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Tax Tips for Tax Time

Tax Tips for Tax Time

Spring has sprung! It's almost that glorious time to put your heavy winter coat away for the season. However, it's also time buckle down on the spring cleaning and that includes filing your taxes. Here are some tips for all of you new entrepreneurs who may find the task pretty daunting – these tips might peel away some of that anxiety for you so stop procrastinating and get on it!

1. Seek professional help

Sure, you've kept all of your expense receipts in a single overstuffed file folder and you're fairly certain that all of your invoices are safely nestled somewhere on your computer. You may think that you're prepared to fill in all the right blanks and perhaps even stir yourself up a refund. Your self-confidence is admirable but it might be laced with a dash of naiveté, especially if you're about to file for your own business for the very first time. The money you'll spend on a CPA will likely pay for itself in time, energy and maybe even some cash that you wouldn't have found otherwise. A worthy investment across the board.

2. Keep your business and personal expenses properly separated

When you're going through those expense receipts, be sure to omit those that may be a bit trickier to qualify as legitimate business expenses. You can't really count every single fast food drive-thru visit as a business lunch. Also, having the accountant sort through that overstuffed file folder from scratch is only going to drum up more accounting fees for yourself. It would be easiest for both you and your accountant if you have separate credit and checking accounts for your business. NOTE: Don't forget to include the payment receipts for your rented office or desk if you've set up shop in a shared workspace!

3. Make it a family affair

There are a few legitimate ways to exploit, ahem, utilize your close relatives in order to lower your own taxable income. Under CRA regulation, you can loan your lower earning spouse investment funds at a tax rate of only 1% and there is no timeline for when the loan has to be paid back [1]. Obviously, your spouse will need to actually put that money into the market for this to work, but it does indeed work. You can also hire your spouse, sibling or child to reduce your own taxable income. You will, however, need to prove that they did some actual work for their salary. If you pay your little brother to run errands for the business, make sure you do so at a reasonable rate that reflects the market. Be sure to have the T4 slip handy and, to be safe, a signed employee agreement come tax time [2].

These three tips really just scratch the surface as there are endless resources online that can help to steer you through the process. If you do decide to go it alone, be sure to do your homework. Surely, it will get easier as the years pass by. Or simply take a load off and find yourself a chartered professional accountant, because any expense that can help you sleep at night is most definitely worthwhile.