If you are a small business owner with a growing company, you may be expecting a bigger tax obligation than ever this year. But, when your company is still growing, you want to keep as much cash flow as possible to keep your business moving. Here are some ways to reduce the size of your tax bill this year and keep more money in your account.
Delay Sales and Invoicing
If you need to push some of your income back to the following year, one of the easiest ways to do it is to limit your end-of-year income so that it will fall into the next tax year. For instance, if you normally do your invoicing on the last day of the month, wait one day and send your December invoices out on January 1st. If you need to sell some old equipment or property, wait until the new year to do it.
Although these options won't prevent you from paying taxes forever, they can keep more money in your pocket now to increase your cash flow. A good management accounting system will help you determine if this is a good idea for your business; check with your accountant to set up a cash flow monitoring system.
Share Income With Your Partner
You can sometimes benefit from splitting income with your spouse or partner. If they are in a lower income bracket than you, then they will pay less taxes on the business income that they receive. You can even split money into their Canadian Pension Plan to pay a lower tax amount for the earnings.
Choosing this type of rebate can come with some legal implications. You may need to make them a legal partner and show that they have worked on the business. Document any time that the person spends helping you with the business, even if it's not in a managerial position. You'll also want to find an accountant to do the paperwork correctly for the transfer.
Buy More Stuff
Finally, if you have purchases that need to be made for your business, try to get them in before the end of the year. This way, you'll be able to claim them on this year's tax bill and lower your obligations for this year.
These ideas can get you thinking about ways to save money on this year's tax return. To put them to good use, contact accounting companies in your area to see if they can help you file a strong tax return that takes advantage of all of your options.
For accounting companies in Calgary, click on the link or do an online search.