To avoid confusion amongst those individuals that are new to world of business strategies, tax planning is a legal way to optimally minimize and reduce your personal or business’s tax liabilities in a year. In other words, it is an analysis of your individual or business’s financial state or situation from a point of view that is most efficient to your fiscal well-being.
Of course, this is something that should be done well within the boundaries of the law and not to be confused with tax evasion which, if not done properly, can very well become the case. Here are a few simple tips you can use to do your tax planning in a way that will help you get the most out of your business or personal tax situation.
File Your Taxes Online
This might not seem like any way to minimize how much tax you pay in a year but, believe it or not, it has a lot to with it simply due to the fact that if you make any errors, fill in your information wrong, miss anything or add value to things that aren’t accurate – you will end up paying more than you should every year. When filing your taxes online, the likelihood of you making any of these mistakes is drastically reduced.
Make Use of an Accountable Plan
Making use of accountable plan not only be a very beneficial move to make for your business but will also build good relationship between you and your employees. An accountable plan is an arrangement you make to reimburse your employees for their business expenses like travel and entertainment related to the business not counted as income – by doing this you will lower your and your employees’ income tax within the regulations set by the CRA.
Fringe Benefits for Your Employees
In short, there are certain benefits your business can offer your employees to avoid paying additional wages that might trigger higher employment tax, such as:
Transportation benefits within business hours.
Health benefits or insurance.
Disability cover or insurance.
Education benefits or assistance.
Employee meals covered at work.
Dependent care assistance for employees.
Group Term life insurance.
These are only some of the things your employees might need to cover in their day to day lives that will require you to pay them extra, offering some of these benefits as part of their employment might cut some extra costs for your business in the long run.
Manage and Keep Any and All Documentation
This might be the simplest and most effective way of lowering your business and personal tax. Keeping a clear record of your expenses during the year will help and allow you to file the most accurate tax documentation, avoiding any and all errors that might cost you or business extra money that could have been profitable. You can achieve this by simply keeping and filing even the smallest of receipts of any expenses.
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- The Capex Team