There a good number of small business tax strategies that you can put into effect in order to cut down the amount of income tax you pay on our business. A few of them are discussed below.

• Endeavor to maximize your Capital Cost Allowance income tax claim. Small business owners should be aware by now, that rather than merely deducting the cost of any depreciable property they have acquired for the purpose of operating their businesses in a given year, it is more needful to deduct the cost of the depreciable property over a period of years, via a Capital Cost Allowance claim; this is particularly true for Canadian small business owners. Unfortunately, a good number of small business owners are oblivious of the fact that they do not have to claim Capital Cost Allowance in the same year it took place – a good tax strategy that the small business owner can use in reducing tax payable on income.  The Capital Cost Allowance is not a “Must” tax deduction; therefore, the business owner can use either much or little of the CCA claim in a given tax year as the person wishes; and any unused portion can be carried forward to assist in the offsetting of a larger income tax bill in subsequent year (s).

• The need to split your income; the income splitting small business strategy allows the business owner to make most use of the marginal tax rate disparities. As your income increases, so the marginal rate. When you transfer a part of your income to a child, spouse, someone with a lower income, your marginal tax rate on your income will be reduced. For small business owners who have children of post-secondary school age, this tax strategy is a powerful one. For instance, suppose that your 18-year old son is employed in your business, and the total salary you are paying him is 10, 000 dollars. As a result of basic personal income tax exemption, the boy will pay very petite income tax and would have a good nest-egg to assist foot her educational bills. And supposing you pay him an income that is equal to the personal income tax exemption, he will not pay any tax! And in the meantime, you have chopped 10,000 dollars off your income for that year, thereby reducing the total amount of income tax you are personally owing.

• Maximize the full benefits of the income tax offered to home-based businesses. if you are operating your small business on home-based level, there are advantages that is obtainable when it comes to business income tax. One, there is the advantage of business use-of-home deduction. Again, home-based business owners can deduct a part of many-home related expenses like electricity, heat, home maintenance, home insurance and home cleaning materials. And if you are a homeowner, you can as well deduct your property tax and mortgage interest.