The Competitive Edge for Small Business Owners
Did you Overpay Taxes by Using Tax Preparation Software?
For many business owners the answer to this quandary is tax preparation software. Fill out a fairly simple interview, click “print” and comes out a complete return that will pass muster with the CRA. The answer to all your problems or is it?
Can one Software Program Cover all Businesses?Read more
If one were to create a list of questions for every tax deduction and credit detailed in those pages, the list would be the size of phone book! Yet, tax software programmers have somehow boiled it all down to a simple 30-minute interview process? Common sense should tell you that doesn’t make sense. A practical matter, tax software programs are designed to make sure that you claim a general set of deduction that are applicable to business all industries. Most programs try to mask this fact by asking you to identify your business before proceeding. For a lark, you might try selecting another industry and running through the interview process. You will find that the interview process is modified a bit, but you are still being asked the same basic deduction questions. If you are only claiming general tax deductions, you are paying more than you should in taxes. Ask yourself if you have seen any of those question in a tax software program interview?
Q. Do you store business inventory in your house?
Hint: You may be able to claim hundreds or thousands of dollars in deductions.
Q. How is the value of business inventory established?
- fair market value
- the lower of its cost or its fair marketed value
Hint: How to value your inventory will shift your tax situation greatly.
Q. Do you claim standard mileage for your auto or the actual costs?
Hint: Standard mileage rate may not the best option.
Q. Do you have a home-based business and a second office?
Hint: You may be able to deduct your commuting expense each day. Yes, commuting expense.
Q. Did you hire apprentices?
Hint: If you hire apprentices, you may be able to claim a non- refundable tax credit up to $2,000 per year for each eligible apprentice for the first 24 months of the apprenticeship.
Q. Did you refinance your home?
Hint: The points you paid on your original mortgage are fully deductible now, not over the length of the loan.
Q. Were you required to purchase life insurance when borrowing money for business purposes?
Hint: you can deduct the cost of the premiums, provided certain criteria are met.
This represent only the tip of iceberg of available credits and deductions available to you. Just one of the deduction could save you thousands of dollars in taxes. Yet you never going to see these questions raised in a tax software program interview. The tax code and regulations are simply too large to be incorporated into a usable software program.
Your business is unique. You face and overcome issues situation that are unique to your size, financial situation and particular business needs. Don’t limiting your deductions by using tax software programs.