Canadian Income Tax and Your Small Business

Accounting problems small businesses face - 393949

If you are thinking of starting a new business in Canada or have already started then you must learn about Canadian taxes for small businesses. This article will provide you with the information needed to understand the Canadian income tax. It is important to be informed about this tax and this information is useful for all businesss owners and business associates.

What Is Income Tax?

Income tax is the tax that must be paid by every individual in order to help to build the nation. The amount of the tax to pay depends upon the earning of the individual during a financial year.

How To Calculate Income Tax In Canada?

Calculating income tax in Canada is based in a very simple rule: The average tax rate is equal to the total taxes paid divided by the total taxable income.

Average Tax Rate=Total Taxes Paid/Total Taxable Income.

Average Tax Rate: When the total amount of the tax is divided by the total income then the average tax rate is generated.

Total Taxes Paid: All the individual taxes that you are paying total count.

Total Taxable Income: The amount of income used to calculate the tax individual paid to the government at a given year is the taxable income.

Can a Small Business Deduction Help You To Reduce Tax?

Yes, you can freely reduce tax with a small business deduction. There are lots of ways that you can reduce your taxes as a small business owner some of the tips are shared below with you.

Have a Good Account:

If you have a good, properly maintained account then it can be helpful to you to reduce taxes. All you have to do is to meet your accountant at least twice a year and make sure that everything is in order. Keep track of your expenses and use your account only to direct business.

Buy Capital Equipment:

You just have to finance it, but it provides millions of dollars and interest. And also helps you to reduce taxes.

Use Tax Deductible Options:

There are many things that can be deducted from your taxes. Salaries is one of them. Do everything posible to utilize these tax free options. These alternatives will reduce taxes and help you create a healthy savings account.

 Use an Employee Benefits Plan:

There are many schemes for employees that can help you to reduce the taxes. Health care insurance, transportation benefits, educational assistant benefits, meal provisiom benefits, and so on.

Bottom line is that here are many ways by which you can very easily reduce your tax. All you need to do is plan and learn about what these opportunities consist of. This will help your small business flourish and also provide a healthy environment for your workers.

We hope this article is of use to you and helps you reach both your business goals and personal goals.

Interesting Related Article: “3 Money Saving Strategies for Small Businesses