3 Easy Year-End Tax Tips to Save Your Small Business Money
Posted by Ocean Wealth
Wait a second. Check the calendar again. That can’t be right. Wasn’t it just January? The end of the year has come in fast and furious form. The Christmas season is almost upon us, but our stomachs are still digesting Thanksgiving dinner. That’s life, isn’t it? The more you have going on, the more you start recognizing how quickly time flies.
This is especially true for small business owners. Between hitting annual sales goals and perfecting a product or service, it seems like there’s barely any time for financial planning. The fiscal and tax year will be over before you know it, and there’s nothing anyone can do for you once 2020 officially gets underway.
Don’t panic, though. There’s still hope. If you’re a small business owner in Canada, there are things you can do to help yourself before the taxman comes knocking. Unless you’ve already got a sharp financial advisor on the job, you need to read carefully. These three year-end tax tips can save your small business some serious cash.
Delay Your Income
It’s one of the oldest tricks in the book. All you have to do is delay a payment that’s scheduled for late December, and make sure the money isn’t in your account until the following month. Perhaps you can bill a little later than normal so as to ensure that money won’t be in your account and taxable until January — for the 2020 tax year.
This is especially helpful if your business has made more than usual or if tax rates are going to be lower the following year. As a small business owner, freelancer, or consultant, you have a little more freedom when it comes to this decision. Since you’re running your own operation, you don’t have to necessarily be right on time for December invoicing. Give it a few more days, and you won’t have to deal with that chunk of taxable income until later.
Maximize Your RRSP Contributions
If you don’t already have a registered retirement savings plan (RRSP) — you should talk with a financial advisor about setting one up. If you already have one, however, then you likely know about its biggest benefits especially when it specifically comes to taxes.
In Canada, the real beauty of an RRSP is that you can contribute up to 18% of your earned income, and the contribution is deducted directly from your income. This is a fantastic option for many small business owners who find themselves in a higher tax bracket since those individuals receive the biggest deductions.
You technically have until the end of February 2020 to make RRSP contributions, but there’s absolutely no harm in jumping into your investment before the year is up to get ahead of the madness of tax season.
Boost Your Expenses
There’s no better time to address your upcoming business expenses than at the end of the fiscal and tax year. If you wait until January, you’re spending extra money out of the gate, and you’ll get zero tax benefits for them until 2021. Sit down and go over what potential business expenses you have and pull the trigger before the year is up.
Whether it’s new office equipment or more money invested in marketing or promotion, it doesn’t necessarily matter. You simply want to ensure that you’re not waiting until January or February to do it when you can address it a little earlier and get some nice tax kickbacks as a result. While it’s not carte blanche to expense every single object in your way, there are a number of business-related things you can expense with relative ease.
Not sure how to navigate taxes for your small business? We’ll set you up with a seasoned financial advisor that does. Get in touch with us today, and we’ll get your business primed and ready for tax season.