It’s a taxing time! Get your tips in Emery

Tax time can be stressful for small business owners. With so many tax credits and savings opportunities, knowing what you can claim can be a daunting challenge. With the tax deadline looming, many small business owners are scrambling to find that shoebox full of receipts. It doesn’t have to be that way. Here are a few helpful tips to make sure you’re getting every dollar back that you deserve.

1. Build expense tracking into your routine.Rather than scrambling to find missing receipts at the last minute, consider using financial management software that lives in the cloud. This strategy will help you track your expenses all year-round, and if you use online tax software at tax time, all your financial information can be easily ported over.

2. Don’t forget about that business lunch.Often missed are the entertainment expenses incurred to earn income, such as meals, coffee, drinks at the bar and gifts.

3. Log your kilometres. If you use your car for business, you may be entitled to claim a reasonable portion of gas, licence and registration fees, interest, insurance, lease, maintenance and repairs, capital cost allowance and parking. Keep a log of all business-related travel to ensure that you can distinguish between personal and business use.

4. How big is your home office? You can find this out by calculating the percentage of space in your home that you use for business. Multiply that amount by how many hours in the day you use that space for business and then divide that total by 24 hours. You would then multiply this new number by your home business expenses. This will give you the household cost you can deduct. Remember, if you run the business for only part of the week or year, reduce your claim accordingly.

5. Take a picture! Even if you’re diligent about filing away your receipts, one or two essential ones are bound to go missing. Take advantage of your smartphone and take pictures of all your receipts. You can e-mail them to yourself and keep a separate folder. This way you’ll always have accurate records.

6. Avoid the CCA. Capital cost allowance (CCA) is another eligible business-use-of-home expense, but accounting professionals generally don’t recommend you take advantage of the opportunity to claim CCA, as this deduction is subject to capital gains and recapture rules. This means that you will have to pay capital gains on the depreciated portion of your home when you sell it.

7. Save your accountant for strategy. By tracking your expenses year-round, and taking advantage of easy to use tax software, you can get more value out of your relationship. Showing up with a box of receipts means you’re paying a lot of money for data entry rather than strategic business advice.

8. Buy or lease? Things like computer software and hardware purchases have a depreciation range of about five to seven years, and different classifications. Take the cost of that item and divide it by five or seven years and deduct that over the course of your taxes. If you lease, you can deduct all of your lease costs for each year. So you need to look at how long the asset will last before you decide it’s too old and you need a new one.

9. Keep it in the family If a spouse, common-law partner or other family members work for your business, a reasonable salary may be deducted. This can be a great tax savings strategy for income splitting and reduction of your family’s overall tax burden. The salary paid to a family member may allow him or her to become eligible for CPP and RRSP contributions.

10. Take advantage of every savings opportunity. You can deduct more than just a portion of your mortgage if you have a home office. Anything from cleaning materials to hydro to routine maintenance is fair game. Just make sure you’re not going overboard. Claiming the kitchen sink will raise a red flag with the CRA.

Caroline Corbeil is a tax analyst at Intuit Canada. An expert in all things tax, she analyzes and implements tax credits and changes for Intuit’s TurboTax software

Reach out to a local Emery Village Tax or accounting experts.

Waheed Accounting Services 2537 Finch Ave. W. 416-804-3352

Universal Accounting & Tax Services 1888 Wilson Ave. 416-745-4554

Frank Peri Chartered Accountant 800 Arrow Rd. 416-747-1400

Canpak Tax & Accounting Services 2465 Finch Ave. W. 416-741-7778

Marsh Goulding 2300 Sheppard Ave. W. 416-241-1128

Investia Financial Servcies Inc 2300 Finch Ave. W 416-749-6273