As the year slowly winds to a close, many business owners will begin–if they have not already–the process of closing out their current fiscal year and preparing for 2025. In Canada, the most common fiscal year-end deadline is December 31, 2024, with corporate T2 tax forms due no later than six months after the deadline, which, in this case, would be June 30, 2025. As business owners prepare, the Gallo LLP team is here to help tailor corporate tax solutions that are best suited to the needs of your business.
Our commitment is simple: our Chartered Professional Accountants are here to help create plans that push the envelope and give you the confidence to uplift your entrepreneurial savvy and bring success to your business. With these bespoke corporate tax plans, we help bring a greater understanding of what your business requires and help implement these bespoke solutions to give you the confidence you need to elevate your success. To help bring this confidence, here are five simple ways business owners can reduce their corporate tax liabilities:
1. Encourage Employees to Track Their Mileage
Tracking and claiming mileage is a simple yet impactful way for employees to contribute to reducing corporate taxes while ensuring they’re fairly compensated for work-related travel. Companies can claim legitimate deductions by accurately claiming miles driven for business purposes, lowering taxable income and improving financial health. Encourage employees to use mileage tracking apps or maintain detailed logs to make this process seamless and compliant with tax regulations. Not only does this practice benefit your business, but it also fosters a culture of accountability and transparency.
2. Deduct Home Office Expenses
Entrepreneurs and business owners running their operations from a home office can significantly reduce their corporate taxes by deducting eligible expenses such as a portion of home insurance, utilities, rent or mortgage, property taxes, maintenance costs, and even phone and internet fees. These deductions, calculated based on the space used for business activities, can lead to substantial savings. However, it’s essential to ensure you meet eligibility criteria to avoid issues in the future. By strategically leveraging home office deductions, you lower your corporate taxes and optimize your operational budget—a smart move for any business owner!
Related: How to Calculate Business Use of Home Expenses Canada
3. Tracking Your Meal And Entertainment Expenses
Ensuring that all client gifts and meals are properly recorded and receipts are kept is a smart financial practice for business owners. Keeping accurate records of client gifts and meals and their receipts can help business owners maximize their tax benefits. These expenses often qualify for partial or full tax deductions, provided they meet specific requirements.
Proper documentation, including the date, amount, purpose, and attendees for meals or the recipient for gifts, ensures compliance with tax regulations and strengthens your case during audits. Beyond tax advantages, meticulous record-keeping also improves financial management by offering clear insights into spending patterns, aiding budget control, and ensuring accurate financial reporting. Using the accounting services of Gallo LLP can simplify the process, helping you stay organized and focused on growing your business while optimizing your tax savings.
4. Invest In Your Employees
Investing in your employees is more than just a financial decision—it’s an investment in people and the future of your business. By prioritizing employee development and fostering a diverse, skilled workforce, you empower individuals and position your company for long-term success! For example, hiring apprentices in designated Red Seal trades can unlock valuable opportunities, both for your workforce and your bottom line. Through these programs, businesses gain access to highly skilled individuals while qualifying for corporate tax credits that reduce expenses.
This approach creates a win-win situation: apprentices receive hands-on training to build their careers. Your business benefits from a motivated, capable team and financial incentives that ease operational costs. By investing in employees, you’re not just building a stronger workforce—you’re uplifting your entire organization and contributing to a more inclusive and sustainable economy!
5. Make Transactions At The Right Time
Timing large transactions strategically can make a significant difference in maximizing corporate tax deductions and managing liabilities effectively. For businesses with a year-end of December 31, 2024, making substantial purchases before year-end can be advantageous. For example, buying new equipment or upgrading office infrastructure in December allows the business to claim deductions for these expenses within the current tax year, potentially lowering the taxable income.
On the flip side, when selling a significant capital asset like a building, it may be wise to defer the transaction to the following business year. This approach helps spread out the tax liability and provides an opportunity to plan deductions or losses in advance to offset the resulting capital gains. Thoughtful timing of these transactions is a key part of tax strategy, ensuring businesses maintain a favourable financial position while staying compliant with tax regulations.
Partner with Gallo LLP for All of Your Corporate Tax Needs
When it comes to corporate tax accounting, businesses trust Gallo LLP for their expertise, personalized service, and proactive strategies. With a deep understanding of tax regulations and a commitment to helping business owners across Edmonton, Gallo LLP helps businesses navigate complex tax landscapes with confidence. Gallo LLP delivers tailored solutions that align with your financial goals, ensuring compliance and efficiency every step of the way.