With the recent oil price downturn in Calgary and the increase in labor costs, many businesses are looking for ways to save on their taxes and keep their doors open. Here are five ways that retail business owners can potentially save on income taxes and increase their profitability.

Family Member Worker Expenses

Wages that business owners pay to employees are business expenses, even if they hire their own spouse or child. Since the spouse or child is in a lower tax bracket than the owner, this allows the business owners to reduce their own income so they can fall into a lower tax bracket.  The end result is a savings of tax dollars

Apprenticeship Job Creation Tax Credit

If the business hires a tradesperson, it may qualify for the Apprenticeship Job Creation Tax Credit. This means getting a tax credit of up to $2,000 if they hire a tradesperson that is part of their two-year apprenticeship program.

Advertising and Promotional Activity Expenses

Advertising may be fully written off.  Basically, online advertising is fully deductible. This includes costs associated with web hosting and domain name registration. Television and radio advertising can be fully deducted. Print advertising in a Canadian magazine or other publication can be fully deducted.

Other promotional activities that are deductible include:

  • Creating flyers
  • Printing business cards
  • Giving away swag
  • Paying to paint a vehicle to promote the store
  • Sponsoring a charitable event that promotes the business

Vehicle Expenses

If a business owner uses a vehicle for business purposes, these expenses can be deducted, including:

  • Insurance
  • Fuel and Oil
  • Repairs and maintenance
  • Parking fees
  • Toll charges
  • Vehicle registration fees

To receive these deductions, business owners must maintain an accurate logbook regarding the use of the vehicle for business purposes. Additionally, business owners may be able to depreciate 30 percent of the cost of the vehicle each year as the Capital Cost Allowance.

Booths at Local Markets

Many of our retail clients will participate in open markets in Calgary and abroad.  A successful three day show can change a slow month into a good month.  All of the costs of these activities can be deducted as legitimate expenses.  This would include the cost of the booth, labor at the booth, the travel costs to and from the show, and advertising at the show.

Seek Expert Help with Padgett Business Services®

While these tips may help businesses save significant sums on their federal taxes this year, contact Padgett Calgary  for further assistance. We would be happy to meet with you to review the potential tax savings that exist in your retail business.