How paying less tax for your business
No corporation may evade taxes, but neither should one pay more than its due in accordance with the law. To that end, it is important to know the law and reap the benefits it affords. As an entrepreneur, you are entitled to many deductions. You should list them and then make the necessary calculations.
Looking for eligible deductions
Go through your bank statements and personal credit cards for any forgotten business expenditures. If you personally collected payments, write them in your accounting system.
Congress and training
If you have to attend training classes or conferences related to your enterprise, such expenses are usually deductible. You only need to keep the schedules of your classes and conferences, proofs of attendance, certifications, and of course your invoices in anticipation of future audits by the tax authorities.
Meal and public relation expenses
For gifts to clients, meal expenses, public relation expenses (restaurants, food and beverages, cultural and sports events), it is highly recommended to indicate the name of the person, and the reason of the business meal on the back of the invoice.
Meal and public relation expensesMeal and public relation expenses
For gifts to clients, meal expenses, public relation expenses (restaurants, food and beverages, cultural and sports events), it is highly recommended to indicate the name of the person, and the reason of the business meal on the back of the invoice.
Gifts
Gifts to employees should not be given in cash or by cheques. Instead, give them goods (of a maximal value of 500$) and keep the invoice.
Home office expenses
If you use a home office for your corporation, and provided you meet the conditions for eligibility, some expenses are reimbursable according to the ratio of your house area used for the corporation’s business. Home insurance, power, mortgage interest, school and municipal tax, house maintenance and repair, co‑ownership expenses, telephone line, cellphone, are eligible expenses.
Capital expenditures
If you plan to acquire or dispose of capital asset (computers, furniture, cars, goodwill, franchises) towards the year-end, make sure you acquire it as soon as possible so as to be able to use it before the year-end.
Income splitting
Do your spouse, and/or your children over the age of majority, work in your enterprise? Then you might contemplate paying them a reasonable salary if their taxable income is below yours. Sharing an individual’s revenue within the family is a means for benefitting from the graduated income tax rate and reducing taxes.
Personal cash
If you need a lot of cash, wait until one day after the corporation’s year-end to withdraw it. For instance, if the year-end is December 31, wait until January 1st to use the corporation’s cash.
Year-end bonus
In some cases, it is better to report a bonus after the year-end (many conditions apply).
Eligibility to QPIP (Quebec Parental Insurance Plan)
If you contemplate starting a family, you might want to pay yourself a salary instead of dividends before the birth of a child, so as to be eligible for the QPIP (Quebec Parental Insurance Plan) and maximise accordingly your allowances.
Conclusion
Finally, since every situation is unique, seek the advice of a professional accountant specialising in income tax returns to counsel you about the tax credits available to you.
Frédéric Roy-Gobeil
CPA, M. TAX
As President of T2inc.ca and an entrepreneur at heart, I have founded many start-ups such as delve Labs and T2inc.ca. A former tax specialist at Ernst & Young, I am also a member of the Ordre des comptables professionnels agréés CPA and have a master's degree in taxation from the Université de Sherbrooke. With a passion for the world of entrepreneurship and the growth mindset, I have authored numerous articles and videos on the industry and the business world, as well as on accounting, taxation, financial statements and financial independence.
