There’s a reason the Canada Revenue Agency hones in on small businesses and the self-employed when deciding whom to audit: They make plenty of tax-related errors. Here’s how to be on top of filing, paying and making nice with the taxman, not just leading up to the next filing deadline, but all year.
Know your deadlines
Self-employed? Circle two dates on the calendar each year: April 30 and June 15. The second date is your filing deadline. But don’t be too hasty making fun of those stressed and struggling to file their personal income taxes at the end of April. If you’re a small-business owner who owes money, you’ve got to pay it by that date, too.
But how do you know what you owe without going through all the work of collecting receipts and tallying income? You don’t, says Hugh Neilson, director of taxation services at KRP Group in Edmonton and a member of the Chartered Professional Accountants of Canada’s small and medium practitioner tax committee. You might as well file April 30 as well. In fact, forget the mid-June deadline altogether.
“There are an awful lot of accountants who are of the view that we don’t want our clients to find out about that June 15 deadline, that it will only make trouble,” he says.
Incorporated business deadlines are even more complicated. The general rule: The company has six months to file taxes after its fiscal year-end, but must pay within two months of its year-end. For active businesses, however, their payment date is generally extended to three months. Most small, incorporated businesses meet the requirements for the extension, explains Mr. Neilson, but it’s still a good idea to get an accountant’s expert opinion.
Know the fees
Figuring out what the average tax professional charges is like asking for an average actor’s wage. There’s a wide range. Tax preparers, who typically work during tax season, tend to cost about $150 for a standard business return. But certified accountants may charge hundreds or even thousands of dollars to file complicated taxes and deal with obscure issues.
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