When tax years come to an end, businesses must focus on their tax situations to help them find ways to minimize their tax liabilities before they file their business taxes. Here are six great tips that can help small businesses to save money on their taxes before the New Year arrives.
Maximizing Capital Cost Allowance
It is a good idea for you to go ahead and purchase new equipment and technology before the new tax year begins. You will usually only let you claim half of the allowable Capital Cost Allowance on the new purchases, but it helps you to increase your overall Capital Cost Allowance. This can help you have a better CCA claim for the next year as well.
Don’t Get Rid of Depreciable Assets Right Away
If you have some depreciable assets that you want to get rid of, you might want to wait until the new year. If you do it before the new tax year, you will find that you reduce your CCA allowance claim without even realizing it.
Delay Income if Possible
If your business is able to receive some income during the month of January rather than in December, you will have lower business income for the year. This can reduce the amount of tax that you must pay. It makes a lot of sense, especially if you have a higher income than you usually do during the tax year. It also makes sense if tax rates are predicted to be lower the following year.
Increase Your Expenses
Another great way to help out your income for the current tax year is to increase your expenses related to your business. You can think about the things that you will need in the near future and go ahead and get them. You can look at your detailed business expenses in each category, and if you have low expenses in a particular are then you might want to consider increasing this area.
Maximize RRSP Contributions
This is a great way to reduce your tax liability, especially if you are a sole proprietorship or a partnership. Each year, you can contribute 18 percent of the income that you earn. This contribution is made before taxes, and it can also help you have a lower tax liability.
Maintain Your Complete Calendar Year
If you are considering closing the doors of your business, then you might want to wait until the new year comes. This will help you to lower your tax liability, and will allow some expenses and income to be taxed next year.