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LLC owners can avoid paying employment taxes by making a corporate tax election with the IRS. The members of an LLC can choose to have the company be treated as a C-Corporation (C-Corp) or an S-Corporation (S-Corp) depending on which structure provides the biggest advantage to the business.
Top 5 Tax Mistakes Small Businesses Make Failing to File or Send the Proper Forms or Payments. Underestimating and Underreporting. Mixing Business and Personal Expenses. Poor Record-Keeping and Organization. Not Taking the Proper Deductions.
The federal tax rate for incorporated businesses is 15% and could be as low as 9%. Applicable provincial tax rates would also apply. As a incorporated business, you have the benefit of the small business deduction which reduces the corporate income tax that you would have to pay in a taxation year.
If you discover an error on your business tax return after filing, you may want to discuss the problem with a lawyer or tax professional. Some errors may not require an amended tax return. Other errors may be corrected on an amended tax return.
10 ways to minimize your small business tax liability Employ family members. Build a retirement fund. Focus on healthcare. Get incorporated. Maximize deductions. Contract employees. Charitable contributions. Optimize deductions.
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How to reduce your business taxes Record what the receipt was for. Get in the habit of writing on your receipts as you receive them with the activity. Create a filing system. Separate your business and personal finances. Pay taxes and instalments on time. Shelter your income from tax. Hire an accountant. Take your deductions.
Incorporate your business One of the most effective tax-saving tips for small businesses is incorporation, if your business produces more profit than you need to live on. It could produce a sizeable tax deferral by qualifying for the lower small business tax rate for active income.
Federal rates The basic rate of Part I tax is 38% of your taxable income, 28% after federal tax abatement. After the general tax reduction, the net tax rate is 15%. For Canadian-controlled private corporations claiming the small business deduction, the net tax rate is 9%.

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