As a small business owner in Canada, you are responsible for filing your business income tax every year. Being tax efficient adds credibility to your business and enables you to avoid penalties and fees for non-compliance. Often, the process can be overwhelming for some entrepreneurs, especially when they worry about filing mistakes and overdue deadlines.
Still, filing your annual business income tax does not have to be a daunting task. Making necessary preparations all year round is crucial to making the process smoother and less stressful.
Before the tax season arrives, you must take note of important dates and deadlines. It is ideal to file your return before the due date rather than wait until the last minute. You can also check if a deadline falls on a weekend or a Canada Revue Agency (CRA)-recognized holiday. In these instances, you have until the next business day to proceed with the filing.
Since a business is recognized as a separate legal entity, it requires its own tax return apart from your personal income tax. Therefore, you must know which type of tax return to file to avoid errors. Moreover, deciding how you will prepare your turn is another crucial aspect of tax season preparation. You can do it by yourself or have a reliable accountant to handle the task.
Also, when tax season comes, you must ensure that your records are organized and accounted for. If you are using business accounting software, it can make the process quicker and easier. These programs enable you to store financial records digitally and retrieve them without hassle.
Similarly, using invoice maker software integrated into your accounting system enables automatic posting of accounts receivables and payables for easy reconciliation and tax filing.
There are many more ways you can prepare your small business for tax season in Canada. To know more about them, see the infographic below from KIPPIN, Inc.