Spring Cleaning: Tips for Self-employed canadians and incorporated businesses
Givens LLP | May 21, 2025
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You’ve hopefully completed your personal income tax return by now. With the sun shining and flowers blooming, spring is a great time to step back, reassess and get proactive about your current accounting and financial processes. Whether you're a self-employed professional or the owner of an incorporated business, the months following tax season are a strategic time to optimize your tax position and prepare for the year ahead.
Reassess Your Record-Keeping System
Good bookkeeping isn’t just about compliance—it’s a foundation for managing cashflows and assessing profitability. If you often find tax season or your corporate year end stressful due to missing receipts or disorganized records, now’s the time to implement a better system.
- Consider cloud-based accounting tools like QuickBooks Online or Xero for real-time expense tracking.
- For incorporated businesses, establish clear documentation for shareholder loan contributions and withdrawals to avoid year-end surprises.
- Assess your accounting software for any gaps that your system may currently have and if a different tool would offer a better solution.
- Canada Revenue Agency is selecting more individuals and businesses to review or even audit. It is important to ensure that your system has a paper trail in the event you are selected.
Optimize Your Contributions and Withdrawals
This is a great time to assess which planning opportunities are available to you to help minimize tax:
- Discuss with your advisor whether it makes sense to pay yourself salary, dividends or a combination. Each option affects your personal and corporate tax outcomes differently. Spring is an ideal time to revisit your compensation strategy for 2025.
- For those who are self-employed, evaluate utilizing your RRSP contribution rooms and topping up your TFSA early in the year to maximize tax-sheltered growth.
Consider Incorporating (If Not Already Incorporated)
If you’re self-employed and earning more than you need for living expenses, it may be time to explore incorporation. Incorporating can offer tax deferral advantages by allowing you to leave profits inside the company at a lower tax rate rather than withdrawing all income personally.
At Givens LLP, we can walk you through whether incorporation aligns with your goals—and the administrative responsibilities that come with it. Contact us today to set up an appointment.
Plan for Instalment Payments and Upcoming Deadlines
If you owed more than $3,000 in taxes last year, the CRA may require you to make quarterly instalments this year. Missing instalments can result in interest or penalty charges next tax year.
- Set calendar reminders and consider automating payments to avoid penalties
- For corporations, your instalments may be due monthly or quarterly depending on your filing status. Review your cash flow to ensure you’re setting aside enough to meet these obligations and that you are making payments based on the schedule indicated by CRA.
Evaluate Business Structure and Expense Strategy
Spring is an ideal time to review whether your current business structure still serves you. Consider the following:
- Are you using a holding company for asset protection?
- How are you managing your expenses in comparison to any budgets you created initially?
- Is retirement on the horizon and is there a need for estate planning
By taking proactive steps this spring, you’ll not only reduce headaches next tax season or corporate year end but also create opportunities to grow and protect your wealth and hopefully add some efficiencies to your accounting processes.
Whether you’re a sole proprietor, freelancer, or incorporated business owner, our team at Givens LLP, Chartered Professional Accountants is here to guide you every step of the way. Reach out today for personalized advice tailored to your unique situation.
