Tax is the biggest expense for most small businesses. Yet most small businesses don’t have a plan to reduce the amount of taxes that they pay. To stay competitive and profitable, your small business must reduce its tax expense.
Below, I’ll share the 10 Best Tax Tips that your small business should implement:
Income Splitting with Your Spouse
Consider paying your spouse a salary of the work that he/she performs in your small business. The amount of salary paid must be reasonable about the hours worked and type of work. For example, it would be unreasonable to pay your spouse $100 per hour for 8 hours a day, when your spouse only works 3 hours a day in an administrative capacity.
By income splitting with your spouse, the overall taxes paid will be reduced.
Dividend Sprinkling – by Accountant in Mississauga
As an Accountant in Mississauga, I recommend that you pay dividends to your family members who over the age of 18. The first $38,000 (approximately) of dividends that an individual receives is completely tax-free.
Kiddie tax of 46% is applied to dividends paid from private companies to children under the age of 18, effectively defeating the purpose of income splitting with minors.
Home Office Expenses
As a small business owner, you can write off expenses related to your home office, if you work from home. These expenses include:
- Mortgage interest
- Condo fees
- Property taxes
- Maintenance and repairs
- Rent (if you’re renting your home)
The following formula is used to determine the portion of the home office expenses that can be deducted for tax expenses:
Expenses relating to the home listed above x (Total Square Feet of Home / Square Feet of Home Office)
You should consult with your Accountant in Mississauga before deducting your home office expenses, as certain other limitations apply.
Tax-Free Automobile Allowance
If you own an automobile for which you use for business purposes, you should have your corporation pay yourself a tax-free automobile allowance. The Canada Revenue Agency (CRA) will allow a corporation to pay a tax-deductible allowance of 52 cents per KM for the first 5,000KM and 46 cents per KM after that for kilometers driven for business purposes to an employee of a corporation to compensate him/her for the use of their automobile.
The automobile allowance received by the employee is completely tax-free.
- Meals & Entertainment – by Accountant in Mississauga
Expenses that you incur for entertaining your clients are taking your clients out for lunch/dinner are 50% tax-deductible. Make sure you tell your Accountant in Mississauga to keep track of those meals and entertainment receipts!
Business Promotion Expenses
Business promotion expenses, such as gifts to clients, marketing materials, and promotional items (e.g. company pens, calendars, etc.) are 100% tax-deductible by your small business.
- Tax Depreciation – by Accountant in Mississauga
Tax depreciation (also known as capital cost allowance) can be deducted in respect of the capital assets owned by your small business corporation. The tax depreciation permitted as a tax deduction is calculated as a % of the cost of the asset, at rates stipulated by the CRA:
- Furniture & Fixtures – 20%
- Buildings – 6%
- Computers – 100%
- Software – 100%
- General office equipment – 20%
- Manufacturing Equipment – 25% the first year, 50% the second year, 25% the third year
It would help if you spoke with your Accountant Mississauga about maximizing your small business corporation’s tax depreciation.
Small Business Deduction
Small business corporations in Canada receive a special tax deduction on the first $500,000 of business profits, which effectively reduces the federal income tax rate to only 11%. Canadian provinces also have a small business deduction.
Any expenses incurred for business purposes
The Canadian Income Tax Act stipulates that any reasonable expense incurred to earn income from the business is tax-deductible. There are certain exceptions, however, such as meal and entertainment as discussed above.
Therefore, as long as the amount of the expense is reasonable, and the purpose of incurring the expenses was about your business, the expense should be tax-deductible.
Hire an Accountant!
Last but not least, you should hire an accountant to manage the books of your small business and to provide you with valuable tax advice. The fees that you pay your Mississauga Accountant (or other Accountant) will be more than offset, by the tax savings identified by your Accountant.
New public health measures to come into effect Friday – paNOW
Premier Scott Moe said a lockdown similar to the one that occurred in the spring is not necessary at this point because we now have a better understanding of the virus than we did back then.
“We know what we need to do to reduce the spread of this virus to keep ourselves and others safe,” he said. “We need to just slow down a little bit.”
These additional health measures come into effect at 12:01 a.m., Friday November 27 and, along with current health measures, remain in effect until Dec. 17, 2020. At that time they will be reviewed by the provincial Chief Medical Health Officer.
Enforcement of public health orders is permitted under The Public Health Act, 1994.
During the Wednesday press conference, SHA CEO Scott Livingstone said the SHA was working on setting up a drive-thru testing site in Prince Albert, he did not provide additional details.
Restaurants and licensed establishments measures
Beginning on Friday all restaurants and licensed establishments are limited to seat four at a single table. If there are barriers between restaurants they must be paced two metres apart but if there are none there must be three metres between tables.
Restaurants and licensed establishments must maintain guest/reservation information on all patrons and the curfew on liquor service remains in effect.
Performance and Gaming Venues
Capacity will be restricted to 30 people at all casinos, bingo halls, arenas, live theatres, movie theatres, performing arts venues and any other facilities that are currently supporting a capacity of 150 people.
Where any of these facilities offer food or beverage service, they must keep the activity separate (i.e. cordoned off) from the food and beverage service. No food or drink may be in the activity area.
Indoor Public Event Gatherings
Indoor events such as pubkic banquets, conferences, funerals and weddings in public buildings will be limited to 30 people.
Food or beverages may not be present or served. Note that the maximum allowable gathering size for private gatherings in the home setting remains at five. This includes in the home or in buildings located on the private property (e.g. garages, sheds). If your immediate family is five or greater, you cannot have additional visitors. Individuals, recurring caregivers, support personnel (i.e. therapists, nursing staff) and tradespersons (i.e. housekeeper, plumber) are permitted, though they should maintain two metre distancing and be masked during service provision.Gatherings of any size beyond your immediate household are strongly discouraged at this time.
Sports, Fitness and Dance
All of team or group sports, games, activities, competitions, recitals and practices are suspended. This includes amateur and recreational leagues for all age groups. Examples include hockey, curling, racquet sports, cheerleading, dance practices in group setting, etc.
Athletes and dancers 18 years of age and under may continue practicing, conditioning and skills training in groups of eight or fewer, abiding by the required mask use and at least three metres of physical distancing between participants at all times.
Individual groups of eight may not share a training/rehearsal surface or space at the same time.
Coaches /trainers are not included in the training group numbers as long as they are masked and maintain a minimum physical distance of three metres.
Fitness activities and group fitness classes in groups of eight or fewer continues to be permitted, for all ages. Mask use and at least three metres of physical distancing between participants must be maintained.
Places of Worship
All places of worship must reduce capacity to 30 people, including wedding, funeral and baptismal services. No food or drink may be present or served.
Mandatory Masking Expanded
Mandatory, non-medical mask use will be required during all indoor fitness activities, with aquatic activities the only exception.Mandatory, non-medical masking will be extended to:
- All students, employees and visitors in all schools and day cares (except while consuming food or beverage or engaging in aquatic fitness activities). Children ages 0-2 years are exempt from wearing masks. Children ages 3-12 should wear a mask if they are able to;
- All employees and visitors in all common areas in businesses and workplaces, even in those areas which the public does not have access (e.g. construction sites, manufacturing facilities); and
- All residents, employees and visitors in all common areas in provincial and municipal correctional facilities.
Note that masking continues to be required in indoor public areas that have installed barriers.
Malls and Retail
Retail businesses must enhance the expectation of mask use and mitigation measures (reduced traffic, directional flow signage, hand sanitizer, etc.) through signage and staff training.
Large retail locations are required to limit customer access to 50 per cent capacity or four square metres of space per person, whichever is less. Large retail locations are defined as retailers with a square footage larger than 20,000 square feet, and 50 per cent capacity is determined by half of the specified fire-code capacity.
On Twitter: @princealbertnow
Saskatchewan Government Announces New COVID-19 Restrictions – SwiftCurrentOnline.com
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- Saskatchewan Government Announces New COVID-19 Restrictions SwiftCurrentOnline.com
- New COVID-19 restrictions suspend sports, extend mandatory masking to schools CBC.ca
- WATCH LIVE: Sask. suspends team sports, activities along with other tweaks to existing COVID-19 restrictions CTV News
- Coronavirus: Saskatchewan Premier Moe introduces new measures to stop spread of virus | FULL Global News
- Sask. contact tracing ‘strained,’ with thousands of cases’ sources not confirmed CBC.ca
- View Full coverage on Google News
This is only a drill: B.C. to test emergency alert system Wednesday – CBC.ca
British Columbians can expect their cellphones to sound an alarm Wednesday afternoon as the province tests its emergency alert system.
On Nov. 25, a test of B.C.’s wireless alerting system will be conducted as part of the national Alert Ready system to improve public safety in the event of an emergency.
The scheduled alert will be sent to all compatible cellphones and will be broadcast on radio and television stations at 1:55 p.m. PT.
The emergency alert system is tested twice a year to assess whether it’s ready for an actual emergency. A scheduled test in May 2020 was cancelled across Canada due to the COVID-19 pandemic.
To receive alerts, mobile phones must be connected to a cellular network, be alert compatible, be within the alert area and have up-to-date cellular software. Alerts will be broadcast automatically at no cost to the user.
The Alert Ready system was launched in B.C. in April 2018, and it’s meant to rapidly warn the public of any “imminent or unfolding hazards to life.”
Residents who experience any issues can participate in a short online survey following the test.
The alert program is a collaborative initiative between the federal, provincial and territorial governments.
To find out if your wireless device is compatible with the Alert Ready system or for more information about the system, visit: www.alertready.ca.
New public health measures to come into effect Friday – paNOW
Hockey Canada suspends world junior selection camp after positive COVID-19 tests – CityNews Toronto
Anti-maskers need to reflect on the true meaning of 'injustice,' B.C. health officials say – CBC.ca
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