Small company owners must concentrate on completing their taxes while Canadians finish their income tax returns. Self-employed people have until June 15 to file their tax forms, and the payment deadline is May 2. The deadline for filing for people with incorporated businesses is six months following the conclusion of the fiscal year for the business. However, three months after the fiscal year’s conclusion is when all unpaid company taxes are due.
To record business income, self-employed people must complete the T-2125 form and their regular T1 individual income tax return. You can get assistance from the small business tax preparation service for filing your tax.
Here are some tips from our corporate tax preparation services to assist you in filing your corporate tax return.
Review your government benefits listed on COVID-19
Any COVID-19 government subsidies you get are taxable unless your company is a non-profit or registered charity, free from income taxes.
You must report any COVID-19 help you received on your income tax return for the tax year (fiscal year) that was given to you. Recipients must pay taxes unless their organization qualifies for an exemption since they did not deduct taxes for some benefits at the source.
Depending on the type of entity your firm is, there are different ways you might claim a rent subsidy on your tax return (incorporated, sole proprietorship, trust, or income tax-exempt).
Remote employment and additional costs
Last year, people who worked from home because of COVID-19 could deduct up to $400 in remote working expenditures from their taxes because of the recently introduced temporary flat-rate approach. This year, it has been raised to $500. The temporary flat-rate solution does not need additional paperwork or expenditure reports to be submitted.
The old approach, also known as the Detailed Method, is still an option for people using tax preparation services in Toronto. It incurs significant expenses due to their remote work. Using this approach, people could be able to request more money than the interim flat-rate method’s $500 cap. However, they’ll need to provide more information.
Keep your records
You must keep records of all business costs for six years after the end of the last tax year to which they pertain as a business owner. These documents consist of copies of credit card and bank statements and financial statements, tax returns, invoices, receipts, and cheques.
For several reasons, it is advised that you digitize as many of your documents as you can. Numerous apps from tax preparation services in Toronto can be of great help. They can assist you in managing and filing your receipts and uploading their photographs.
Assess your eligibility for the Small Business Deduction
The Canadian tax system is set up to favor Canadian-controlled private enterprises in specific ways (CCPC). Your company may be eligible to claim the small business deduction (SBD) on the first $500,000 of active business income. It would be best to consider the federal and provincial taxes rates when determining the SBD for your incorporated business.
Be careful while using your capital cost allowance.
You can deduct a portion of your depreciating capital assets each year thanks to the Capital Cost Allowance (CCA). Capital Asset is a property you buy for your firm with a life expectancy longer than a year. A few examples are vehicles, electronics, machinery, equipment, land, and structures.
Work with an accountant
Offloading your tax filing to professional accounting services can be a wise decision. They can provide you with specialized tax advice depending on the structure of your company. It helps you free up your time and concentrate on other aspects of your business.
It’s challenging to obtain general information online because corporations, sole proprietors, partnerships, and limited liability entities have various tax preparation and reporting procedures. So you can take help from our small business accountant Toronto, for all your taxation processes.
Timely filing of taxes
Lastly, staying organized and on schedule throughout the year is one of the secrets to ensuring you file your business tax return on time. You may, for instance, set reminders in your calendar to pay your taxes every three months. There will be a penalty of 5 percent on any unpaid taxes if you submit your return after the deadline. Furthermore, an additional 1 percent of this unpaid tax for each month the return is late, up to a maximum of 12 months.
Filing your corporation tax return is one of many duties of running a small business. However, by using the advice mentioned above, you’ll be able to get started in the proper direction. It helps you to take advantage of some of your potential rewards. We advise contacting corporate tax preparation services if you want further details.