Why does one need a corporate tax accountant in Brampton?

What is a corporate income tax?

Corporation Tax is a federal and provincial income tax for companies operating in Canada. Federal income tax is filed as a T2 corporate tax return, but each province has its own way of handling provincial income tax.

Who must file the Canadian corporate tax return?

All companies operating in Canada must file a T2 declaration, including non-profit organizations, tax-exempt companies, and inactive companies. So even if your Company has no income per year, if that Company exists, the taxes must be filed.

Some companies do not have to pay corporate income tax

Tax-exempt crown corporations, Hutterite colonies, and registered charities do not have to file or pay Canadian corporate income tax (but each have its own unique government filing obligations).

How much corporate income tax do you have to pay?

The corporate income tax rate varies depending on the size of your business and the province in which you are located.

The basic tax rate for all companies is 38% of the taxable income; this is called the Part 1 tax.

However, income earned in Canada is eligible for a federal tax cut, which reduces Part 1 corporation tax to 28%. Additional tax deductions and tax credits are available – check this CRA page to see if you are eligible for any of them.

Good news for small businesses

Sometimes the benefit is being a kid: Canadian-owned and controlled small businesses can benefit from a small business deduction, reducing the tax rate to 10.5%. The business limit for a small business deduction is $ 500,000, which means business income of up to $ 500,000 is eligible for the small business deduction.

The CRA provides a worksheet for a quick business tax estimate, but it’s best to work with a CPA to get the most accurate assessment possible.

Quebec and Alberta currently have no corporation tax agreements with the CRA, but you can find out their provincial corporate tax rates on their websites:

• Quebec
• Alberta

Presentation of corporate income tax

In Canada, your Company’s tax year and income level will affect when and how you file corporate taxes.

Deadlines for submission

You must file a tax return within six months of the end of the tax year.

If your fiscal year ends on the last day of that month, your taxes are due six months later, on the last day of that month. However, if your fiscal year ends in the middle of the month, your taxes are due six months later, on the same day of that month.

Here is an example: If your fiscal year ended on December 31, 2017, you must file your taxes by June 30, 2018. If your fiscal year ended on December 4, 2017, the deadline for filing is June 4, 2018.

The due date falls on a weekend or public holiday but can be sent on time on the next business day following the due date.

Are you the forgetful type? It turns out that the CRA has created an application for this. The CRA Tax Reminders application is designed to help you keep track of all the data you need to file and pay your business taxes.

Beware of sanctions

It seems obvious that late payment of taxes will be associated with penalties, but there are other less obvious penalties that need to be resolved.

Penalties for late submission

If you do not submit the T2 fees on time, you will be penalized. These penalties amount to 5% of the amount due in your taxes plus 1% more for each full month that your tax return is overdue. The late filing penalty could go up to 10% if the CRA submits a filing request if the application was also not filed in any of the three previous tax periods.

The lesson here is basically to submit your taxes on time; your future self will thank you for it.

Penalties for late payment

Interest on overdue or insufficient installments is added daily.

If your business’s overdue interest exceeds $ 1,000, it may be subject to additional penalties.

Financial penalties are also punishable for false declarations, omissions of data in the tax return of companies, omitted tax returns, or for help or advice to those who make a false statement. More information on sanctions is on the CRA website.

Occasionally, the CRA may waive penalties if exceptional circumstances, such as floods or deaths among your close relatives, prevent you from filing your tax return or paying taxes in a timely manner. But extraordinary really means extraordinary: “I was too busy and forgot” or “I lost the Internet” definitely don’t count.

There are no small words: filing corporate taxes is complicated. We strongly recommend that you work with the CPA to make sure you send and pay the right amount at the right time and get all possible deductions.

And if your books are out of date, our accounting service can give you much-needed relief during the most stressful time of the year.

What is WebTaxOnline?

We are an online accounting service powered by real people. The bench will provide you with a specialized accountant supported by a team of experienced small business experts. We’re here to get rid of your business for good. Each month, your accounting team imports bank statements, classify transactions and prepares financial statements.

If your Company is registered in the Business Register or registered GST / HST, then the My Business account is for you. In addition to viewing your income tax, your My Business account allows you to manage your payroll, store returns, view account balances, and manage direct debits. You can also archive or edit GST / HST returns and check account balances. Other services include accessing authorization for representatives, such as accountants, the ability to submit documents in electronic format, and the submission of excise tax returns.

What can be written off as operating expenses? In short, all the costs necessary for running your business can be deducted as business costs. The opposite of business expenses is personal expenses which cannot be deducted. Sounds easy, right? If so, this chapter would not have existed. Small business accounting has a lot of reservations and can be difficult to navigate. We will first look at specific examples of typical small business deductions available to Canadian entrepreneurs.

Things your accountant would never want you to do:

1. Throw your receipts in the trash, even if you’ve already declared your taxes. Receipts must be kept for at least six years in case of an audit.
2. Rely on estimates when presenting expenses
3. Try to do it all by yourself. Feel free to seek help from a professional accountant.
4. Rely on estimates when submitting expenses. Feel limited if the CRA doesn’t list certain expenses on its website. The CRA’s definition of the cost of business is “any reasonable ongoing expense that you have paid or will have to pay to earn business income,” so if in doubt, consult your accountant or the CRA directly to see if your expense may be admissible.
5. While the tax assistance process as a small business owner can be daunting, help is available. Once you have an overview of what you can and cannot cancel in your tax returns, we need to look now

As a business, paying taxes on a monthly basis can help you manage your cash flow and stay on budget, says a tax expert. Unlike separate ownership – which is the case when you are a business – a registered company is a separate legal entity. Since companies can use a non-calendar fiscal year, the filing term is six months after the end of the year. However, as many businesses have chosen to use the calendar year, June 30 is a very common filing date.

Doing business in a company has its own unique barriers. Here are four tips for preparing corporate taxes, whether you have become the sole owner or a newcomer to the business world:

1. KNOW WHEN TO PAY

If you are self-employed, you are required to pay taxes to the Canadian Tax Agency (CRA) in quarterly installments. If your business does not meet certain criteria, it is actually required to pay the installments on a monthly basis. Monthly payments can be beneficial for your business, even if the Company qualifies for quarterly payments.

2. MAKING GOOD RECORDS

Another important tip is to hire a good corporate tax accountant. “Many of the clients I’ve seen over the years think they can do it,” she says. “I told the doctor he was trying to keep his bills. He didn’t stick to the needles, so he shouldn’t have to do the accounting.”

It is important to realize that good accounting is extremely important to anyone doing business, as well as having a good record-keeping system where you can find things easily.

“When the CRA comes to look at something, the burden of proof doesn’t fall on the CRA; the burden of proof rests with the taxpayer to prove his position,” “You must be able to find all your receipts, journals, and documents.”

3. DISCOVER THE ACCOUNTING SOFTWARE

Are you ready to accept the change? For technically friendly business owners, the new accounting applications and software are even easier to use. Many of them now have a cloud option, so you can place your work in the cloud and access it from anywhere.

“We see this becoming extremely useful and revolutionizing the accounting industry. “Some of these common programs, such as QuickBooks, have applications that not only simplify some of your accounting processes but also help you with a variety of business activities, such as inventory tracking, customer billing, contract signing, and loading receipts. All of this can be archived online. “

4. DON’T BE INVOLVED IN TAX DEDUCTIONS

It is a myth that if you are a legal entity, you can deduct much more than as the sole owner. Most of the tax rules for calculating business income are the same for companies. He recommends looking out for some common pitfalls, such as home office and vehicle deductions.

“People assume that working on a kitchen table means they can deduct a lot of household expenses,” he says. “There is real legislation, and here are the criteria: it has to be a separate room designed to be a home office … and you have to use the home office more than 50 percent of your time.”

The second trap is people giving their vehicle to the Company so they can deduct it as a business expense. The problem is that if you use this vehicle for any personal use, the percentage of time used for personal purposes becomes a taxable advantage. The result can be particularly unfavorable if the Company owns a car rather than a lease.

“The CRA walks in and says, Is Je parked in your driveway? It is available for your use. One piece of advice to get around this would be to not put yourself in the Company. What you should do is pay the amount that the CRA says you are allowed for commercial purposes. “

What are taxable transactions?

Most goods and services in Canada are taxable supplies. This includes everything from auto repairs, hotel accommodation, clothing, and footwear to legal and accounting services. Most of these items are subject to a full 5% GST rate. Some goods and services are classified as “zero rates” supplies; that is, they are subject to a 0% tax. Zero-rate supplies include staple foods, prescription drugs, and some goods and services sold to customers outside of Canada. Other supplies are still non-taxable, such as daycare services and rents. If your business sells taxable supplies in Canada (at 5 percent or 0 percent), you must register for GST / HST unless you are a small supplier.

When (and how often) do you administer GST / HST?

The first step is to find out when to return. The CRA assumes that you report your GST / HST returns once a year. You can choose to report more often, but most small businesses may not report more than once a year. Once you have signed up for your GST / HST number, CRA will send you a customized GST or HST return form that includes the date you need to submit your return. If you are the sole owner, the deadline for filing the GST / HST tax return and for making any outstanding payments is usually in line with the deadline for filing the individual tax return. Your personal tax return form will confirm the deadline for filing your tax return. Businesses usually have the same fiscal year-end for income tax and GST / HST purposes. If a company wishes to manage another GST / HST fiscal year, it must obtain approval from the CRA. If your business has a fiscal year-end (e.g., December 31), your GST / HST tax return must be filed by June 15 of the following year, and payment must be made by April 30 of the year following. If your business has a non-calendar fiscal year-end (i.e., a date other than December 31), you must file a GST / HST tax return and pay no later than three months after the end of your fiscal year. While most companies submit their GST / HST returns annually, others report more frequently (monthly or quarterly). For more information on when to file a GST / HST tax return, visit Revenue Canada.