05
Jan
As a small business owner, you have the extension available to wait until June 15, 2017 to file your income tax, but did you know that if you have a balance owing it must be paid as of April 30, 2017? Therefore, if you wait until June 15th, you face interest charges on your outstanding balance and frankly, who wants to pay any more than you already have to? Keep that in mind when you are preparing your business information to be filed.
What kind of return does your business need to file?
Depending on what kind of business you have determines how you will file your 2016 income tax return. If you are a sole proprietor or have a partnership, you simply report your income on your personal income tax form. A small business that is incorporated is required to file a corporate tax return. If your business is incorporated, you will still need to file a personal return.
Deductions
As a small business owner, it is crucial to know what can be written off as a deduction and what can’t.
Home Based Business
- Utilities including heating, hydro, water, phone and internet
- Mortgage interest, property taxes or rent
- Office Expenses. You will need to determine what is a straight expense (paper clips, stapler, pens) and what are depreciable assets (filing cabinets, printers, furniture and equipment)
- Cleaning Materials
- Insurance
With a home-based business, you need to know the parameters and the rules for your deductions. Expenses must be related to the workspace. Your workspace needs to be a dedicated space you use on a regular and continuous basis.
Small Business
- Research & Development – simply put, this is any expense incurred by the business learning and participating in anything that will grow your business, a good example is expense for attending a trade show
- Vehicle costs – Everything from fuel, maintenance and leasing costs. If you use your vehicle for business as well as personal, you will only be able to claim a portion of these expenses
- Travel – If your business takes you away from home, make sure you keep all receipts as accommodations, transportation and a portion of meal and entertainment can be used.
- Advertising
- Legal
Be an informed and knowledgeable business owner when it comes to your deductions, but when in doubt, ask a professional! Professionals know the ins, outs and if it’s a WRITE OFF!
The ultimate goal, since no one can avoid income tax, is to reduce the amount you will have to pay out. Make a plan and put together tax strategies that can help you reduce the income tax you pay. Keep on top of collecting receipts, invest into RRSP’s, and donate to your favourite charity.