SMALL BUSINESS MANAGEMENT

1
SMALL BUSINESS MANAGEMENT

• Chapter Thirteen
• Tax Management

2
Taxation and Small Business

• History of Taxation
• Income Taxes
• complexity of principles and frequency of
  legislative changes

3
General Tax Management Principles

• Nine fundamental areas
• 1. Continual tax planning
• through the year requirements
• 2. Tax Deferral
• 3. Income Splitting
• 4. Marginal Tax Rates

4
General Tax Management Principles

• 5. Deductibles
• accounting and legal expenses
• advertising
• business entertaining
• automobile expenses
• interest expense
• repairs and improvements
• office expenses

5
General Tax Management Principles

• 6. Government Tax-Related Programs
• Special tax rate deductions
• Small Business Deduction (SBD)
• Manufacturing and Processing Deduction
• Investment Tax Credit
• Deferral Programs
• deferred profit sharing
• registered retirement savings plan
• bonus deferral

6
General Tax Management Principles

• 6. Government Tax-Related Programs (cont)
• Accelerated Capital Cost Allowance
• Small Business Financing Programs
• 7. The Incorporation Question
• corporation vs proprietorship vs partnership

7
General Tax Management Principles

• 8. The Remuneration Question
• compensation salary or dividend
• 9. Transferring the Business Capital Gains
• capital gains and family members
• Goods and Service Tax (GST) and Provincial Sales
  Tax (PST)

8
Appendices

• A. Federal and Provincial Tax Rates for
  Individuals
• B. Federal and Provincial Corporate Income Tax
  Rates

9
Concept Checks

• 1. Why is it imperative that the small business
  owner have some tax knowledge ?
• 2. What is continual tax planning ?
• 3. What are two good reasons to defer taxes
• 4. What is income splitting ?

10
Concept Checks

• 5. What are the nine fundamental areas of tax
  management of which an owner should be aware ?
• 6. What is the definition of a deductible ?
• 7. List the six government related programs
  available to small businesses.

11
Concept Checks

• 8. Why would a company wish to incorporate ?
• 9. From a tax perspective, would it be better to
  take a salary or dividends from an incorporated
  company ?