8 Tax Tips for Canadian Small Businesses

Are you a small business owner looking for ways to save on taxes? We get it - filing taxes can be time-consuming and expensive. But there are a few effective strategies that Canadian small businesses can use in order to reduce their tax bill and maximize savings. Here are 8 tax tips for Canadian small business tax savings: 

1. Balance your Dividend/Salary Mix: For small business owners, it might be beneficial to balance the mix of dividend payments and salary to optimize your tax savings. Paying yourself dividends instead of salary can result in lower taxes, as there is a higher personal rate applied to salaries than dividends. 

2. Know Your Eligible Expenses: Ensure that you are aware of the tax deductions and credits available to you. You are allowed to deduct eligible expenses from your revenue in order to reduce the amount of taxes your business pays. 

3. Keep Track of Your Money: Make sure that all your financial records and documents related to your business expenses, profits, and losses are organized and up-to-date. This will help you when filing your taxes and taking advantage of potential tax deductions or credits.

4. Consider Paying Income Taxes Every Month: To reduce the amount of taxes payable, consider making instalment payments throughout the year instead of paying one lump sum in April. 

5. Consider a Health Spending Account (HSA): Take advantage of the HSA to reduce your taxable income. With an HSA, you can deduct certain medical expenses from your taxes and save on tax payments. 

6. Paying Salary to Your Family (Income Splitting): Income splitting is a great way for small business owners to lower their taxes by taking advantage of members of their family with lower tax brackets. 

7. Apprenticeship Job Creation Tax Credit: This credit is available for businesses employing apprentices in certain recognized trades. It is a great incentive to hire apprentices, and this credit can help you save on taxes. 

8. Create a Separate Company for Tax-Deferred Investing: Setting up a separate company for tax-deferred investing can help reduce the total amount of taxes you pay. Talk to your accountant and find out if this is an option for you. 

If you want more detail about any of these tips for Canadian small businesses, let's book a time to talk. You can reach me at 705.770.7159 or at steve@middletretirement.com