Guidance on Filing the RL1 Summary and CNESST Salary Declarations
The first important year end deadline for corporations, with employees, is the end of February. Salary declarations including T4 and RL1 (in Quebec) slips and summaries have to be filed with CRA and RQ. While there are numerous payroll software that handle the filing of the T4 and RL1 slips, the RL1 summary is usually left to the employer (and/or their accountants) to file. While a T4 summary is not specifically required if slips are filed electronically, an RL1 summary regardless of the method of filing the RL1 slips i.e. manually or electronically. Additionally, employers in Quebec also have to prepare a year end declaration for CNESST which is Quebec version of workers compensation. As someone who has filed numerous slips, declarations and summaries for clients over the years, I have enumerated some tips on preparing these documents::
Know Your Small Business Tax Deadlines For 2024
As we approach the new year, it will be time soon to start working on everyone’s favourite activity i.e. getting your tax stuff in order :) . Below are the deadlines that all small businesses need to know for 2024.
Download our free Canada unincorporated business tax deadline calendar for 2024 (both Federal and Quebec).
Guidance on Registering for Payroll and Remitting Source Deductions
There comes a time for many small business owners when they decide that they need to hire employees. This is usually an excellent sign as it means a) the business is growing and b) the small business owner has learned to delegate. It also means that additional paperwork needs to be filled out and additional taxes need to be paid. The simplest option when deciding to augment your workforce is to have the new worker invoice the business, based on hours worked or some other formula. Unfortunately, there are very specific rules as to who qualifies as a self employed contractor. Essentially, if your have someone that works full time, has little flexibility with respect to the hours that they work and you provide the tools such as a desk/office, computer etc, then there is a good chance that the tax authorities will classify them as an employee. In this case, where your worker is clearly an employee, you must register for payroll, pay them a salary and submit regular, periodic payroll reports and payments to the Canada Revenue Agency (CRA). As usual, if you live in Quebec, you must submit to Revenue Quebec (MRQ) as well.
Should You Transition to a Paperless Office (and What CRA Has to Say about It)
Imagine having an office without clutter, free from sad looking boxes and filing cabinets filled to the brim, where you don’t have to rifle through unlabeled containers to find a receipt for a computer that you bought three years ago. . An office where you can make Marie Kondo proud by getting rid of (almost) anything that does not bring you joy and surrounding it instead with items that inspire (or at least improve productivity). This is all possible with a few apps, sufficient digital space and a shift in your mindset and processes.
Know Your Small Business Tax Deadlines For 2023
Somehow we are almost one month into 2023 (!) and it is time for business owners (and individuals) to start thinking about one of their favourite subjects i.e. taxes. I have compiled a list of the deadlines that all of you should know and also updated my annual business tax deadline calendar.
Sign up to download our free Canada unincorporated business tax deadline calendar for 2023 or Quebec unincorporated small business tax deadline calendar 2023.
What Independent Contractors Should Know About Personal Service Businesses
Many of you leave your full time jobs to become independent contractors. This could be for a variety of reasons: you might decide you want the freedom that comes with self employment, or your company might decide that they no longer want to maintain employees. In some cases, you are laid off and find another opportunity , but the business only offers contract positions.
This type of situation is particularly applicable to people in the IT industry but can also apply to a variety of other types of skill sets. Often, your client will require that you set up a corporation which then contracts with the client to provide services that are very similar to those you would provide if you were an employee. The corporation then bills your client either directly or through a third-party (often a recruiting agency).
Two (and a Half) Options for Claiming Employee Home Office Expenses in 2020
As numerous employees shifted from their offices to their homes, Revenue Canada (CRA) and accountants were deluged with questions about how they could claim home office expenses. To stave off the complaints and questions, CRA decided to introduce a simplified method of claiming a tax deduction. It should be noted that employees have always been allowed to claim expenses relating to their employment as long as their employers completed and signed form T2200. The information from this form would then be entered on Schedule T777. The issue for this year is that filling out the form and completing the schedule is a somewhat tedious process and does not fit all employees’ who worked from home as a result of Covid imposed restrictions.
Why Every Canadian Should File a Personal Tax Return
A friend of mine has been in a nightmare scenario with CRA. She hadn’t filed her tax return in a few years mostly because she had one T4, figured that she didn’t owe any tax and was simply procrastinating on an unenjoyable task. In 2020 she receive a notice of assessment from CRA indicating that she owed several thousand dollars, with no additional details except that they had added $25k to her actual income earned. Over the past year, she has called them numerous times to get an explanation and each time she is told that the file is being escalated and someone will get back to her. To date nobody has gotten back to her. To make matters worse, CRA passed this information i.e. additional income on to Revenue Quebec (without any details) which resulted in a significant assessment from them. She still has no idea why she was assessed this amount and is now in the unenviable position of calling both revenue agencies on a weekly basis to manage the situation.
Know Your Small Business Tax Deadlines For 2022
With the beginning of a new year upon us, tax submission deadlines for individuals and businesses are starting to loom. Every small business owner must adhere to these deadlines or risk facing penalties for late filing of returns plus interest on any overdue balances. Knowing these deadlines can help you ensure that you don’t simply waste your hard earned money and run afoul of CRA and RQ. I have compiled a list of deadlines for all unincorporated small business owners which includes sole proprietors and self employed individuals.
Note that the usual deadline for sales tax (GST/HST and QST) payments and income tax returns is April 30th. However, since this falls on a Saturday, the deadline is pushed to Monday, May 2nd, 2022.
3 Government Wage Subsidy Programs for Startups and Small Businesses
Budget limitations and inexperience can make hiring new employees a difficult decision for small business owners. Luckily, If you are a startup or a small business in Canada, there are numerous programs that can help you get up and running. Some programs provide help with your cash flow in the form of financing, grants, subsidies and tax credits while others provide resources such as training, mentoring and coaching. Many small businesses particularly when they are in the startup stage should take the time to research these programs and send applications to the ones that might be applicable. Below are a list of three popular programs that are worth exploring further:
Note that the programs listed below are independent of COVID. For a list of COVID related wage subsidies and tax credits, please see the Government of Canada website
Business and Tax Implications of Owning Rental Property
A great many fortunes have been made in real estate. Conversely, as was evidenced in 2008 with the deflation of the housing bubble, many fortunes have also been spectacularly lost. Fortunes aside, owning real estate is one of the best ways to build equity. If you own your home, you are already one step ahead. With rental property, you can further augment your net worth if after investing the necessary down payment the rental income covers and/or exceeds the mortgage payment and related expenses, (Leaving you free to move on to buying your next property). This is not a decision to take lightly as with any investment there are several business and tax factors to consider before taking the plunge:
Employment Insurance for Small Business Owners and Self Employed Individuals
One of the benefits allowed employees working in Canada is that have access to employment insurance. A specific amount is withdrawn from each employees paycheques each pay period along with an employer portion and remitted to Revenue Canada. This entitles them to wage loss replacement, in the event that they are laid off, as well as other benefits. This can be extremely useful in difficult times and has been used by millions of Canadians.
Unfortunately, taxpayers who are considered self employed are not entitled to the same benefits. A self employed individual also includes anyone who owns 40% of a corporation and usually extends to family members of self employed people. By the same token, self employed taxpayers (whether they are sole proprietorships or owners of corporations) are also not required to pay employment insurance (EI) premiums.
Quebec’s Small Business Tax Deduction and How It Relates to Payroll Hours
Revenue Quebec, in the March 2017 budget (or economic plan as they like to call it) decided that a small business wasn’t a small business for the purposes of the tax deduction, unless a minimum number of payroll hours was worked by employees of the business. Initially they had wanted to impose a minimum number of 3 full time employees to qualify for the deduction, however, after realizing that many businesses had several part time employees during the year, they changed the requirement to a minimum number of hours worked to 5,500 hours per year. This could be a combination of full time and part time employees. Consequently, many businesses that had qualified for the small business tax rate were no longer eligible.
Employee vs. Self Employed: Criteria and Considerations
For the majority of income earners, employment status is pretty evident. If you are going to the same place every day, have an assigned cubicle with a computer and a corporate stapler, and you have a boss that tells you what you need to do, chances are you are an employee. Conversely if you have several clients, use your own laptop, and are worried about where your next sale is going to come from, you are probably self employed.
There are, however, some workers whose status is not that apparent. For example you may work from home and use your own computer, but you report to one entity, where someone supervises and directs your work. In these cases a determination needs to be made as to whether you are an employee or self employed. It is not enough for the person paying you to determine your classification ; often, payers are biased as they may not want to take on the financial costs and responsibilities of having an employee (explained below). As such, when in doubt about your status, it is helpful to answer the following questions:
The Parable of the Toy Soldier: How a Small Gaming Business Became a Victim of their Own Success.
This story has all the ingredients of a great novel - drama, intrigue, the Chinese, hostile takeovers and a guy named Lonnie. It has shaken the world of miniature gaming, where excitement is usually imagined rather than real. And, although the details are murky, it is an excellent case study that demonstrates how mistakes made by business owners can result in severe and unintended consequences.
On January 17th, the founder of Wargames Factory, Tony Reidy issued an open letter:
Wai Kee Hui - if your true intention is to salvage this company and pay back the debts - you have started down the absolutely wrong path.
I understand that this is so far beneath you because you run so many multi-yuan millions businesses - but if you want to salvage anything, you are proceeding in the absolutely worst direction right now.
Your faith in Lonnie Mullins is incredibly misguided. You're trusting a guy who threw me under the bus in order to save his own skin. A guy who has no honor whatsoever.
Read full letter Open letter from Tony Reidy