Here are a few suggestions:
1. Keep an accurate accounting of your expenses so you have the information available at year end.
2. If you maintain a home office, claim a percentage of the costs of maintaining your home. See the Canada Revenue Agency (“CRA”) website for details and eligibility on claiming Home Office Expenses.
3. If your spouse is helping you in your business, consider paying your spouse a wage comparable with others in their position. This will help reduce your taxable income and provide for income splitting with your spouse.
4. If this is your first year of being self-employed, consider making quarterly installments of the estimate of income taxes payable. If you have been self-employed for more than a year, then when you filed your income taxes the previous year, CRA would have told you what your required quarterly installment payments are on your notice of assessment. If you think that your income is going to be more than previous years, consider increasing your installment payments.
5. Open an RRSP account and make monthly contributions to the RRSP. Not only does this reduce your taxable income but it sets something aside for your retirement.
If you have questions or concerns respecting your business’ financial situation, we invite you to contact our office. Our highly experienced staff will be happy to discuss your situation.
Henry M. Francheville, CA, CIRP, Licensed Insolvency Trustee
Licensed Insolvency Trustees
Fresh start…the road to financial freedom