Small business owners with families can utilize a number of different tax savings strategies to maximize their financial well-being. This consists of incorporating their business, claiming business related costs, allowing the lower income spouse to pay for household expenses, and using the employee home purchase loan to purchase a house.
Are you looking for tax saving strategies for families and small business owners? My name is Allan Madan, your trusted accountant. Here, I will show you a few clever tax saving strategies to save on tax throughout your lifetime by using an illustration depicting the life of a couple, Jack and Jane.
Once upon a time there was a self employed business owner named Jack. He fell in love with a girl named Jane and decided to marry her. In order to save more money for his fairytale wedding, he needed a tax savings technique and this is where a tax saving strategies for couples comes into play. He decided to incorporate his small business to reduce his business taxes. After doing so he only had to pay tax at a rate of 15.5% instead of the usual 46.4%, hence, saving about 30% in taxes. These savings allowed them to have the fairytale wedding they always wanted.
Post Wedding Bliss:
After their wedding Jack and Jane decided that they didn’t want to walk everywhere. Jack then decided he would have to buy a car. As a self employed Canadian, Jack realized he could save taxes by leasing a vehicle for their business, bringing us to a tax savings method for small business owners.. The following cost could be deducted for tax purposes.
- Repairs and maintenance
- Toll charges
- License and registration
- Lease charges
Preparing for a Baby:
A year after their dream wedding Jack and Jane decided to have a baby. However, to be able to afford raising a baby they had to increase their savings. In order to increase their savings, Jack and Jane used the income splitting technique, a tax savings strategy for households. They decided to let the higher income spouse pay for all of the household bills. This way, the lower income spouse could make all of the investments and get taxed at the lower rate.
However, before the baby arrived Jack and Jane decided they needed a home for the young one. Jack decided to buy a home with his corporation. He decided to use the employee home purchase loan. By using this tax free loan from his corporation he agreed to have a mortgage in place and had reasonable terms of repayment and interest. After Jack and Jane successfully purchased their dream home, they had their precious baby girl who they named Jill.
As illustrated, you can see that Jack and Jane used clever tax saving strategies to save money on taxes throughout their life and managed to live happily ever after.
I hope the mentioned tax saving strategies helped. For more ways to save money check my free report, ‘20 Tax Secrets on How to Beat the Tax Man’, access to which is through my website.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.