Tax Season: What it means for your small business.

It’s that time of year again – tax season is upon us. While it might be a stressful time, especially for small business owners, Flagstaff is dedicated to helping every business owner not only grow, but also succeed.

To help prepare you for tax time, we’re here to answer a few FAQs, as well as provide some helpful small business tax tips.

Let’s dive into it:

Do you have a small business?

Before anything, it is essential to ensure you qualify as a small business in Alberta. If you have less than 50 employees working for you, then you are considered a small business. Did you know that approximately 96% of all businesses in Alberta are small businesses?

When do you have to register for GST?

If your small business’s gross revenue does not exceed $30,000 over the previous four or less calendar quarters, you will not need to register for GST. However, you can choose to do so voluntarily.

If you exceed the $30,000 threshold over the last four or less calendar quarters, you are no longer considered a small supplier and are required to register.

What is the Income Tax Rate for your small business?

In Alberta, the provincial income tax rate for small businesses is 2%. This rate is significantly lower than the general corporate income tax rate, which sits at 8%, and is also the lowest rate for any province in Canada.

In addition to this, the Federal rate for small businesses is 9%, giving you a combined tax rate of 11%.

Small Business Tax Tips:

• Make sure you know your eligible expenses. Some of the expenses you use while running your business can be claimed as a tax deduction. Things like vehicle mileage, materials and supplies used, rent, or travel could potentially all be claimed as deductions.
• Separate your personal expenses. Keep your personal and business bank accounts separate. Eliminate any chance of grey areas that may cause problems come tax time. Trust us, you’ll be happy you kept them separate!
• Know your tax credits! Getting a direct reduction on your business-related taxes can make a world of difference. Things like medical expenses, apprenticeships, investor credits, and charitable donations can all be considered tax credits. You can claim tax credits at the provincial and Federal level.
• Write off any losses. In any situation that involves a loss it’s possible for you to write it off as a deduction. By deducting your losses, you can turn some of them into wins.

Of course, it is also always advisable to consult with a tax professional to ensure that you are receiving the best advice possible. Their professional understanding of the tax world can help maximize your financial potential.

Remember this: while no one necessarily enjoys tax season, it doesn’t need to be a negative experience. With a little help and the right knowledge, this normally tedious task can become something very beneficial to you and your business.