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3 Ways Small Business Tax Preparation Saves You Money
One of the First Rules of Starting a Small Business Is to Learn How to Save Money.
However, with all the costs that come with a new business venture, it’s easy to throw this rule out the window without realizing it.
Unexpected expenses and setbacks are a normal occurrence for the first few years, but they cost time and money. And when small business owners of Toronto start their tax preparation, they may be in for a bit of a shock.
If you’re a small business owner in Toronto, the complexities of local tax regulations can make tax time especially daunting. To navigate these complexities, consider these three proven strategies that not only simplify the tax preparation process but also optimize your savings.
Work with a Trained Accountant
Most people have a hard time managing tax preparation, much less handling their accounting throughout the year. That’s why it’s important to work with a trained accountant. An accountant will organize your bookkeeping and tell you what to keep in mind throughout the year (not just at tax time.) They also will support you when you’re filing your small business taxes, which reduces the chance of liability. And if the IRS audits your small business, an accountant can help you during the process to ensure you’re taken care of. This kind of forethought will save you a lot of time and money throughout the year.
For Toronto entrepreneurs, local tax accountants like those at Leonard Tam Professional Corporation are familiar with Ontario-specific tax benefits and pitfalls, making them invaluable during the tax season.
Continually Track Receipts and Records
Much like the saying, “a stitch in time saves nine,” you should always keep track of your receipts throughout the year. Make a note of ongoing expenses and one-off purchases to have a better grasp of your profit and loss. And if you work with an accountant, they will ensure this doesn’t fall by the wayside. This paper trail will also help when it comes time to file for deductions or credits at tax time.
Being thorough with record-keeping is particularly important in Toronto, where municipal and provincial regulations may affect your reporting requirements.
Actively Look for Deductions
There are plenty of deductions your small business can benefit from. However, some people don’t know what potential deductions to look for. And these deductions may differ or vary depending on your business or industry. Take time to identify deductions and credits throughout the year, so you are more likely to get a refund when you file your taxes. Discuss these with your accountant to ensure you apply for all potential credits.
Toronto businesses might also benefit from provincial programs such as the Ontario Small Business Deduction, which your local accountant can help you navigate.
While these three steps may seem simple, they aren’t always easy. It’s challenging to track receipts, especially during a busy season. And keeping an eye out for new potential deductions takes time and patience. However, if you work with a seasoned accountant, they will do most of the heavy lifting for you.
Curious about small business accounting in Toronto? Sign up for a free consultation with Leonard Tam to discuss your specific needs. We’d be happy to address any questions or concerns you may have so that you can manage your small business confidently with local insights.