific situation, we’re happy to help. We’re here to make tax season hassle-free so you can focus on what’s truly important — growing your business.
Incorporating your business
Turn your passion into an incorporation. Incorporate your small business to pay lower taxes, among other benefits, like deferring taxes later. If you’re a sole proprietor wondering why you should incorporate, we’re happy to explain why.
Tax credits for small businesses
Tax credits are like hidden gems that can save you money. Here are some Canadian tax credits available that may apply to your business.
- Air quality improvement tax credit
- Canadian film or video production tax credit
- Canadian journalism labour tax credit
- Federal foreign business income tax credit
- Federal foreign non-business income tax credit
- Federal logging tax credit
- Federal qualifying environmental trust tax credit
- Film or video production services tax credit
- Investment tax credits
- Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction
- Return of fuel charge proceeds to farmers tax credit
Learn more from the CRA website.
Income sprinkling
If your family members help out with your business, paying them a fair wage can spread the tax love. It’s a win-win; your business gets the help it needs, and your family’s income gets more tax-friendly.
Our blog Should you pay your spouse a salary? provides more details on this approach.
Maximizing deductible expenses
Whether it’s the coffee for the office or a new laptop, keeping track of what you spend on your business can pay off (see the full list from the CRA). Here are common small business tax write-offs to reduce your taxable income:
- advertising
- bad debts
- business start-up costs
- business tax, fees, licenses and dues
- business-use-of-home expenses
- capital cost allowance
- delivery, freight and express
- fuel costs (except for motor vehicles)
- insurance
- interest and bank charges
- legal, accounting and other professional fees
- maintenance and repairs
- management and administration fees
- meals and entertainment (allowable part only)
- motor vehicle expenses
- office expenses
- property taxes
- rent
- salaries, wages and benefits (including employer's contributions)
- supplies
- telephone and utilities
- travel
Home office expenses
See Your home office: how to get organized and claim small business expenses
Business entertainment expenses
See What business entertainment expenses are deductible?
Child care expenses
See Tax tips: Claiming child care expenses in Canada
Tax grey areas
See Tax grey areas: Make the most of your vehicle and home office expenses
Deferred income
If you can, be smart about taking money from your business. Sometimes, waiting a bit can mean paying less tax, especially if next year looks a bit leaner.
GST/HST and input tax credits (ITCs)
If you charge GST/HST, make sure you also claim back what you pay on your business expenses. It’s like getting a little rebate every time you buy something for your business.
Learn more about GST in our blog.
Instalments
Paying your taxes in instalments throughout the year is a helpful way to spread out your payments and avoid potential surprises at tax time.
Retirement savings plans
Putting money into a Retirement Savings Plan (RRSP) isn’t just about planning for beach days in your golden years. It can also reduce your income tax. Your future self will thank you – every little bit helps!
Our Chartered Professional Accountant (CPA) professionals are experts in the constantly evolving tax laws and regulations. We can help you with deductions, write-offs, expenses, tax returns, GST filing, etc.
Read more about Corporate and Personal Tax topics relevant to you and your small business. Don’t hesitate to reach out — we’re here to help make tax season a little brighter for you.
