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Tax Tips You Need To Know For Your Small Business

Tax may be the greatest expense for many small businesses. Yet most small businesses possess zero intend to reduce the quantity of taxes they pay. To remain competitive and lucrative, it’s imperative that your online business reduce its tax expense.

Below, I’ll share the ten Best Tax Tips that your online business should implement:


1. Earnings Splitting together with your Spouse

Consider having to pay your partner an income from the work heOrshe performs in your online business. The quantity of salary compensated should be reasonable with regards to the hrs labored and kind of labor. For instance, it might be not reasonable to pay for your partner $100 each hour for 8 hrs each day, whenever your spouse only works 3 hrs each day within an administrative capacity.


By earnings splitting together with your spouse, the general taxes compensated will disappear.

2. Dividend Sprinkling - by Accountant in Mississauga

Being an Accountant in Mississauga, I suggest that you simply pay dividends for your family people who older than 18. The very first $38,000 (roughly) of dividends that the individual receives is totally tax-free.


Kiddie tax of 46% is used to dividends compensated from private companies to children younger than 18, effectively defeating the objective of earnings splitting with minors.

3. Office At Home Expenses

As a small company owner, you are able to discount expenses related to your house office, should you work at home. These expenses include:

  • Mortgage interest
  • Utilities
  • Condo charges
  • Property taxes
  • Maintenance and repairs
  • Rent (if you are renting your house)

The next formula can be used to look for the area of the office at home expenses that may be deducted for tax expenses:

Expenses associated with a home in the above list x (Total Square Ft of Home / Square Ft of Office At Home)


You need to talk to an accountant in Mississauga before deducting your house office expenses, as certain other limitations apply.

4. Tax-free Automobile Allowance

If you need to automobile that you use for business purposes, you ought to have your corporation pay your tax-free automobile allowance. The Canada Revenue Agency (CRA) allows an organization to pay for a tax-deductible allowance of 52 cents per KM for that first 5,000KM and 46 cents per KM after that for kilometers driven for business purposes for a worker of the corporation to pay him or her to be used of the automobile.


The car allowance received through the worker is totally tax-free.

5. Meals & Entertainment - by Accountant in Mississauga

Expenses that you simply incur for entertaining your customers take your customers out for supper are 50% tax-deductible. Make certain you know an accountant in Mississauga to keep an eye on individuals meals and entertainment receipts!


6. Business Promotion Expenses

Business promotion expenses, for example, gifts to clients, ads, and marketing products (e.g. company pens, calendars, etc.) are 100% tax-deductible by your online business.


7. Tax Depreciation - by Accountant in Mississauga

Tax depreciation (also termed as capital cost allowance) could be deducted according to the capital assets of your online business corporation. The tax depreciation allowed like a tax break is calculated like a % of the price of the asset, at rates stipulated through the CRA:

  • Furniture & Fixtures - 20%
  • Structures - 6%
  • Computers - 100%
  • Software - 100%
  • General equipment for your office - 20%
  • Manufacturing Equipment - 25% newbie, 50% the second year, 25% the third year

You need to call your Accountant Mississauga about maximizing your online business corporation’s tax depreciation.


8. Small Company Deduction

Small company corporations in Canada get a special tax break around the first $500,000 of economic profits, which effectively cuts down on the federal tax rate to simply 11%. Canadian provinces, in addition, have a small company deduction.


9. Any expenses incurred for business purposes

The Canadian Tax Act stipulates that any reasonable expense incurred with regards to earning earnings from clients are tax-deductible. There are specific exceptions, however, for example, meal and entertainment as discussed above.


Therefore, as lengthy as the quantity of the cost is affordable and the objective of incurring the price was with regards to your company, the cost ought to be tax-deductible.

10. Hire a CPA!

Last, although not least, you need to hire a CPA to handle the books of your online business and to offer you valuable tax advice. The charges that you simply pay your Mississauga Accountant (or any other accountant) could be more than offset, through the tax savings recognized by an accountant.

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