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A Business’s Guide on How to Prepare for Tax Season


Soon it will be time to file your business income tax return. Whether you are self-employed or have a corporation, it is important to get organized in advance by either preparing it yourself or having an income tax specialist prepare it for you.


If you are a business, you must file an annual business income tax return. The type you file depends upon the structure of your business. Those who are self-employed sole proprietorship or partnership business owners must report their business income on the T1 personal income tax return and include tax form T2125 (Statement of Business or Professional Activities). However, if your business is incorporated, you must report your business income on the T2 corporate income tax return.


Please see the chart below for when the deadlines are for filing your tax return. *Note: CCPC stands for Canadian Controlled Private Corporations. They are private businesses incorporated in Canada that are not controlled by one or more non-residents of Canada.

TYPE OF RETURN

PAYMENT DEADLINE

FILING DEADLINE

Individual T1

April 30

April 30

Sole-Proprietors/ Partnerships T1

April 30

June 15

Corporation T2 - CCPC

3 months after fiscal year-end

6 months after fiscal year-end

Completeness and accuracy of information is very important in assisting your tax specialist or accountant in the income tax preparation and filing process, as well as supporting tax planning and minimization strategies. Getting organized early is always recommended. To get started you should:

  • Ensure you have all your receipts and invoices organized by the expense and income categories, so your tax specialist can easily find the information they are looking for.

  • Keep a summary record of all your income and expense-related transactions for the filing year, and ensure the following details are provided: transaction date, payment method, customer/vendor name, gross amount, GST/HST amount, PST/RST amount, net amount, and identify the income/expense category(ies) per transaction.

It is also important to ensure good records are kept for the following documentation requirements:

  • Business Account Records – business, GST/HST, PST/RST, Payroll, WCB registrations etc.

  • Employees/Subcontractors' payment summaries

  • Tax Slips – T3, T4, T4A, T5, T5008, etc.

  • Capital Dispositions – shares, farm/fishing properties, real estate properties, etc.

  • Business Use of Home Expenses

  • Business Use of Vehicle Expenses

For a full listing of income & expense categories, tax credit/savings opportunities, as well as other helpful resources and tools to assist in your document organization and preparation process, please visit the Tax Preparation section & Tax Deduction Resources section at https://www.kliuaccounting.com/tools-resources .


Listed below is a sampling of the types of resources created by K Liu accounting Services Inc. to provide ease to your year-end tax preparation process:

  • Automobile & Office-in-Home Expenses

  • Business Income and Expense Activities

  • Capital Asset & Eligible Capital Property Schedule

  • Business Transactions Template

  • Preparation Checklist questionnaires

When filing your business income tax returns, the Tax & Accounting professionals at K Liu Accounting Services Inc. can provide you with a stress-free income tax preparation experience. They keep up to date with all the latest tax updates and tax savings opportunities, so you do not miss any income tax deductions that will benefit you. To contact them for your next business income tax return service, please visit Contact Us | K Liu Accounting Services Inc.


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https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/important-dates-individuals.html


https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-income-tax-return/when-file-your-corporation-income-tax-return.html

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