An important process for any business is the tax process.  Often, this can be a scary or confusing process, and we always suggest seeking professional assistance to get the right advice and complete it appropriately.

Here are 10 tax tips for your business:

1. File On Time!

Don’t have the money to pay your HST?  You should still file on time.  

Save yourself from the non-filer penalties.  Canada Revenue Agency fees and interest are not tax-deductible.

2. Keep Your receipts.  

You aren’t eligible for HST credits if you don’t have the receipts to support your expenses.  

Keep those itemized receipts!

3. Know the Deadlines

Unincorporated small businesses have two income tax deadlines.  The yearly filing deadline for your return (T2125) is June 15th, but any outstanding balances are due April 30th.  

Keep track of your receipts and be on top of your records to avoid missing these deadlines. For corporations, most also have two deadlines.  

Corporate tax owing is due 90 days after your year-end, even though your filing deadline is up to 6 months after the year-end.

4.  Know Your HST

Just starting out and wondering about HST? 

If you have sales under $30,000 you do not need to register to charge and remit HST. 

Keep an eye on those sales though.  If you are nearing $30,000 you may need to register to avoid being over the sales threshold and paying out of pocket

5. Know How You Pay Yourself

If your business is incorporated, balance your mix of pay between salary and dividends.  

Each situation is unique.  RRSP contribution limits, CPP contributions and reduced tax rates on dividends are all things to think of.

6. Have Reasonable Expenses

Do you have a rental property?  Keep in mind that Canada Revenue Agency allows you to deduct reasonable expenses from your rental income.  

But if you have multiple years of rental property losses, this could easily trigger a review of your return. If you have valid reasons for the losses (leaky pipes?) make sure to document any letters with outside agencies and departments so it will help support you reasons for multiple losses.

7. Splitting Income?

You can pay your family to help split income.  Just keep in mind the amount of remuneration must be considered “reasonable” to the same or similar pay scale that you would hire and pay any other “arms-length” employee

8. Non-Capital Losses

If your business may have struggled thru 2020 and has a non-capital loss (simply put, when your expenses exceed business income) you can put these losses to work.  Non-capital losses can be “carried back” up to three years to offset some profits from more profitable years.  

They can also be carried forward up to 20 years to offset future gains.  

Self-employed?  These losses can offset other taxable income.

9. Plan For Taxes

If you are a sole proprietor (unincorporated business), make sure to do yourself a small favour and remember to set some money aside on a monthly or even quarterly basis to pay your income tax at the end of the year.  

Depending on your taxable income from your business, Canada Revenue Agency may require you to make installments to your income tax account. 

Make sure to follow their schedule as these are not usually suggested.  Even if you pay on time at the end of the year, they can still levy penalties for short-paying the account during the year.

10. Log Your Mileage

Have a business and use your personal vehicle for errands and deliveries?  

Make sure you keep a mileage log.  You can download apps on your phone to keep track or pen and paper will still work too.  

A review of your mileage claim by the Canada Revenue Agency is an easy way to lose out on those deductions if you don’t have proof of your trips to support your claim.