Income Tax Tips Checklist
Dom Cocco, Partner
FranchiseCanada
Jan 2010
A little planning and organizing can help to make the tax filing process easier – and reduce the income tax bill for you and your franchise.
- Review tax returns from prior years to identify any unused tax deductions or credits that you may be able to use this year.
- Determine whether your franchise had a loss in any previous years since you may be able to apply this loss against other sources of income.
- Save expense receipts and ensure they include the date of purchase, the name, address and GST number of the supplier and a description of the goods or services purchased.
- Record expenses every day, especially the following, which are often overlooked: auto, parking, taxi/transit, travel, bad debts, education/ training, entertainment, meals, gifts for clients, membership dues, seminars, conventions/trade shows, cell phone, books and subscriptions.
- Maintain records of all revenue transactions including sales invoices, cash register tapes and contracts in order to support income claims.
- Track business use of your vehicle and deductible automobile expenses including license and registration fees, insurance, maintenance/repair, fuel, oil, washes and parking fees.
- If your franchise business is incorporated, decide how much income to draw from the corporation as salary, dividends or bonus in order to achieve optimal tax results. Consider paying yourself sufficient salary to maximize your 2010 Registered Retirement Savings Plan contribution and your family's child care deductions. Depending upon your age you may want to set up an Individual Pension Plan instead of an RRSP to maximize current deductions and increase retirement savings.
- Hire your spouse or children if they provide services to your business. By paying a salary to family members who pay income tax at a lower marginal rate than yours, you will reduce your business income as well as taxes for your family.
Consult with a tax specialist before filing your personal and corporate tax returns to ensure that you take advantage of every available tax deduction.
Dom Cocco is a partner with BDO Canada LLP (www.bdo.ca). You can reach him at (905)639-9500 or dcocco@BDO.ca.
