Tip For Business Tax Returns
$ TIP 1: For large purchases (such as a car), consider leasing instead of buying.
When you purchase an expensive item, the amount you can claim for depreciation (CCA) is only half of 30% for the first year. Leasing, however, allows you to write off the entire lease payment if you use the item solely for business.
$ TIP 2: Deduct your home workspace used for business or meeting clients.
To reduce your taxes, you can claim a portion of your home expenses such as rent, hydro, telephone, utilities, and property taxes, etc. The home workspace used for business is calculated as a percentage of the total square footage of your home. For example, if 10% of your home is used for business, you can deduct 10% of your claimable home expenses from business income.
$ TIP 3: Know when to talk to a tax consultant.
It's important for you to understand your taxes — a consultant can save you time and money in the long run. You'll gain time to concentrate on running your business.
$ TIP 4: Beginning January 1st each year, keep an accurate log of all mileage and automotive expenses incurred during business activities.
Remember, these records will be necessary to verify the amounts if you are audited.
$ TIP 5: Keep receipts and tax assessments in case of an audit by Revenue Canada.
Remember to keep records for six years in case Revenue Canada audits your returns. You might have to pay back any taxes refunded if you are unable to produce the required documents.