Small businesses are highly significant to the Canadian economy. According to a study, in 2021, small businesses contributed 98.1% of business in the country. It is becoming highly competitive to establish yourself firmly in the SME sector. In addition, improper tax calculations can lead to inefficient tax filing.
The Live CFO, being a passionate income tax services provider, couldn’t help but shed some strategies to reduce your income tax. You will find some neat tricks here that will help you overcome your struggles.
1. Do not forget about receipts
One of the first mistakes that most small businesses do is not collecting all the receipts. Whatever you do for the betterment of your business can help you reduce the final tax amount. Over the course of the financial year, you should collect receipts for all the little things. Even the cost of purchasing a few envelopes.
2. Include the Non-capital losses
There are some financial years in which you would have
incurred more expenses than income. You can use this to decrease your income
tax. If you have any unapplied non-capital losses in the last 7 years, you can
include that in your current year. This can significantly reduce your taxable
income.
3. Earn tax credits through charitable donations
Doing good for society always helps you in the long run.
When we provide income tax services to our clients, we always urge them to keep
track of all their charitable donations. If you make donations to registered
Canadian charities, you can earn more tax credits and reduce your income tax
amount.
4. Plan your CCA
This is one of the best strategies to reduce your income
tax. Many small businesses do not know that you do not have to claim your
Capital Cost Allowance in the same year. You can carry it over. So, save it for
years you expect your income tax amount to increase.
Finally…
As a small business, you must save as much as possible
through smart methods. Do that through professional help and enjoy the savings!
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