Running a business in itself is not an easy task, but finding tax strategies to save your business money is well worth the time and effort required. The constantly changing tax laws create a tedious job for you come tax season. The best thing to do is something you already should be doing: keep your accounting up to date, especially before the end of the year, and yes, income tax time. It might be useful to hire an income tax professional if you have not kept up your accounting. If you would like to bypass an income tax professional, that’s fine too, but you should at least consider income tax preparation websites such as TurboTax and H&R Block.
A popular way to save money is by charitable income. Donations to charities are tax deductible expenses. Be sure to claim your charitable income on your 1040, and the charity must be either cash or property. And remember you must actually make the donation; a promise to make the donation in the future will not count. Charitable income must be made to a tax exempt organization – a charity for instance, and it is also extremely important to itemize and keep track of your donations and charitable income.
RRSP, or Registered Retirement Savings Plan, is a kind of account meant for holding savings and investments. They are often used for self-employed workers and employees. Contributions to RRSP’s are tax deductible, so like charitable donations, this could be a key part in your strategy of saving money. It also makes sense to contribute to RRSP’s simply for the wellbeing of your employee. RRSP’s help employees save for retirement, and it’s a great way to reward a lifetime of hard work for your company.
Another great way to reduce taxes are tax write offs. Get a new computer this year for your business? It’s deductible. New software?Usually deductible.New furniture? Definitely deductible. Even mileage can be considered deductible in some cases. Sometimes even telephone charges, travels, and meals can be deductible. Anything you have purchased in the last year pertaining to your business is worth thinking about. Check with an income tax professional to be sure what new items you purchased for your business that can be deducted.
Under the new health care laws, providing healthcare is another way for a business owner to save. If you supply health insurance to your employees it is often worth a huge tax break. And again, like contributions to their RRSP, this is really for the common good of your employee. Consider how important they are to your business. Without strong employees, what would happen to your business? It’s important to reward them with contributions to RRSP’s and health insurance.