What Happens After You Have Filed Your Return
After we receive your return, we send it to Corporation Services of the responsible tax centre for processing. To find your tax centre, go to Find a CRA address.
After we assess your return:
- we send an email notification that there is mail for you to view in your secure online account, if you registered to receive e-mail notifications through My Business Account, or
- we mail a notice of assessment
As soon as you get the notice of assessment, compare it to your copy of the corporation’s return. Contact us if you need us to clarify or explain any part of the assessment. You can call the telephone number provided in the CRA’s correspondence. If you do not have contact information, see how to Contact the Canada Revenue Agency.
Get Your Federal Tax Refund Fast
Not only have we tried to make it as painless as possible to prepare and file your return, filing electronically will also get your tax refund much faster. After all, it’s your money. Why wait any longer than necessary to get it back.
At E-file.com, we work to get your federal tax refund as fast as possible thanks to the electronic filing program with the IRS. Filing electronically with the IRS and selecting to have your refund direct deposited to your bank allows you to get your refund as fast as possible.
T2 Corporation Income Form
If your business is incorporated, you will need to file specific forms with your returns. The T2 form serves as a federal, provincial, and territorial income tax return for corporations in Canada. However, for those located in Alberta or Quebec, you must file a separate provincial corporation return. All residential corporations must file a T2 return every tax year, even when there is no tax payable.
You can file your T2 form electronically using the internet, as in most cases, the CRA mandates electronic filing. To do so, you must use CRA certified software to fill in the forms accordingly. Once the forms are complete, you can submit your tax files online, or print them off and submit by mail.
ProTax is a cloud-based software built into QuickBooks Online Accountant, covering basic T2 tax forms, and is fully CRA certified.
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Using Professional Accounting Services
Those who might not have the best grasp on financial matters might choose to hire a professional accountant or bookkeeper to file their taxes for them. If you opt for accounting service, they will handle all of your returns and will file them online through the CRA portal, Represent a Client.
However you opt to file your returns, the CRA dictates you must hold onto all your tax documents for at least six years. Hence, keeping organized tax files is a significant part of any business or persons tax management.
Understanding the tax return process can help small businesses organize all of the required information to file their returns successfully. Be prepared for this tax season with QuickBooks accounting software. Try it free today!
How Do Small Businesses Handle Taxes
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Small Business Taxes Based On Business Structure
All in all, these are the basics of paying your small business taxes:
- What types of taxes you need to pay
- How much you have to pay in taxes
- When you have to pay business taxes
- And how you pay business taxes
When it really comes down to it, however, these four basics depend on your businessâs legal structure. Your business entity type will dictate your tax burden. Letâs explain:
More Business Tax Deductions
In the long list of business tax deductions, you might stumble across some that you didnât even know existed.
Here are a few that you might have overlooked, but should absolutely take advantage of when filing your small business taxes.
1. Startup Costs
If youâre just opening the doors of your small business, you know how expensive starting up can be. There are lots of startup costs youâll need to cover to get going. Luckily, you can actually deduct all of these related costs on your business tax returns.
Any business-related startup and organizational costs are considered capital expenditures by the IRS. Startup and organizational costs are pretty broadly defined by the IRS. Theyâre essentially any amounts paid or incurred when you start a businessâthey could even be the costs of researching the business before you start.
With this in mind, as long as your startup costs donât exceed $50,000, you can choose to deduct up to $5,000 of business startup costs and up to $5,000 of organizational costs. If your startup costs are higher than $50,000, the deduction will be reduced by that amountâand you canât deduct any startup costs if your total costs amounted to $55,000 or more. After the initial deduction, the remainder of your startup costs can be amortized and deducted over a period of 180 months.
2. Inventory
In most cases, inventory isnât considered a tax-deductible expenseâmaybe thatâs why youâve overlooked them on your small business taxes.
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Get Your Records In Order
Good tax preparation begins with recordkeeping. Before you start the process, collect all your relevant business records. Whatâs relevant, you ask? Depending on your type of business entity, youâll need different things, but start here:
- Personal information
- Last yearâs tax returns
- Employer Identification Number
Youâll also need to collect everything related to your earnings and expenses. On the earnings side, this could be:
- Invoices you sent to clients
- Records of any goods sold to customers
- Sales records that note money coming into your business
On the expenses side, collect receipts for any costs you incurred during operation. Think of the following things:
- Rent receipts for your small business
- Office supplies
- Client lunches
- Mileage records
Different small business entities need to supply different information for their returns, so we created a small business tax checklist for each type.
And if you want to avoid the dreaded task of sorting through shoeboxes full of crumpled business-related papers, Bench can help. Our small business bookkeeping solution tracks your earnings and expenses throughout the year and keeps your records in our online app, so theyâre always accessible.
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The above article is intended to provide generalized financial information designed to educate a broad segment of the public it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
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CompleteCheck will run a comprehensive review of your return before you file so nothing gets missed.
How To Prepare Your Business Tax Return
Ultimately, in order to stay on top of your small business taxes, youll need to carefully prepare in advance of any filing deadlines.
This being said, the process of filing your business taxes is much easier if you take time to prepare all your small businessâs financial documents and records before tax season rolls around. The reason is simple: If youâre scrambling to get everything together a few days before a business tax deadline, youâre setting yourself up for disaster.
To make preparing your business tax returns easier then, hereâs what youâll need to gather:
- Last yearâs business tax return
- Payroll documents
- Office supplies and equipment
- Phones and other communication devices
If you keep hold of all these receipts and documents, youâll have a much more accurate income and expense statement when it comes time to file your small business tax returns. Most of these income and expense categories should be easy to locate on your business accounting software or get from your accountant.
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How Are Businesses Taxed In Canada
Taxes The Part I rate of a Part I taxpayer, depending on his taxable income, is 38% plus 28%. As a result of reducing the general tax rate, the net tax rate is 15%. In 2019, a net tax rate of 9% will apply to eligible Canadian-controlled private corporations that claim the deduction on small business income.
Business Taxes For Limited Liability Companies
A limited liability company is a business entity that keeps the owners legally separate from the companyâs debts or liabilities. As the owner of an LLC, youâll have the liability protection of a corporation with the tax benefits of a sole proprietorship or partnership.
If you operate an LLC, youâll be subject to pass-through taxation, just as you would be as a partnership. In other words, with LLC taxes, youâre not taxed twice like corporations are. Instead, as an owner of an LLC, youâll make quarterly tax payments on your personal income tax forms. On top of that, youâll also have to submit Form 1065 each year for informational purposes.
Furthermore, LLCs offer you additional tax flexibility compared to other business entities. From a legal standpoint, you can exist as an LLC. However, from a tax standpoint, you have the option to be taxed as an S-corporation or partnership.
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Incorporated Business Tax Deadline
Corporate tax returns are due 6 months after the corporations fiscal year-end. If your business is incorporated and has a balance that it still needs to pay, you have until 2 months after the end of your fiscal tax year to pay it off.
There are some exceptions to this rule. Canadian-controlled private corporations with annual business income less than $500,000 may have up to 3 months rather than 2 if they meet the eligibility criteria.
If you owe money to the CRA and file your taxes late, youll have to pay a penalty of 5% of the balance owed plus 1% for each month you are late, to a maximum of 12 months.
If you are late multiple years, the penalty can increase to 10% plus 2% for each month your return is late, to a maximum of 20 months.
How To Request A Reassessment
You can request a reassessment electronically using the latest commercial tax preparation software packages, or send a letter to the tax centre that serves the corporation. If you send a letter, state the name of the corporation, the business number, the tax year, and any details that apply. With your letter, include any relevant supporting information, such as revised financial statements or the General Index of Financial Information and schedules. If you are preparing your return using tax preparation software, submit the bar codes that contain the information needed to reassess your return. Do not send the entire T2 return.
To ask to carry back a loss or tax credit to a prior tax year, file whichever of the following schedules apply:
- Schedule 42, Calculation of Unused Part I Tax Credit, to ask to carry back a Part I tax credit
You can file these schedules with the return on which you report the loss or earn the credit, or you can forward them separately to the tax centre that serves the corporation.
ReferenceSubsection 152
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Can An Llc Get A Tax Refund
Once youve filed correctly, you may wonder if the IRS will send your LLC a check for any over-payment. Aside from the C corporation, all other tax statuses are pass-through entities, meaning the individual pays taxes and receives taxes. Only C corporations can get a refund. For any other LLC filing types, the business owner will receive the refund.
So yes, you will get your excess tax payments back, but it will be you receiving the money personally, rather than your LLC getting a refund check.
How To Register A Formal Dispute
Many misunderstandings are caused by a lack of information or by a simple miscommunication. That’s why we say: Talk to us.
If you have new or additional information, you or your authorized representative can ask for a change online at My Business Account, Represent a Client, or by writing to us. Many disputes are resolved this way.
If you disagree with an assessment or a determination, you can make a formal objection.
Filing an objection is the first step in the formal process of resolving your dispute. You have 90 days after the date of the notice of assessment or determination to file an objection.
For information on extended time limits, due to COVID 19, that apply to notices of objection, go to COVID-19 Ministerial Orders and select Explanatory Note: Time Limits and Other Periods Act Income Tax provisions.
You can file an objection:
- online in My Business Account or in Represent a Client by selecting “Register a formal dispute under “Corporation Income Tax
- by mail, using Form T400A, Notice of Objection Income Tax Act, or writing to the chief of appeals at your Appeals Intake Centre
In all cases, you have to explain why you disagree and include all relevant facts and supporting documents.
For large corporations, your objection must:
ReferenceSection 165
ReferenceSubsection 225.1
For more information about objections and appeals, see Guide P148, Resolving your dispute: Objection and appeal rights under the Income Tax Act, or go to Complaints and disputes.
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Canada Emergency Wage Subsidy
The Canada Emergency Wage Subsidy is a taxable benefit available to employers who have experienced a drop in revenue due to COVID-19, to cover part of their employee wages retroactive to March 15, 2020.
You can use the money to prevent layoffs and make it easier to resume operations after the pandemic is over. Plus, salaries are usually the biggest cost on an income statement.
With the subsidy, youll have some cash flow that you can use for operating costs like rent, utilities, insurance and property taxes.
The Canada Emergency Wage Subsidy is taxable. You must include the amount of CEWS you receive as taxable income on your corporate income tax return.
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How And When To File Your Tax Return
Learn how to fill out your return using tax preparation software or on paper.
The deadline for filing personal income tax returns and paying outstanding income tax is . After April 30, penalties and interest start to apply to any outstanding balance owed.
If you are self-employed or filing for someone who has passed away, please see the CRAs website for filing deadlines.
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Business Taxes: When To Pay
No matter what type of small business entity you have, you have to pay quarterly estimated taxes if you expect to owe income taxes of $1,000 or more. Corporations only have to pay quarterly estimated taxes if they expect to owe $500 or more in business taxes for the year.
Before you owned a business, filing taxes was a once-per-year occurrence. But as a small business owner, on the other hand, youâll have to pay the IRS four times per year. Although this means there are four deadlines to keep track of, it also means by the time your yearly tax deadline comes around, youâll have already paid three-quarters of your tax return.
This being said, though, to make things even more complicated, if your businesses has employees, it must deposit federal income tax withheld from employees, federal unemployment taxes, and both the employer and employee social security and Medicare taxes. Depositing can be on a semi-weekly or monthly schedule.
Filing Your Tax Return
What you need to know about filing your personal income tax and benefit return.
Get help this tax season with the Ontario Child Care Tax Credit and the Low-Income Workers Tax Credit.
Save your receipts for the new Seniors’ Home Safety Tax Credit in 2021, which you can apply for during the 2022 tax season.
You may be eligible for tax credits and benefits to help you with living costs.
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How Do I File My Business Taxes For The First Time
Quarterly Estimated Small Business Taxes
Therefore, to calculate the quarterly payment for your business taxes, youâll estimate your expected adjusted gross income, taxable income, deductions, and small business tax credits for the year. The best way to gauge these numbers is to look at your taxes from the previous year as a guide. If this is your first year filing a business tax return, you might consult your accountant or another tax advisor for assistance in making these estimates.
Once youâve put a number on these figures, youâll just have to calculate how much youâll owe in your estimated quarterly small business taxes. The easiest way to do this is to use the IRS Form 1040-ES Estimated Tax Worksheet.
These are the deadlines for you to file your quarterly estimated small business taxes for 2019:
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