For most Canadians, April means springtime; warmer weather, longer days, and an energized attitude. Unfortunately, April is also tax time, and for small business owners, this can bring about a lot of stress…
The Future is Bright…if You Take Time to Prepare.
By establishing good routines and good habits throughout the year, you’ll not only save time and money, you’ll also be relieved of a lot of stress at tax time. Disorganization can cost your business financially, so don’t procrastinate on chasing client invoices and overdue accounts. Also, keep a calendar of when all payments need to be made.
You Don’t Have to Do it on Your Own.
We all have our own strengths and weaknesses. For many, dealing with finance and taxes can be a stressful time. But it’s important to remember you don’t have to do it on your own.
Hiring an accountant is a smart move. Knowing that there is someone who you can contact for advice through the year, and not just at year end, will create a better relationship between your business and your money. And just think of what you can be doing with all that time you have previously spent trying to work things out for yourself.
I’ll Just Write that Off!
The number one question that business owners ask their accountants is: “What is deductible from the income that I am receiving from my clients?”
And that’s because the tax act is not very clear. It explains that you can write off some things and you can’t write off others. But there are a number of grey areas where there are no definitions.
Things like taking your prospective clients to a Canucks game, or to a local bistro, can potentially be deducted from your tax bill. If you send thank you gifts to your clients, these could be written off too. It’s important to talk to your accountant or do your research to find out which items can be deducted and what percentage of them can be used.
Keep Up-to-Date About New Credits.
The Federal Government recently introduced an incentive for all businesses that increased the number of employees on their payroll in 2011 over 2010.
This credit is one of the easiest to claim too. Simply file your annual T4 Slips and Summary for your employees and the Canada Revenue Agency will do the rest for you. As long as the total paid for the employer’s portion of employment insurance is more in 2011 than was paid in 2010, the difference, to a maximum of $1,000, will be refunded to the business.
Be Strategic in Your Purchases in 2012/13
If you’re planning a capital purchase for your business, make sure it is bought before BC reverts back to the PST and GST system. Under the current HST system you’ll be reimbursed on all taxes, therefore you’ll only pay the net cost of the item. If you wait until after the March 31st deadline, the cost of these items will rise 7% as you’ll only be able to claim deductions for the GST and not the PST.