Filing taxes for small businesses

December 11, 2018

Filing taxes for small businesses

4 things you should know before filing your taxes

Managing a small business is not easy both mentally and financially.
It comes with a lot of stress and it can affect the way you work and perform.
Having your finances on check by a professional will not only make you
feel secure but will leave you with one less thing to worry about. Helping
you keep your mental health on check as well. Here are 4 things you
should know to keep your finances on check.

 

Income taxes reductions

 

You can easily save money by claiming business expenses but there are a few things you need to know. First of all, you need to use your judgement and make reasonable claims. You could claim an expense on gas if you need to travel a lot in you line of business but it wouldn’t make sense to claim it if you were managing a company remotely from the comfort of your home. If you use the expense for personal purposes you can’t make a deduction claim.

 

Once you know which claims to make, you need to keep ALL the receipts and documentations related to your claim to back it up. Unfortunately all bank statements are not valid because they are proof that a payment was made but it is not a proof that it is a business expense.

 

External payroll services

 

According to a recent survey from Freshbooks, only 44% of small business use an external payroll company. This task can be really complex and time consuming. There is no room for errors if you’re looking to make every dollar count. You need to file federal, provincial and local payroll taxes for your employees. You also have to keep track of deductions for social security and Medicare taxes, unemployment taxes and new hiring reporting.

 

Know that accountants are way more qualified to file your business taxes. They can fix mistakes that you wouldn’t normally see and save you a lot of time and deductions. Hiring an accountant isn’t an expense if it saves you time, money and effort.

 

Hiring apprentices and family members

 

According to the Government of Canada website, you can get up to 2000$ for hiring an apprentice who is working in his first two years of the apprentice program. An Investment Tax Credit can give you the help you need if you have too much work on your plate. It can help you bring in skilled people to work on a reduce rate and make your company grow.

 

Hiring family members is also an beneficial. Any employees wages are business expenses but it is still effective if it’s a family member like your child or spouse. It’ll split the some income. You could drop your net income into a lower tax bracket, netting a nice income tax deduction.

Your business financial health

 

No one is better equipped than an accountant to check on your business. Seeing big numbers don’t necessarily means your company is doing well or makes a large amount of profit. An accountant can put all your numbers in order and tell you how much you’re really making and if there’s a way to make more.

 

In the long term, the accountant can help you plan a growth strategy and tell you if there are any cuts you could make in order to maximize revenue. The professional accountant can also help you meet your goals or set them for you. They won’t tell you how to manage your business but they can provide very good suggestions and improvements to your company.