For those new to running a small business, or for those who are simply self-employed, managing your taxes can be an intimidating task. Business is about profitability, so when tax time comes around, knowing your allowable tax deductions will help you save valuable capital that you can reinvest into your business.
Here are five tips that will help you lower your tax as a small business:
1. As a business owner, you’re eligible to claim expenses on office supplies, equipment rentals and consulting fees if they’ve been used to incur income. So long as your expenses are reasonable and being used to incur income, you can deduct everything from salaries, travel, and bank charges to repairs and maintenance. Have a look at what you’re eligible to claim as an expense if you’re self-employed or a small business here.
2. For those who use their car for their business, you can claim a portion of your license and registration fees, gas, insurance, lease, maintenance and repairs, parking and capital cost allowance on your tax return. However, make sure you’re honest, as you cannot claim expenses on personal use of your vehicle. In case you’re audited, you should keep track of how many kilometers you’re driving per day for business. Check out the details here.
3. If you’re self-employed and you work from home, you’re able to deduct some of your rent, mortgage interest, insurance, utilities and property taxes as well as repairs and maintenance. The deduction is calculated based on how much time you spend at home working and how much space you use to work.
4. Hiring members of your family to work for your small business is also a tax benefit as a their salary (so long as it’s reasonable) can be deducted from your taxes.
5. As a small business, you’re able to deduct private health services plan (PHSP) payments made for your employees.
Stay and informed and ask an expert if you require assistance.