When starting a business, it can be confusing and a little overwhelming to keep on top of the different types of tax filings that need to be submitted and the timing on each one.
Documents received from the government are not always clear as to what needs to be done, particularly if you are not familiar with government jargon. It can be easy to ignore them for more pressing business related issues, which is the worst thing to do since the government will usually follow up with arbitrary assessments and interest and penalties. It is therefore prudent for registered and incorporated businesses to keep on top of their tax filing.
The following are the primary tax filings for most small businesses:
Payroll/Deductions at Source
If you have employees or if you are incorporated and the owners are drawing a salary, you are required to file payroll reports which include deductions at source returns and year end T4 slips and summaries. Additionally, if you are registered in Quebec you have to file a second set of reports including deductions at source, RL-1 slips and summaries and annual CSST returns.
- How to Register for Payroll and Report Deductions at Source
- 4 Alternatives to Preparing your Payroll, Deductions at Source and Annual Returns
- An explanation of Salary Deductions including CPP, EI and Federal Income Taxes
If you are Canadian small business that meets certain criteria, you are required to file periodic GST-HST and (if you are registered in Quebec) QST Returns. Sales tax returns reflect the amounts charged on products and services, which are collected on behalf of the government. These are then reduced by any sales taxes that are paid on business expenses.
- Does your small business need to register for GST-HST-QST?
- Do you need to change your GST reporting period?
- Does your small business qualify for the quick method of reporting GST-HST & QST?
Corporate or Personal Tax Returns
All incorporated businesses are required to file Corporate Tax Returns (T-2) while unincorporated business owners are required to complete the T2125- Statement of Business Activities along with their Personal Tax Returns. For incorporated business owners filing a T-2 it is important the business select their year end, which is usually up to a year after their incorporation date. Since T-2s are somewhat complex, it is usually a good idea to have your accountant prepare them for you.
This is a business filing, separate from the corporate tax returns, that requires a business to update their business information every year plus remit an annual fee. If not done on a timely basis, it can result in delisting of your business.
Although the CRA and provincial revenue agencies are generally good at keeping business apprised of their filing obligations, notices are sometimes unclear or get lost in the mail. Ultimately, the onus is on the business owner to ensure that tax reports are filed and related amounts are paid.