No one likes filing their taxes, but it can be even more overwhelming with a small business. With the last-minute scramble every spring and receipts in every nook and cranny, your taxes might not always be perfect. Unless you’re an accountant, knowing the ins and outs of small business taxes isn’t easy. Here are six tips to make sure you’re not overlooking any credits that can make or break your small business.
Accurately tracking and claiming expenses are absolutely crucial for a small business. Even small expenses can add up by tax season, and that can make a huge difference for your business. Make sure you know what can (and can’t) be claimed as a business expense. Office supplies, maintenance and repairs, some advertising, and even business licenses and dues can be claimed as valid operating expenses.
2. Input Tax Credits
Input Tax Credits help you recover some of the GST/HST paid out on business expenses. Most small business owners simply don’t take advantage of this, but it can mean serious savings come tax season. If your business has a registered GST number, you’re eligible to reclaim the GST/HST paid on most valid business expenses. When combined with the last tip, this can make the cost of running your business a lot more manageable.
3. Health Plans
Good news: you don’t have to forego health insurance to run your own business. If you’re self-employed, you can deduct the premiums you pay for private health care plans for you and your household. Health plans aren’t cheap, so this is one way to maximize your profit (or at least reduce your spend) every year.
4. Home Business
If you have a valid home office, you definitely need to be claiming it on your taxes. A home office comes with tax write-offs galore, like being able to claim a portion of your rent/mortgage and utilities. It might take a little bit of math, but it’s well worth the effort every year.
It shouldn’t have to be said, but every year businesses miss the filing deadline and make everything harder for themselves. You start racking up penalty charges every month that you’re late, which could make next year’s taxes even harder. Keep yourself organized, set a deadline, and make it happen. After all, there are only two guaranteed things in life, so procrastinating won’t get you anywhere.
No one wants to be audited when it comes to complex business taxes, but it happens more than you think. Being prepared will make you dread tax season a lot less. Keep all the receipts you need in a filing cabinet and use a spreadsheet to track expenses so you don’t forget any. Don’t forget to keep everything for up to six years in case of a future audit.
Remember: the best defense is always a good offense. If you do a little legwork off-the-hop, you can save yourself a lot of stress, and even more money. Contact me if you want to make sure you’re prepared for this coming tax season.