Are you looking for tax tips for sole proprietors? Sole proprietorships can utilize a number of different strategies to save money and reduce their tax obligations. These include taking advantage non-capital losses, paying wages to family members for income splitting, claiming relevant business expenses and incorporating your business.
Are you a self-employed sole proprietor? Did you know that the tax filing deadline for self-employed business owners is coming up? Hi, my name is Allan Madan, your trusted accountant. Today I will tell you about four tax savings strategies for sole proprietors, so you are ready when the June 15th filing deadline comes up.
Tax Tip for Sole Proprietors #1: Take Advantage of Non-Capital Losses.
If your business has non-capital losses where your expenses exceed your income, consider using this tool to reduce your taxes. You can use these losses to offset other sources of personal income. Remember, these losses can be carried back up to three years and carried forward for twenty years. This is a great tax reduction maximization plan.
Tax Tip #2: Pay Wages to Your Family Members for Income Splitting.
Consider paying wages to your family members for services that they perform in relation to your business as part of this tax savings plan for sole proprietors. This way you can decrease your overall tax liability by income splitting. Remember though, that the wages that you pay must be reasonable in accordance with the services that they provide.
Tax Tip #3: Claim Relevant Business Expenses.
There are often many business expenses relating to your business that you may forget to claim. Some of these include internet and telephone bills along with automobile expenses. For example, if it’s essential for you to drive in order to conduct your business then you can deduct car costs like gas, repairs and maintenance, interest, insurance, and parking.
Tax Tip #4: Consider Incorporating Your Business.
The natural progression for sole proprietors is to eventually incorporate their business because of the many tax advantages corporations have to offer. The most important being the small business deduction which reduces the tax rate to a low of 15.5 percent on the first $ 500,000 of business profits.
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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.