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While the general deadline by which most tax returns have to be submitted to Revenue Canada is usually April 30 (unless its a weekend) calendar year, small business owners actually have until June 15th, to submit their taxes.\u00a0 This is also true for spouses of small business owners who may only have a regular(non small business) tax return.\u00a0 It is important to keep in mind that while you will not incur any penalties as long as you submit your tax return by June 15th, CRA starts charging interest on any amounts payable after April 30th.\u00a0 If you are not able to do your tax return by April 30th, you might want to consider estimating your taxes payable and making an instalment payment <\/a>to avoid interest charges.\u00a0 <\/p>\n Preparing your own unincorporated tax return<\/a> can be fairly straightforward, especially when using tax preparation software as it guides you through the process.\u00a0 However, if you feel a bit overwhelmed by the idea of doing it yourself or if your situation is somewhat complicated, it might make more sense to outsource to an accountant.\u00a0 If you are planning to outsource, you should find an accountant as soon as possible as they tend to be very busy during the early part of the year.\u00a0 When speaking to a potential accountant, you should ensure that you have good communication and that they are responsive.\u00a0 It can be worth paying a bit more for a service provider that is a great fit especially where your finances are concerned.<\/p>\n Minimally, you are required to report your total sales\/revenues from your small business for the calendar year.\u00a0 You should also keep a record of your expenses that relate to your business as you may claim these against your income. Record keeping can be done by using a spreadsheet or if you have more than a few transactions per year, it might be useful to use accounting software as this can help you save time, ensure accuracy and allow you to have all your history in one place.\u00a0 See my post on whether to use accounting software or a spreadsheet.<\/a> <\/p>\n All information relating to the business is reported on the T2125 (also known as the statement of business activities<\/a>).\u00a0 The form requires some information about your business i.e. the type of product or service your selling.\u00a0 It also requires input of a \u201cNAICS\u201d code which is a business code that most closely aligns with your business.\u00a0 Tax software will usually provide a list of these codes in a dropdown.\u00a0 <\/p>\n The T2125 also requires the percentage of income earned directly from websites (that might have a shop or display ads) as well as the URL of the websites.<\/p>\n Every business owner is entitled to deduct expenses relating to their business, that are compiled by category as can be seen on the T2125 form.\u00a0 Some of the more popular expenses include:<\/p>\n Direct costs such as the cost of materials to make your products, shipping, duties and amounts paid to subcontractors. <\/p>\n<\/li>\n Advertising expenses<\/a> which also includes website related costs, networking events and online ads.<\/p>\n<\/li>\n Meals and entertainment that involve clients or business partners.<\/p>\n<\/li>\n Bank charges for your business accounts.<\/p>\n<\/li>\n Dues and subscriptions for monthly services that you use that relate to your business.<\/p>\n<\/li>\n Office expenses required to run your office.<\/p>\n<\/li>\n Home office expenses<\/a> which can be claimed if you work exclusively from your home (rather than another office) and are based on the percentage of your home office to your total home.\u00a0 <\/p>\n<\/li>\n Motor vehicle (car) expenses<\/a> including lease payments, gas, insurance, repairs etc. based on the percentage during the year of kilometres driven for work.<\/p>\n<\/li>\n Capital cost allowance <\/a>refers to larger purchases of furniture or equipment such as computer, printers etc. that cannot be expensed all in one year but must be depreciated over time.<\/p>\n<\/li>\n<\/ul>\n While you are not required to submit any documents when you send in your tax return, it is possible that CRA will ask you for documents at a later date.\u00a0 The types of documents you should ensure that you keep relating to your business include:<\/p>\n Receipts and bills relating to your expenses.<\/p>\n<\/li>\n Invoices and records of payment by customers.<\/p>\n<\/li>\n Bank and credit card statements.<\/p>\n<\/li>\n Legal documents, contracts etc.<\/p>\n<\/li>\n Notices of assessment<\/a> and other documents from the government.<\/p>\n<\/li>\n Spreadsheet with your data or reports from accounting software including a profit-loss statement.<\/p>\n<\/li>\n<\/ul>\n I recommend scanning documents into an accounting folder<\/a> on your computer as this makes them much easier to locate if you require them in the future and is also helpful for your own reference.<\/p>\n If your business is registered for sales tax (GST\/HST and QST)<\/a>, it is essential that you understand your reporting and remitting obligations.\u00a0 Reporting may by annual, quarterly, or monthly.\u00a0\u00a0 You should know how often you are required to report and ensure that the forms are completed and submitted on time.\u00a0 If not, it might result in significant penalties and interest.\u00a0 For annual filers, the sales tax returns are due at the same time as your tax returns which is June 15th.\u00a0 Payments relating to sales tax are due by April 30th otherwise CRA will start charging interest on the amounts payable.\u00a0 Similar to income tax, if you are unable to file on time, you should pay an estimated amount to reduce the amount of interest you will have to pay.\u00a0 <\/p>\n Filing and payments for GST\/HST can be done directly through CRA My Business Account<\/a>.\u00a0 Alternatively, if you have a business bank account<\/a> you can usually access a special business tax filing service where you can both file and pay at the same time.\u00a0 <\/p>\nKnow what type of information you need<\/h2>\n
Determine the types of expenses you can deduct<\/h2>\n
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Ensure that you keep all relevant documentation<\/h2>\n
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Understand your sales tax obligations<\/h2>\n