Effective Tax-Planning Tips for Every Small Business Owner

Managing financial issues like tax filing is one of the most important and complex tasks for a business. If the year-end is coming and you are getting ready to enjoy the holiday season, you require a strategy that will help you to sort out all these issues and gain benefits.

If you are running a small business, tax compliance and tax planning are an important aspect of your financial success. This article will help you to make that convenient for you and allow you to grow your business.

Collect the Right Files

When it comes to collecting and preparing documents required for tax filing, people become restless and find it difficult to organize the files and documents appropriately.

Organizing files and documents in the right way is one of the important tasks you should perform before getting prepare for the tax plan at the end of a financial year.

Each business’s accounting needs and processes vary so it is a good idea to design a system that works for you as this will help you keep track of your revenue and expenses for the year.

Invest in Capital Assets

You can reduce the volume of tax by investing in a capital asset purchase. Capital assets are considered as a tool that can help a business over a long period. Office equipment, machines, vehicles, electrical and electronic equipment are some of the capital assets you can purchase or finance to ease the amount of payable tax.

However, here you should know that the expense on high-valued assets cannot be deducted in the one-year term as they are the subject of the half-year term. Thus, if you are planning to take the advantages of capital asset purchase, then you should perform it at the end of your fiscal year. It is important to note that the delay will help you to enjoy the maximum depreciation rate.

Pay Installments Quarterly

Making payment for taxes like corporate tax, GST/HST and QST on an annual basis means you have to get ready for large tax payments at the end of the year.

However, you can get rid of such heavy expenses by paying the installments on a quarterly basis. This will help you to divide the entire amount of yearly interest into four segments.

Income Splitting

This is one of the most effective ways of tax reduction. You can spit the income from one family member to another who is a subject of paying significantly low tax. You have to justify all the sources of income and make sure all the sources can submit documents to prove their claim.

You can also take the advantages of dividend sprinkling by restructuring the shares of your company. You can do this by giving some non-voting shares to some of your family members (with some restrictions) in lower tax brackets.

Declare Rewards for Your Employees

You can make things better by declaring rewards or incentives for your employees. This will help you to reduce the volume of your income and the level of payable tax as well. If you declared incentive for your employees in the present financial year and assured them to pay it in the next fiscal, your business will be entitled to enjoy a tax deduction.


These are some of the simple yet effective tips to enjoy tax benefits for a business.

However, each individual business varies and you should always consult with a qualified Chartered Professional Accountant before implementing any tax planning procedures.


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