I maintain and operate a private corporation that I use as a vehicle for side business ventures, minor royalties and outside of work income.
I've grown lax over the last year - probably due to full time job pressure, but finally have balanced the check books for my business accounts - boy will my accountant be happy!!
BIG TIP NOT TO FORGET
Now the next effort is to review all of my out of pocket expenses related to the business and declare them as debt the company owes me.
Often, people spend money on their side business in the forms of cash, personal checks or on their personal accounts, but fail to account for it as actual business expenses - why? This can be due to effort, confusion, laziness or mere unawareness.
I'm not sure how long it will take, but I'm certainly going to try to pull my largest business expenses by category and include them as accounts payable to me.
Why do this? Good question...
If the company has enough money to pay you back, it's money back in your pocket, tax free since it was a legitimate business expense.
If on the other hand the company does not have enough money to pay you back right now, you can carry the expense forward as part of a loss carry forward (I think you have up to 17 years to carry losses forward). You can also carry the debt forward and pay it back to yourself when the company does have enough money.
What does this mean?
Well, expenses accumulated in 2008, can be used to offset income accumulated in 2009. This is a great thing as it allows you to legitimately take money out of your own business tax free AND pay yourself back.
I wonder how many business owners don't take advantage of this?
If you think your company will never have enough money to pay you back, think of this: other people or businesses might want to buy your company or invest in it in order to absorb the tax loss. Now this is complex tax accounting and I can be imagining something that's not true, but I do recall on several M&A dialogues the value of favorable tax positions in acquired companies.
Hopefully this will give you some helpful ideas.