What are the Legitimate Ways to Decrease Business Taxes in Canada

1. What are the Legitimate Ways to Decrease Business Taxes in Canada? https://www.maroofhs.com/tax-services-canada/corporate-tax-services-canada/

2. In this post, we will take you through some of the best legal techniques to save business taxes in Canada. There Are several legal ways that you can make use of to save your corporation’s taxes. So, why be untruthful in the first place? We’re going to talk about the top 5 legitimate ways to decrease business taxes in Canada. Incorporate your small business: The foremost legitimate way to decrease business taxes in Canada is by incorporating your corporation. Companies pay a pretty low tax rate of just 12.2 percent on the first half-million dollars of profit. In the contrary, individuals can pay as high as 52% percent in taxes if the reach their highest tax bracket (at graduated rates). So, you see, you can save in taxes by just incorporating your small business. Keep in mind that when income is withdrawn from the corporations, it adds back to individual’s income with a credit available for paid. So it’s more of a tax deferral tool!

3. Having a higher income, why not to set up a tiered structure? Add lower income spouse as a shareholder: The second best legitimate way to decrease business taxes in Canada is by incorporating your spouse to your existing corporation as a shareholder. Being a shareholder of your corporation, your other half can get up to $33,733 (2021, ON) in dividends, tax-free, per year, from your organization, given that your spouse doesn’t have any other income source. Even if your spouse is working & is earning considerably less than you are from your business, it is still beneficial to pay dividends to your spouse, as you’ll decrease the overall tax burden of your family. This is because you’re in a higher tax bracket & your other half is in a lower tax bracket. Write-off donations given to charities: The third best legal way to decrease business taxes in Canada is through donations. Companies that make donations to enrolled charities can take advantage of charitable donations.

4. Promote your business & avail a tax deduction: The 4th best legal way to get a tax deduction in Canada is to promote your business. Advertising expenditures are completely deductible, and purchases done for gifts to offer to clients are also entirely deductible (subject to limitations). Finally, meals & entertainment incurred, for instance, for winning and dining clients, are 50% deductible. Set up a Tiered Corporate Structure If you are having multiple entities generating significant amounts of profits, consider utilizing the benefits of tiered structures. Setting up a holding company allows dividends to flow freely from operation corporations to holding corporations. For professional Corporation Tax Preparation Services in Canada, do get in touch with Maroof HS CPA Professional Corporation!

5. You can reach us at: 3-100 Hanlan Road, Woodbridge, ON L4L 4V8 Phone: (647)724-4308 Email: Canada@MaroofHS.com https://www.maroofhs.com/contact/ https://twitter.com/MaroofHS https://www.facebook.com/MaroofHSCPA