One of the responsibilities of being a small business owner requires having to submit a variety of tax declarations by specific deadlines or face consequences that involve penalties, interest and if left long enough, aggressive letters from Revenue Canada and Revenue Quebec. The bad news is that there is no way around it and ignoring it does not make it go away. The good news is that if you are prepared and organized it doesn’t have to be painful and can actually be quite straightforward with the right infrastructure. The first step is to be aware of the deadlines and understand the obligations that go along with it:
- Salary (T4 & RL1)
- Deadline: February 28th.
If you have employees to whom you pay a salary and remit deductions at source, you are required to file T4 and RL-1 slips and summaries with both Revenue Canada and Revenue Quebec respectively. Additionally the slips must be given to employees so that they can report the income and related deductions on their income tax returns.
- Dividend Declarations (T5 and RL3)
- Deadline: February 28th
Shareholders of corporations, including small business owners who have incorporated may want to declare dividends for amounts withdrawn from the corporation that exceed salaries paid, in lieu of a bonus or to compensate shareholders. If dividends are declared, T5 and RL-3 (in Quebec) slips and summaries must be prepared and submitted to the CRA and MRQ (if applicable)
- RRSP Contributions for 2013
- Deadline: March 3rd
While not strictly relating to small business, owners might want to consider their available room and contribute to their RRSPs. to reduce their taxes payable on self employment income or salaries taken. Note that dividends paid are considered to be passive income and as such are not eligible when calculating RRSP room.
- Annual GST-HST-QST Returns for Corporations with December 31st Year End.
- Deadline: March 31st
If you are incorporated and chose to file your sales tax returns annually, the deadline is March 31st. Any corporation with an annual filing period is required to file their GST-HST-QST return three months after their year end.
- Partnership Returns (T5013 and RL-15)
- Deadline: March 31st
If you are involved in a partnership that meets certain criteria you are required to file T5013 and RL-15 (QC) slips and summaries and submit them to both the government and individual partners.
- Income Tax Return (Non Self Employed Persons)
- Deadline: April 30th
For taxpayers who are not self employed, which includes those who draw salaries and dividends from corporations that they own, the tax return must be filed and any balance owing is payable. Note that if you do not have the funds to pay your balance owing, it is still better to file your tax return by the deadline as you will not incur penalties for late payment, which is based on the balance owing and can be significant.
- GST-QST (Self Employed Persons)
- Deadline: April 30th
The self employed and unincorporated small business owners get a bit of a reprieve and are permitted to file their sales tax returns by April 30th instead of March 31st if you are an incorporated business.
- Income Tax Return (Self Employed Persons)
- Deadline: June 15th
Any taxpayer that runs a small business that is not incorporated and completes the T2125 (small business return) has until June 15th to file their tax returns. It is important to note that any balances owing start accruing interest at April 30th, so you should consider paying an estimated amount at April 30th to reduce your final tax bill.
- Income Tax Instalments
- March 15, June 15, September 15th, December 15th
Small business owners that are not incorporated are, depending on the level of tax owing in prior years are required to pay income tax instalments. Amounts that are not paid start to accrue interest, which can be onerous particularly with Revenue Quebec. It is best to pay attention to any notifications that you receive from CRA or MRQ with respect to instalments and follow the instructions. If you feel that the instalments exceed the income taxes that you will have to pay in the current year, you can reduce the amount. Note that you are not required to pay instalments during your first year in business as they are based on historical income.
- GST-HST-QST Instalments
- April 30th, July 31st, October 31st and January 31st
Similar to income tax instalments, you are required to pay an estimated amount of GST-HST-QST, which is applicable if prior year revenues exceed a certain amount. Similar to income tax, you are not required to pay sales tax instalments during your first year in business as they are based on historical income.
Ensuring that you know the deadlines, even if you have an accountant, can reduce unpleasant surprises and potentially save you precious funds that are just wasted on interest and penalties.