September: A Perfect Time for Tax Planning

September is here so it’s time to get back to business; not that most self-employed entrepreneurs even know what a summer vacation is!

Since leaving the tax department in 1988, I have spent the past 22 years on my own business which just happens to be an accounting practice.

Each year that I have been in business I come across people who tell me that they wish they had sought out advice on deductions, record keeping or tax effective business structures earlier than they did.

Here is some of the advice that I typically share with these small business owners:

Know What is Taxable Income.

To calculate the amount of tax that you owe, you need to first calculate how much your taxable income is.  Your total income plus self employed business profits less eligible deductions is your taxable income.  For corporations, a rough guide is to deduct costs and expenses from gross (total) sales.

Know What You Can Deduct.

If you’re self-employed and operate from a home-based business, you might be able to deduct a portion of your mortgage interest (for example, you can deduct 10% of your mortgage interest if 10% of your home is your home office and main place of business) as well as other operating costs for your home.

Know When to Use an Accountant.

If you’re not sure how to calculate and file your business taxes, you should enlist the help of a professional to make sure it’s done right. After all, accounting expenses are tax deductible too!

So if you need some advice in any of these areas, consider attending one of the many seminars focused in this area that are offered by Small Business BC or try a one on one session on Ask an Accountant Day which is scheduled for Tuesday, September 21st from 10 am to 2pm.  Accountants from our firm, Loren, Nancke & Company, CGA’s will be available to answer a variety of questions on personal, business, and corporate tax issues.