How to Use Online Banking to File and Pay Your Business Sales Tax, Payroll DAS and Corporate Tax
The major Canadian banks including RBC,CIBC, TD, BMO and Scotiabank as well as some regional banks such Caisse Desjardins Access D’Affaires conveniently have business tax filings service which replicate the forms that have to be submitted to the government for:
sales tax (GST/HST and QST),
Payroll tax (deductions at source payable to Revenue Canada and Revenue Quebec) and
corporate taxes payable to Revenue Canada (CRA) and Revenue Quebec (RQ).
Business tax instalment payments (including GST-QST instalments)
This means that instead of entering the data on the forms that are available via my business account at CRA and RQ and then going to your bank to make payment, either online or via mail, it can all be done at one time through one form that serves as both tax filing and payment.
Should you use accounting software or a spreadsheet to track your small business finances?
Over the years my clients have come to me with their financial data in various formats. I have received shoeboxes of receipts which need to be deciphered and compiled. Some clients have given me their spreadsheets in excel, google or occasionally summaries in a word document. Others decided it made sense to use accounting software right at the outset of their businesses.
In many cases, using a spreadsheet is perfectly fine and sufficient for small business or self employed individuals where you simply need a way to determine your income and expenses. There are situations, especially when you are planning to do your own small business accounting, where it can be significantly beneficial to upgrade your record keeping from a spreadsheet to accounting software. I have enumerated some of the factors to consider when determining if your spreadsheet is enough for your accounting needs or whether it is time to upgrade.
Are Gifts to customers and business associates deductible expenses?
Giving gifts to clients or customers can be a great way to build goodwill, foster customer loyalty and differentiate yourself from your competition. Gifts can be anything from a simple bouquet of flowers to something a bit more personalized based on your knowledge of the customer (it can be useful to listen carefully or probe gently to find out what your customers might want as a thoughtful gift can be tremendously impactful). A gift can be given around the holidays, on birthdays, after closing a sale or any other time as a simple thank you. Of course, if you are buying gifts on behalf of your business, it is important to understand if they qualify as tax deductible expenses and it what circumstances.
5 Income Tax Tips from the Trenches
It is the time of year when many accountants and tax preparers live, breathe, eat and sleep taxes (leaving very little time to write about them!). And while much of it is routine, there are numerous issues that arise, the treatment for which is not immediately apparent and can actually be useful for you to know.
How to Reflect Investment Income and Capital Gains/Losses on your Personal Tax Return
Residents of Canada are required to reflect all sources of worldwide income on their personal tax returns. For most individuals, who have investments with Canadian based banks and brokerages, this is fairly straightforward as you will receive the relevant tax slips, usually by March 31st of the year following the end of the calendar year i.e. for the 2023 tax year, you should receive all investment related tax forms and slips by March 31st, 2024. It is important, if you have investment income in non registered investments (i.e. not TFSA, RRSPs or FHSAs), to ensure that you have received all tax documents and report them. Failure to report income can result in penalties by Revenue Canada and Revenue Quebec, which is never great, particularly when it can be easily avoided. It should be noted that since most tax documentation is submitted by the issuer to Revenue Canada (CRA) and Revenue Quebec (RQ) electronically, they usually have a record of the various types of investment income for each taxpayer and can easily identify any missing information.
Should New Business Owners Register for GST/HST?
The Goods and Services Tax or GST is a consumption tax that is charged on most goods and services sold within Canada, regardless of where your business is located. Subject to certain exceptions, all businesses are required to charge GST , currently at 5%, plus applicable provincial sales taxes. A business effectively acts as an agent for Revenue Canada by collecting the taxes and remitting them on a periodic basis. Businesses are also permitted to claim the taxes paid on expenses incurred that relate to their business activities. These are referred to as Input Tax Credits.
Make Your Taxes Easier with this Detailed Checklist
The deadline to file tax returns is quickly approaching, resulting in various degrees anxiety for some taxpayers and accountants. The good news is that the stress can be managed fairly easily with some simple organization techniques. The most effective starting point is to evaluate your tax situation and prepare a checklist of the documentation that you will need with respect to your specific tax situation. A checklist can help to ensure that important items are not overlooked in the rush to put everything together (and, of course, its always satisfying to cross something off the list).
Do you have to charge QST if your business is located outside of Quebec?
Quebec is unique in a number of different ways. This is great if you enjoy exposure to different types of culture and cuisine. It isn’t so great where it comes to tax. Almost every type of tax filing in Quebec requires an additional return, which often has different rules and calculations from the federal tax filings. Quebeckers are resigned to this and fortunately tax software or a good accountant tends to make the management of taxes significantly easier.
Prior to January 1st, 2019 a business, even if they had customers in Quebec, did not have to worry about Quebec based taxes as long as they did not have a physical or significant presence in Quebec. This changed on January 1st, 2019 when Quebec implemented a comprehensive set of rules for businesses located outside of Quebec, that, if they meet certain criteria, are now required to collect and report Quebec Sales Tax (QST or TVQ) on sales made in Quebec.
Guidance on Deducting Home Office Expenses
One of the benefits of having a home based business (for freelancers, self employed contractors and small business owners) is that you can deduct the expenses relating to the space that you use to work. This can result in a reduction in your tax bill for costs that you would incur regardless, which is certainly an incentive to being your own boss.
Criteria for Deductibility:
For home office expenses to be deductible, they have to meet the following criteria:
It has to be your principal place of business i.e. you cannot deduct home office expenses if you have another office that relates to your business, elsewhere, even if you work 22 hours a day or you check your blackberry in bed.
The space designated as your home office is used to earn business income and/or you meet clients or customers on a regular basis. You can deduct expenses relating to the workspace in your garage which is used for home improvement projects.
Are Clothing and Other Personal Attire Costs Tax Deductible?
Whether an expense is quite clear for the majority of expenses – salaries paid to employees, office rent, manufacturing supplies etc. , there are a handful of expenses that are more ambiguous. One of the more notable (and often asked) examples of this type of expense relate to personal attire including clothing, shoes and other personal maintenance costs (haircuts, beauty products etc)
How to Stay on Top of Your Tax Obligations
As an accountant I frequently receive panicked calls from business owners who have received ominous letters from the tax authorities requesting that overdue tax returns be immediately filed. Others receive notices of assessments for estimated taxes payable if they have an overdue tax return. Revenue Quebec, particularly will often send corporations or individuals assessment for several thousand dollars to scare people into filing their returns. In more extreme circumstances, the tax authorities have the power to freeze your bank accounts or initiate tax audits. This can be debilitating to a small business.
Frequently Asked Questions About GST/HST By Business Owners
For those of you who are starting a new business, it is essential to know your tax obligations. Every business owner must report their net profits on a either their personal tax return if they are unincorporated or a corporation tax return if they are incorporated.
In addition to income tax, it is essential to consider whether or not you should register and collect GST/HST and provincial sales taxes. There are a variety of questions around this topic:
How to File Your GST/HST Return Using CRA My Business Account
As of January 1, 2024 Revenue Canada will require all business (except for a handful of exceptions such as some financial institutions and charities) to file their returns electronically. This means that you can no longer use the paper form. The good news is that it is quite easy to file the return online and, in most cases, probably saves you time since you don’t have to put it in an envelope, affix a stamp and take a walk to a mailbox.
In this post, I will be reviewing how to do it via CRA My Business Account. Please note that this tutorial is for simple GST/HST returns. If you have more complex transactions, that I don’t discuss here and you are not sure, I recommend speaking to an accountant.
How to File T4s using Quickbooks Desktop
For all Canadian businesses that have employees on their payroll, the deadline to file your T4s is February 28th, The good news is that it has become much easier to prepare and submit the T4s particularly if you are submitting them electronically.. The Canada Revenue Agency (CRA) is encouraging businesses to file the T4s electronically and it should be noted that e-filing is mandatory for employers with more than 50 employees.
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::