It’s tax time and the definition of insanity is to keep doing the same thing and expecting different results. Do you feel that you are paying to much taxes but only complain to your accountant when its tax time? A better approach to to be proactive.
Check out tips to help you stay on top of next years taxes:
IDENTIFY HOW MUCH TAXES YOU ARE PAYING – AND BE PROACTIVE ABOUT REDUCING IT
- Don’t wait until tax time. Contact your accountant early in the year
- Have your tax bill forecasted in advance to identify potential tax reduction opportunities
- Set aside funds for the tax bill as income comes into the business
- Stay on top of business versus personal expenses with your bookeeper. Use a credit card that is dedicated to business expenses to ensure you are receiving all of your deductions and to audit proof your expenses
- Pay your quarterly tax and HST bill on time to avoid penalties
TAX TIPS FOR PARTNERS AND EMPLOYEES IN FIRMS
- Ensure that your firm is taxing you properly based on regular income and bonuses received
- Consider making an RRSP contribution with any bonus income to reduce taxes to bonus and regular income
- If your making RRSP contributions on your own, let your employer know, so they can reduce your taxes at source and you won’t have to wait until tax time for the refund on your contribution
- Determine if your firm can attribute some of your income to a lower income spouse
TAKE ADVANTAGE OF PROGRAMS TO REDUCE TAXES
- If you are self employed discuss incorporating with your Accountant
- Many firms are starting to let partners incorporate as well. Determine if this is a viable option for you.
- Look at maxing out your RRSP, TFSA room, especially if you’re a high income earner.
- Explore investments that provide tax efficient income at retirement. These include TFSA’s, T Series investments, Universal Life Plans and corporate class investments to name a few.
- If you are self employed consider a private health plan to reduce taxes paid on income for medical expenses.
- Determine if you are a candidate for an individual pension plan in order to maximize savings for retirement and reduce taxes