When running a business, you need to come up with structures and systems that will help you lower your tax bill. For instance, you need to have receipts for all your business expenses so collect them and put them in a secure place as soon as they are received. Train yourself to always ask for a receipt when you make a purchase or get a service no matter how small it is. This is one simple way to maximize your corporate tax returns.
Check The Receipts
Collecting the receipts is one thing, you also need to look at them and ensure they show exactly what they’re for. Check the vendor name that appears on the receipt and date. If you fail to do this, you may find yourself with a bunch of incomplete receipts when you want to input the figures in your accounting system for record keeping. It gets even tougher when you can’t seem to remember what the payment was for while trying to record it months later.
Understand The Deductions You Are Entitled To
Do you know the deductible expenses that your business qualifies for? Sometimes people overlook very important deductible expenses that can really lower their tax bill. For instance, business licensing fees and annual membership dues are deductible expenses that you shouldn’t forget. Make sure you take note of all these fees, subscriptions and memberships that you need to deduct on your income tax.
Did You Borrow Money To Run A Business?
If this is the case, any interest you are paying for the loan is also tax deductible. There are other fees related to a loan that you took to run your business that are also deductible. For instance, if you spent money in order to reduce the interest rate on your loan, this fee may also be deductible. Money spent on improving the business property can also be deductible. There are also some legal fees that are tax deductible. Taking advantage of all the tax deductions can really help you to maximize your return.
Deduct Insurance Expenses
Take note that life insurance is not an acceptable deduction. However, there are probably other types of insurance premiums you’ve paid for that are related to your business. For instance, you may have spent on insuring the building or some equipment/machinery that you use in the business. Additionally, you need the figures for any amount you’ve spent to maintain or repair the business property. Small businesses often spend money on labor and materials to improve the look of their property. This amount is also tax deductible. Just make sure you have all the receipts and invoices to support your claims.
Deduct Management Expenses
The amount of money you’ve spent managing your business is also a tax deductible. This includes administration costs incurred the past year as well as bank charges. There are other costs that you can deduct such as home utility costs if you have a home office. Work with a CPA to ensure you don’t miss out on any deductions.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.