Case Study: Small Business Tax Planning Saves Thousands

Many small business owners in Canada believe that tax filing simply means submitting a year-end return. In reality, proactive tax planning can make a huge difference, saving thousands of dollars. In this case study, TikiTax.net shares the story of a small business that significantly cut its tax bill by applying timely strategies.

1. Business Background

This business is a small service company in Toronto, with annual revenue of about $500,000 CAD and 5 employees. Before working with a tax professional, the owner typically just filed taxes at year-end without a long-term plan. As a result:

• Paid higher taxes by not taking advantage of eligible deductions.

• Failed to optimize the balance between salary and dividends.

• Had no long-term tax-saving strategy in place.

2. Strategies Implemented

After consulting with a tax professional, the business applied several key strategies:

a) Salary–Dividend Mix
The owner was advised to take part salary and part dividends instead of only salary. This allowed CPP and RRSP contributions while reducing personal tax burden.

b) Optimizing Eligible Expenses
The company reviewed all expenses, from office costs and equipment to staff training. Many previously unclaimed expenses were added as valid deductions, reducing taxable income.

c) Retirement and Insurance Planning
A portion of profits was redirected into an Individual Pension Plan (IPP) and business insurance, helping save taxes and strengthen long-term financial security.

3. Results Achieved

Thanks to these strategies, the business was able to save:

• $12,000 CAD in the first year alone.

• Built long-term savings through IPP and RRSP contributions.

• Improved cash flow, giving the owner more flexibility in both personal and business finances.

4. Lessons for Small Businesses

This case shows that tax planning is not just a year-end task but an essential part of business financial management. Small businesses can:

• Use all eligible expenses to reduce tax liability.

• Choose a smart salary–dividend mix.

• Invest in retirement and insurance tools to both save taxes and protect financial security.

Conclusion

This case study proves that smart tax planning can save small businesses thousands of dollars each year.
👉 Contact TikiTax.net today for personalized tax strategies to help your business grow sustainably and efficiently.