If you are a Canadian and own a small business in your home, then you may wish to pay a lower amount of tax and may look for opportunities to claim tax write-offs. You can easily assume that you have to take stress to gather your financial records and have to consult with your accountant. At the same time, if your accountant is not an expert, he or she can’t give you proper suggestions to save your hard-earned money. Thus, you need to approach an efficient Canadian Tax Consulting Service.
SOME IMPORTANT TIPS TO LOWER THE AMOUNT OF YOUR HOME BUSINESS INCOME TAX
Incorporation is the most important step. If you own an incorporated company, then you can protect the personal assets of your family against the claims of a creditor. You will also get various tax benefits.
Setting up an incorporated company is not an easy process. But, you will get various benefits. For example, if you give extra efforts to create financial reports and initiate a separate tax return for the company, you will get attractive tax breaks.
If you withdraw an amount from the account of the corporation as a salary or dividend, you have to pay a tax at a personal tax rate. Therefore, you must not spend all of the corporation’s earnings for your personal uses. It is better to leave the earnings in the company’s account so that the amount can be re-invested using higher after-tax dollars.
There is another way to reduce the tax burden. You can make your family members the shareholders of the company. By this step, your company can send a part of its after-tax income in the form of dividends to the family members who belong to the lower tax bracket. So, the tax burden on your family will go down.
Keep in mind that you can’t pay any excess amount of salary or dividend to any member, if he or she does not possess the necessary skills. Otherwise, the tax authorities will not provide any tax benefit. Also, do not pay any amount other than the salary or dividend.
You need to pay down your personal debt before paying the debt which you have incurred to get returns from your business or property. In this case, you don’t have to pay any tax to pay down your personal debt.
KNOW THE WAY
If you think that you can’t take the stress to manage the taxation works of your home business, you can contact The Accounting & Tax. We are a reputed tax consultant in Toronto and we provide effective recommendations to lower your home business income tax amount.
