Tag: small business owner taxes

New 2020 Tax Deadlines Are Approaching

Reminder: New 2020 Tax Deadlines Are Approaching!

Are you aware of the changes the CRA has made to your tax return deadlines?

COVID-19 has brought about so many changes in our lives. Zoom meetings, physical distancing, homeschooling, stay-at-home orders… it’s been overwhelming for us all. And then, as the cherry on top, we started to get notice of assessments in the mail saying that our taxes were due on April 30th, 2020. Yikes!

Thankfully, the government saw fit to give us all a break in April and moved most income tax deadlines a month into the future. This decision has given Canadians some much-needed breathing room. After all, doing your taxes is stressful enough already, let alone doing them during a global pandemic!

So, here are the dates that you need to know to make sure you get everything submitted to the CRA with time to spare:

Filing Date for Individuals

The deadline for filing your personal income taxes this year was moved a month later, to June 1st, 2020. You’ve likely already done most of your tax prep back in March or April (and if you haven’t, we could probably help with that). So all you need to do is fill out the forms and file online or through the mail.

Another way that CRA is helping Canadians is by delaying the payment dates of your income tax to on or before September 1st, 2020. You don’t need to send any money until that date, with no threats of interest or penalties. This deferral could free up some additional room in your budget over the next few months.

Filing Date for Corporations

Similar to individual income taxes, the deadline for filing corporate tax returns is now on or before June 1st, 2020 for those originally due after March 18 and before June 1. Corporations with a filing deadline in June, July or August is extended to September 1st, 2020. This delay was a big stress reliever for business owners, as many of their businesses had been closed due to physical distancing guidelines throughout March and April. But sadly, the “bill” has come due – if you’re a business owner, you’ll need to get your taxes in by the end of the month!

The payment date for corporate taxes has also been moved to September 1st, 2020. Again, this deferral should free up some much-needed budgetary space for businesses of all sizes during this difficult time.

Filing Date for the Self-Employed

Here’s where things get a little tricky. While the CRA moved tax deadlines for individuals and corporations, the deadline for the self-employed remains on or before June 15th, 2020. We understand that it would be nice to get a bit more time to finish your taxes, but that’s still two more weeks than the other groups!

Much like with individual and corporate taxes, the payment date for your taxes has been moved to September 1st, 2020.

Reasons to File Your Taxes ASAP

Just because you have some extra time to do your taxes doesn’t mean you should wait until the last minute. If you ignore them until a week before the deadline, you’re going to be pretty stressed out. By doing your taxes now, you’ll be taking a huge burden off your shoulders, helping you better manage your current situation.

You should also keep in mind that waiting to file your tax returns could result in a delay of any of your benefits under the GST/HST tax credit or the Canada Child Care Benefit, along with potential refunds.

Take the Pressure Off Entirely!

Way back in March, we had dozens of our clients send us all of their relevant financial documents so we could do their taxes. They told us that knowing they didn’t have to do anything was a massive weight off their mind.

Today, individuals and businesses are back in the same situation, except now it’s even more stressful. People usually dread doing their taxes at the best of times, and this is NOT the best of times!

Fortunately, we can help. Even though our physical location is closed due to COVID-19, we’re still putting our nose to the grind doing bookkeeping and taxes for our clients! If you haven’t filed your taxes yet, you could easily send us all of your receipts, invoices, pay stubs, and other financial documents. We’ll take care of the rest! The best part is that you’ll know that a tax professional is making sure that you get every credit and deduction that’s available to you and your business.

So, if you want to take the pressure off doing your taxes, contact The Number Works today. We’ll take care of your taxes so you can take care of yourself!

First Time Filing Your Taxes as a Small Business Owner? This is What You Need to Know!

First Time Filing Your Taxes as a Small Business Owner? This is What You Need to Know!

Have you already completed your taxes for your small business?

Chances are that you just let out a big sigh, followed by “…no.” Well, don’t worry! You still have some time before you need to get your business and personal tax returns to the CRA. Of course, you might also be incredibly busy between now and then—after all, running a small business is one of the most stressful jobs you can have!

If you’re concerned about filing your small business taxes, here are some of the things you need to know, from the professionals here at The Number Works!

What Actually Is a Small Business?

A small business can be just about anything that brings you income. If you’re self-employed, then you have a small business, even if it isn’t incorporated.

That said, the structure of your small business will play a significant role in how you file your taxes.

If you’re self-employed, then everything can be filled in the T2125, Statement of Business Activities form. This form informs the CRA of your income and deductions.

If, on the other hand, you’ve incorporated your business, you’ll need to file a separate return. This is a Corporate Tax Return, or a T2, for the business. All of your business’ income and deductions end up in this return.

You must know the forms that you need to fill out. The last thing you want is the CRA knocking at your door because you didn’t fill out the right ones. If you’ve filled out your small business’ taxes in the previous few years, you can likely use them as a template. If this is your first time filing your taxes as a small business, then you might need a little bit of help (which we would be thrilled to provide).

The Importance of Keeping Records

The main reason why so many people have a difficult time during tax season (when it comes to both their business and personal returns) is because of poor record-keeping.

When you are running a small business, you can’t just keep shoving all of your receipts and invoices into a shoebox sitting under your desk (you shouldn’t be doing this with your personal taxes either, FYI). Instead, it would be best if you made sure that your books are being kept up-to-date continuously, with detailed financial information.

Maintaining the books is one of the reasons why many small business owners hire a bookkeeper year-round. They can ensure that everything will be exactly where it should be. A professional bookkeeper makes tax time a snap, as you don’t need to dig through dozens (or even hundreds) of documents to find the ones that you need.

The Structure of a Self-Employed Tax Return

There are three parts to a self-employed tax return: Identification, Business Income, and Business Expenses.

Identification is simply the details about your business, including its name, address, industry code, information on partners or co-owners, and the fiscal period you’re covering (usually the fiscal year). You likely have all of this information readily on hand, so this section is typically a piece of cake to fill out.

The business income is precisely that—this section is where you are putting the income you’ve gotten from your small business. It’s important to remember that this is your gross income before you calculate your experiences. You will be putting your expenses in the next section.

The business expenses section is the place you list all of the expenses that you built up while running your business. Here, you can include things like office supplies, marketing, vehicle expenses, and meals (50%). If you have no experience filling out your small business’ taxes, this section can be tricky because you might not know which deductions you qualify for—that’s where we come in.

Common Mistakes or Assumptions

New small business owners often make mistakes or assumptions about their taxes. Here are some things to keep in mind:

First, it doesn’t matter how much money your business makes, you still need to file a tax return. Some people think that if their business doesn’t bring in any income, then they don’t have to do their taxes. This is most definitely not the case! After all, many businesses fail to show a profit for the first few years in operation. If that is your situation, then you can often deduct the loss to your other forms of income. So, don’t make this mistake!

Another belief is that if you make less than $5,000 a year, you don’t have to file your income taxes. Again, this is a misconception. You need to consider Canada Pension Plan contributions and other factors. It doesn’t matter how much money you make, you still need to file.

Finally, it doesn’t matter if you are a student or not—you need to file a tax return if you are self-employed or own a small business. This can be tricky as students are often overworked and have little time. Many rely on their parents to file their returns, but this can be a big mistake. It’s best to get involved with your taxes at a younger age, so you don’t feel overwhelmed when it falls to you to complete them in the future.

The reality is that nobody likes to do their taxes, either small business or personal. It’s stressful, takes up a ton of time, and one mistake can result in months of headaches. At The Number Works, we do whatever we can to help small business owners take care of their taxes so they can instead focus on the job of building their business. Contact us today to get some help doing your taxes. But do it soon, as filing deadlines are coming up fast!