5 Top Tax Tips for Entrepreneurs‏, Odette Laurie

5 Top Income Tax Tips For Entrepreneurs

My top 5 income tax planning tips for entrepreneurs to keep as much money as possible in your pockets after the tax man cometh!

1. Watch your revenues when you first start out. Once you earn over $30k gross in one year, you are required to register for HST. If you fail to register, CRA can deem you a registrant and hold you accountable to remit 13% of all monies you collected from that point onwards….even if you hadn’t charged HST. That’s income right out of your pocket! I have been through this process with several clients over the years and it can be crippling to a new start-up venture.

2. When do you file your return? Now that you have a business, CRA has graciously extended your filing deadline until June 15th each year….but if you owe taxes the interest clock on the balance owing starts ticking after April 30th. It’s best to have an idea of your balance owing at April 30th in order to be able to make payment prior to that date and avoid any interest charges.

3. Do you have a home office used primarily for business? If so, you can deduct part of your heat, hydro, water, insurance, mortgage interest, repairs and maintenance and property taxes or rent. To calculate the part you can deduct, I suggest using either the square footage or the number of rooms of the work space divided by the total area or number of rooms of your home.

4. Keep track of all outlays for your vehicle. You can claim these expenses against your business income, based on the amount of business driving you do. Alternatively, you could track kilometres driven for business and calculate your expense entitlement based on CRA’s prescribed rates in any one year (2013 – 54 cents for the 1st 5000km and 48 cents thereafter). With either approach, CRA requires a vehicle log in support of your deductions.

5. Probably the most important income tax tip when you have your own business is to find a knowledgeable and approachable accountant to discuss all potential business expenses with you. Expenses can vary significantly from one field to the next so it’s important to explore all those applicable to your business in your venture as possible. Let an accountant be there to consult with and take your tax worries away so you can concentrate on growing your business.

Hopefully the above tips have helped ease the tax pain. Taxes can be stressful to the entrepreneur. Make sure you spend some time upfront understanding your business income and tax position and finding a trusted advisor to help navigate these waters with you. Its money well spent so you can be free to go out there and build your business and follow your passion.

Julie Ford is the principal of Julie A. Ford Professional Corporation with over 18 years’ experience in partnering with business people to meet their accounting, tax planning and bookkeeping needs. www.julieford.ca

I have to be honest here; I’ve never been a numbers person. I still count on my fingers or use a calculator for simple math. I dropped out of high school math and took an English class. CLICK IMAGE TO BUY BOOK

To be brutally honest, this has not served me well in life or business. Hiding behind ‘I’m not good at math’ just doesn’t cut it when you are in business. What I learned is that, while you don’t need to be a mathematician, you need be, at the very least, conversational. This means you need to know your numbers, what a P & L is and the difference between credit and debit.

ONCE I did not know my numbers when it was asked of me and it caused me a tremendous amount of grief, time and money.

I reached out to a client of mine, Julie Ford, to give us the scoop about taxes and what we need to do come this tax season. We don’t need to be accountants or tax experts but we do need to be experts in our business, and that includes the most important factor that keeps us afloat, knowing our numbers.

To your Success,