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Tax Tips

Owning a small business means that you not only work extremely hard but you also seek ways to improve your business financials. Although tax season is behind you, it is not too early to consider extra ways to save on your taxes for next year. There are a number of websites and resources that highlight tax savings tips, but where do you begin?

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It seems that each resource has a different way to explain how to accurately save valuable tax dollars. To make your saving strategy a bit easier we have compiled a few tax tips from across websites to reduce the amount of time you spend on researching and provide you with more time to spend on saving. Income-splitting This is a classic way of saving on taxes. Basically, it means that you arrange your income to have it divided amongst other family members (spouse and/or children). That way, each of the individuals will be paying less taxes, because of lower marginal tax rates. The aggregate taxes paid will therefore be less than what you would pay if all the money went into your hands. (Certified General Accountants Association of British Columbia. Tax Tips for Small Business Owners. https://docs.google.com/viewer?url=http://www.bizplancontest.ca/media/top-10-tips/pdfs/CGA%2520-%2520Top%252010%2520Tips.pdf ) Record keeping Good record keeping saves money. Small business owners often ignore keeping an organized record of all business-related expenses incurred throughout the year. Some things like copies of business tax returns, licenses, incorporation papers, and capital equipment expenses should be preserved indefinitely. Keep any tax-related documents (e.g., expense receipts, client 1099 forms, and vehicle mileage logs) for a minimum of seven years. This is essential to make use of tax deductions on expenses related to running your business. (All Business.http://www.allbusiness.com/accounting-reporting/corporate-taxes/2975296-1.html ) (Ezine Articles. Valuable Tax Tips for Small Business Owners. http://ezinearticles.com/?Valuable-Tax-Tips-For-Small-Business-Owners&id=3840588 ) Combine business trips with personal travel If your reasons for taking a trip are related to your business, if the costs claimed are reasonable and you have allocated a portion for any personal expenses and if, ultimately, the result was that you earned income as a result of making that trip, it may be possible to deduct travel expenses. (Certified General Accountants Association of British Columbia. Tax Tips for Small Business Owners. https://docs.google.com/viewer?url=http://www.bizplancontest.ca/media/top-10-tips/pdfs/CGA%2520-%2520Top%252010%2520Tips.pdf ) Using your Car or Home for Business If you use your car for business, you may be entitled to claim a reasonable portion of gas, license and registration fees, interest, insurance, lease, maintenance and repairs, capital cost allowance (see below) and parking. The catch is to be sure you distinguish between business and personal use when claiming automobile tax deductions. If you have a vehicle that you use for both business and pleasure, you can only claim the portion of automobile expenses related to business use as a business tax deduction. To support your business claim, keep a car log documenting your daily business kilometers. If your home is your main place of employment, you may also be entitled to claim a portion of your occupancy expenses such as rent, mortgage interest, property taxes, insurance, utilities, telephone and minor repairs and maintenance. (Intuit. Tax Tips: Four Easy Ways to Reduce Your Self-Employment and Small Business Taxes. http://www.intuit.ca/small-business-information/small-business-tax-tips.jsp ) Important Tip! Capital Cost Allowance (CCA) Individuals who run their own business cannot write off the cost of capital assets (automobiles, furniture, computers, etc.) immediately upon purchase; rather they must spread the cost over several years. For tax purposes, this write-off is referred to as capital cost allowance (CCA) and it is subject to strict rules and limitations. (Certified General Accountants Association of British Columbia. Tax Tips for Small Business Owners. https://docs.google.com/viewer?url=http://www.bizplancontest.ca/media/top-10-tips/pdfs/CGA%2520-%2520Top%252010%2520Tips.pdf )

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