Five tax tips your small business needs in 2012.

 

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Given the choice of doing their business taxes or getting a root canal, most business owners would rather choose the latter. However, with the right tips and software , tax time for a small business owners can be easy. Here are five easy tax tips for small business owners:

Sign up for a “My Business Account” with the Canada Revenue Agency.

Small businesses can access a wealth of information related to their small business account with the Canada Revenue Agency through the My Business Account service. You’ll be able to access information like  GST/HST returns and payroll with the click of a button.  You can sign up for a My Business Account here.

Know what business expenses you can claim at tax time.

The rule for business expenses is that you are entitled to deduct any reasonable expense you incurred to earn income. This can include your start-up expenses, entertainment expenses for customers and even office supplies. Taking a few minutes now to get up to speed on what expenses you‘re eligible to claim will pay dividends throughout the year. You can review the full list of eligible expenses at the Canada Revenue website.

Keep your expenses throughout the year.

The Scouts got it right: be prepared. Putting aside some time every week or even monthly to organize your expenses. This will help you keep an accurate records. Every year Canadians lose out on small business tax deductions because they didn’t keep their receipts organized and lost them along the way. Remember – without a receipt, you can’t claim that business expense. Think about what the deductions you could be losing out on.

Make sure your home office and business vehicle pays off at tax time.

If you use your home office for your business or drive your vehicle to earn income, you’re entitled to deduct those expenses from your income. The portion you claim varies based upon the amount of space and time the space is used for business so ensure you are keeping an accurate record of the expenses you incur. Tracking your vehicle & home expenses, including your mortgage, utilities and property taxes, can help decrease your taxable income reducing your tax bill to the Canada Revenue Agency.

Lower your tax preparation costs by completing your own taxes.

An expense is an expense and you can decrease your expenses by using tax software to prepare your small business taxes. Tax software designed specifically for business taxes, such as versions offered by TurboTax, provide easy step-by-step guidance so that you can prepare your small business tax return with confidence. TurboTax offers a Home & Business version for personal and self-employment taxes, including sole proprietors and consultants.