The New Year and Your Taxes: January 7th, 2022

Hello All,

The start of the New Year, for many of us, was a bit muted this year. COVID related restrictions put a damper on most festivities. If you live in Quebec, this was even more pronounced as a curfew was imposed on New Year’s Eve which meant that even small get togethers were verboten. It was perhaps even more difficult as we seemed to be inching back towards normality and once again we reversed course. One can only hope that 2022 will be a better year for all.

Unfortunately, no matter what restrictions are put in place, taxes are here to stay, through good times and bad. While most of you (with the exception of accountants who are starting to prepare for their busy season) have probably not given much thought to taxes yet, it is a good time to simply have some awareness that they are coming up. My next few newsletters will likely focus on various tax issues as deadlines start to become due. Knowing what your obligations are in advance and when they are due means that you are not rushing to get things done at the last minute. It also allows you to plan your finances to ensure that you are able to pay any balances due or potentially file your taxes sooner if you are expecting a refund. If you are not a small business owner, you simply have to determine whether you are going to contribute to RRSPs and ensure that you file your income tax return by the deadline (more on RRSPs in my next newsletter). If you are an unincorporated small business owner there are a few other deadlines that might pertain to you and are covered in my first blog post. If you are incorporated, many of your business deadlines are based on your year end date (except dividend and salary declarations which are based on the calendar year). Regardless of your situation, you should file your tax return even if you literally only have one T4. This allows you to avoid unpleasant letters from CRA (and RQ), establishes your limits and tax carryforwards (such as RRSP contribution limits) and sometimes even results in a refund! My 2nd blog post this week covers the reasons why everyone should file their tax returns in a bit more detail.

Small Business Articles/Tips

Nobody Knows Anything: An interesting article from Inc. on how since nobody knows in advance what idea is a good one (just look at some Hollywood blockbusters that flop miserably), people also don’t know which ideas will be successful.

Tax Tip For those of you who use your cars for business, CRA has updated some automobile related limits including:

• a much awaited increase to the CCA limit for passenger vehicles which as increased from $30,000 to $34,000 before tax. (the limit has been $30,000 for many many years)

• An increase in the per km rate that you can claim from your corporation without tax consequences from $0.59 in 2021 to $0.61 in 2022.

Read more at this link.

QuickBooks Tip - Year End Close

For those of you who have businesses that are unincorporated or incorporated with December 31st year ends should go in and close your year once everything for 2021 has been entered. This ensures that changes are not made to previous years which make any tax filings/financial reports that relate to those years (and have been filed), erroneous. To close your year end, go to the gear/accounts and settings and scroll down to Advanced where you can set the year end which has been closed and restrict it even further by setting a password.

Books and Resources

NEW: FastStart Your Corporation(Corporations)
The step by step guide to starting your small business corporation, including what you need to know about incorporation, setting up your accounting and tax considerations.

QuickStart your QuickBooks(Sole Proprietorships and Corporations)
A comprehensive guide that takes you through the many features of QBO and gives you step by step instructions on how to setup and work with QBO day to day. It is ideal for beginners who have never used QBO before and also for those who are currently using it, but have questions or need guidance.

Small Business Tax Facts(Sole Proprietorships)
For those of you want to have a better understanding of tax, how it applies to your unincorporated small businesses and how to do your own tax return (or at least understand what your accountant does). It also includes a comprehensive breakdown of deductible expenses, by category, with somewhat entertaining examples.

FastStart Your Business (Sole Proprietorships)
A step by step guide for anyone who is planning to start a Canadian business or become self employed (as a sole proprietor) and wants to know what they need to do or simply has questions.

Small Business and Your Dividends (Corporations)
Explains what incorporated small business owners need to know about small business dividends, differences between salary vs dividends and step by step instructions on how to file your own dividend declarations (T5s).

Use discount code “special” to save 20% on any (or all) book(s) when you purchase from the website.

Please note that all books from my website are in PDF format.

If you prefer a print version, all books are also available at Amazon . Note that print versions purchased on Amazon include a complimentary PDF - you just need to email me and include proof of purchase.

Free Resources

New: Business 2022 Tax Deadline Calendar
New: Starting A Corporation Checklist
Start Your Business Checklist
Dividend Declarations Checklist
Small Business Tax Return Checklist
QBO Set Up Checklist.
Small Business Calculators
Previous newsletters.

Consultations

I also provide consultation services if you would like specific guidance on your small business or financial situation. Additional details can be found here and here.

Reviews/Feedback

• I would love to hear your insights into existing blog posts, topic ideas for new blogs, feedback on my products/website or anything else that you want to talk to me about. You can use my feedback form or email me directly at ronika@montrealfinancial.ca. I’m always looking for ways to improve or provide value (to the extent possible) and this will be most helpful.

• For anyone who has purchased my books through Amazon or directly and found them useful, I would be very grateful for a review on Amazon (to leave a review you only need to have an account with Amazon even if you did not purchase the book from there).

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Wishing everyone a very happy, productive, restful and hopeful start to the new year!

Ronika