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What every small business should know about their tax obligations

If you own a business you need to be proactive about many aspects of the business but accounting is often neglected which can lead to additional expenses, lost opportunity and additional stress but with some planning and the right accountant it doesn't have to be that way.

Here are some helpful tips that you can use to avoid some common problems:

  • Don't wait until the last minute to do your get your books and records up to date because there will be lost opportunity to for tax planning.
  • Maintain proper books and records using Quickbooks or Simply Accounting, seek professional advice on which program to use and obtain proper training to ensure clean books and records. The saying "Garbage In Garbage Out" is true for bookkeeping.
  • If your income will be much higher than the prior years you should ask your accountant for an estimate of your taxes payable in order to plan when the payment comes due. This is an opportunity for tax planning at this time.
  • Keep a separate tax account for your HST and Payroll Source Deductions to ensure you have the funds to pay these when they are due. These amounts you are collecting on behalf of CRA as an agent and should not be part of your General Operating Chequing Account.
  • Know what your filing deadlines are for HST, Payroll Source Deductions, Corporate and Personal Taxes.
  • Always pay your HST and Payroll Source Deductions such as CPP, EI, and Taxes by the due date to avoid penalties.
  • Make all required tax instalment request from CRA unless your income will be much lower than the previous year to avoid insufficient instalment payments interest.
  • Keep personal and business receipts separate and with details of the expense. If you can't prove it to be a business expense Canada Revenue Agency will deem it to be personal.
  • Keep a detailed log of mileage, vehicle use, and vehicle maintenance. We can provide you with other options for easily keeping track of this information.
  • If you make a mistake, let us know as it is more easily corrected and with fewer tax implications earlier rather than later.
If you need more information, sole proprietors click here and for corporations here for a more detailed document.
  • Don't ignore calls or letters from CRA. Send us a copy of communications so that we can see what the issue is and how we can help.

If you require more detailed information please click below for a pdf document:

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