Keeping track of expenses and deductions for corporations is essential for accurately calculating and paying taxes, as well as staying on top of your company’s financial health. The Canadian Corporation Tax Act (CCTA) provides the framework for calculating corporate taxes in Canada. Here are some steps you can take to keep track of expenses and deductions for your corporation:
- Set up a system for tracking expenses: This could be as simple as using a spreadsheet or as complex as implementing an accounting software. It’s important to choose a system that works for your corporation and its size, and that you’re comfortable using.
- Assign a specific person to track expenses: This could be an employee or an outside accountant. It’s important to have someone who’s responsible for ensuring that all expenses are recorded accurately and in a timely manner.
- Keep receipts and invoices: Receipts and invoices serve as proof of expenses, so it’s important to keep them organized and easily accessible. You can store them electronically or in a physical file.
- Track all business-related expenses: This includes everything from rent and utilities to travel, advertising, and employee salaries. Don’t forget to track expenses related to the use of vehicles for business purposes, as well as meals and entertainment expenses.
- Be aware of what is deductible: The CCTA allows for a number of deductions, including business-related expenses and depreciation of assets. It’s important to understand what deductions are allowed and to keep records of all eligible expenses.
- Regularly review and update your system: Regularly reviewing your expenses and deductions is an important step in staying on top of your corporation’s financial health. This will allow you to make adjustments to your system as needed and ensure that you’re not missing any expenses or deductions.
In conclusion, keeping track of expenses and deductions for your corporation is a critical part of staying on top of your financial health. Implementing a system for tracking expenses and regularly reviewing and updating it will help you stay compliant with the Canadian Corporation Tax Act and ensure that you’re paying the right amount of taxes.