Taxation is one thing that few people outside the domain can claim to understand but it affects all especially small businesses as there is no escaping from it. Even an unintentional error can invite the wrath of authorities. As a small business in Calgary, you can avoid this by hiring small business tax accountants in Calgary. Good for you, but what about reducing your tax burden? Are there ways in which you can lower your tax outgo? Let us take you through five easy ways in which small businesses would be able to reduce their tax burden – 

Keep all the bills…        

Did you know the coffee you buy while hosting your client at a cafe is tax-free? Perhaps you never bothered! But you will be able to claim substantial tax deductions on every expanse that can be linked to running your business and these include filling gas in your vehicle, postage, parking fee, etc. All you need to do is collect all the receipts and organize them.CRA doesn’t accept Credit Card statements if you were just thinking about a shortcut! 

Time your income…      

If there is a possibility of delaying a huge receivable in the last months of the year push it to the next year as this will immediately reduce your income for the year. While it might sound futile as you’d have to pay taxes on that income next year but this might just help you in case you have lower incomes the next year or the tax rate is lowered. 

Increase year-end business expenditure…   

This is just the reverse of what we have suggested in the earlier point. If you are planning to buy an expensive printer or need to upgrade infrastructure reschedule it before the end of the year as this will help in reducing the tax burden. 

Maximize RRSP or TFSA contributions…     

Sole proprietorship or partnerships can reduce their taxes by maximizing contributions towards Registered Retirement Saving Plans and Tax-Free Savings Account. You can contribute 18% of your income for any given year in RSPS and $6,000 towards TFSA. If you have never contributed towards TFSA you can contribute up to $69,500 in 2020. You won’t have to pay any taxes when you cash out your TFSA. 

Split your income…       

You may already be using this option but if you haven’t you can split the income between you and your spouse, kids, or other family members. You will save some money doing so as the marginal tax rate shall come down. 

There are several other ways in which you will be able to reduce your tax burden. Ask for similar suggestions from your small business tax accountants in Calgary and you will be surprised with the options they have for you.