Is the Small Business Tax Deduction an Advantage for You?
As a business owner you have to look at all the tax breaks that you can possibly get. If you are new to business then there is no doubt that you are busy with the many different aspects that it possesses. Taking the time to know where you stand with the tax department is critically important as part of the success of your business. It is true that you can leave it all up to your accountant but your accountant can only do as good for you as with the information that you provide him with.
Something that you want to take a look at is the small business deduction. This can be a really significant savings for you because what it means is that for the first $500,000 of income for your business you can claim this at a 17.5% small business deduction however it does come with some limitations and these are what you need to be aware of.
There are specific conditions at that your business has to meet. It has to be a Canadian -controlled private corporation and you must be carrying on your business in Canada. Also the income that is eligible has to be from active business income. This cannot be income that comes from a specified investment business and it can also not be income from a personal services business. The exception to this is that if you’re specified investment business or your personal service business is large enough that you can employ five individuals or more full time throughout the year. These are just one example and there is more criteria that is applied to this.
If you think that your business may qualify for the small business tax deduction, this is something that you need to discuss with your accountant as this is the professional that can advise you as to what criteria you have to meet in order to be eligible.
Some business owners adventure in to a business automatically assuming that they will be eligible for this deduction and they have come to this conclusion without knowing what the actual facts are. This is why it’s so important to rely on professionals that can look after your business finances rather than going on what friends or business associates are telling you.