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It's that dreaded time of year again - tax season. The self-employed people in North Bay find tax season especially burdensome as they scramble to organize their books, complete complicated business and personal tax returns and sweat the amount of tax they must pay.
"Entrepreneurs hate paying taxes," says Small Business Expert Andrew Patricio. "They'd rather keep the money to grow their businesses by hiring employees, upgrading equipment or investing in marketing." A lifelong entrepreneur with 10 startups to his credit, Patricio is Co-founder of BizLaunch.ca, a company that trains entrepreneurs how to start and run small businesses. Patricio's firm has trained over 20,000 entrepreneurs worldwide.
"In this harsh economy, small business owners know they must do whatever they can to preserve cash flow and generate at least a little profit," he says. Pierce points out that the average small business owner works hard to earn a very modest income. In 2007, the average self-employed Canadian earned $694 a week.
"But if businesses can't employ people, buy supplies or pay the rent, nobody wins. Without 2.2 million small businesses doing just those things, the economy would experience even worse troubles," he says. "It's the responsibility of every small business owner to embrace every legal means to reduce their taxes."
Patricio offers these 5 tips to help small business owners reduce their taxes:
1. Keep all receipts. An accountant or bookkeeper can't help you if you don't have the paperwork to prove you paid for something. Ask for receipts for everything and keep them organized in expense categories such as automobile, office supplies, business travel, and meals and entertainment.
2. Claim Home Office expenses. If you use part of your home to operate your business, you may be able to claim a portion of household expenses such as mortgage interest, heating, electricity, telephone and property taxes. The portion that you may claim is based on the percentage of the total floor space of your home that is used for business purposes, such as a spare bedroom. Remember, it must only be used for business.
3. Write off bad debts. You are entitled to deduct as an expense any bad debts that you incurred during the tax year, as long as it was previously reported as income.
4. Deduct meals and entertainment. You can deduct up to 50 percent of the cost of meals and entertainment incurred to generate income for your business, such as taking a client out for lunch.
5. Register for the GST. While it's mandatory for any business earning $30,000 or more to collect and remit GST, a small business with sales less than that amount may voluntarily register for the GST. A GST account allows the business owner to recoup any GST paid on expenses, potentially saving them thousands of dollars.
BizLaunch has partnered with Staples to present a free seminar for small business owners called How to Pay Less Tax on April 29, 8 - 9:30 a.m. at 1899 Algonquin Avenue inside STAPLES. Interested small business owners may register at
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