Tax Accounting Tips for Canadian Small Businesses and Self-Employed Individuals

At RQ Financial Services Inc., we understand that managing your taxes can be complex, especially if you run a small business or are self-employed. Here are some essential tax accounting tips to help you stay organized and compliant with the Canada Revenue Agency (CRA) requirements for the 2024 tax year.

Understanding Your Fiscal Period and Filing Deadlines

Your business’s fiscal period is the start and end of your business year, typically 12 months (often January 1 to December 31). If you choose a different fiscal year-end, ensure it does not exceed 53 weeks. Corporations must file their income tax returns within six months after their fiscal year-end. For self-employed individuals, the tax return deadline is June 15, but any taxes owed should be paid by April 30 to avoid penalties and interest. For more details, see the CRA’s guide on Accounting for your earnings.

Keep Accurate Records and Use Digital Tools

Good record-keeping is crucial. Use a dedicated business bank account to separate personal and business transactions, which simplifies tracking and auditing. Save receipts digitally using apps like Smart Receipt Shoebox to avoid losing important documents. The CRA accepts electronic records, so consider using business software or apps for your bookkeeping. You can also manage your tax affairs online through the CRA’s secure portal, My Business Account, where you can file returns, make payments, and view your account balances.

Reporting Income and Expenses

If you are self-employed, report all your income and expenses on your personal tax return using Form T2125, Statement of Business or Professional Activities. This form can be auto-filled if you use NETFILE-certified tax software. Remember to register for a GST/HST account if your taxable supplies exceed $30,000 in a calendar quarter or over four consecutive quarters. Filing your GST/HST returns on time helps avoid penalties and interest. Learn more about self-employment tax tips at the CRA’s page on Self-employed? Get ready for tax season.

Maximize Your Deductions

Keep track of all business-related expenses to reduce your taxable income. Common deductions include office supplies, vehicle expenses, advertising, and professional fees. For real estate agents and other professionals, specialized deductions may apply. Consult the CRA’s guidelines on business expenses or seek advice from a qualified accountant to ensure you claim all eligible deductions.

Get Help When Needed

The CRA offers resources such as the Liaison Officer Service for small businesses, providing personalized support to help you avoid common reporting errors. If you discover you have omitted income or made errors in your tax filings, you can use the CRA’s Voluntary Disclosures Program to correct your tax affairs with reduced penalties.

For more information and to manage your business taxes online, visit the CRA’s official pages:

• My Business Account

• Accounting for your earnings

• Business expenses

• Self-employed tax tips

  
  

At RQ Financial Services Inc., we are here to help you navigate your tax obligations smoothly and efficiently. Contact us for personalized advice tailored to your business needs.