It’s a whole new year.
Besides new beginnings, resolutions, business targets, and goals, a new year also means getting on top of your corporate tax return for the current tax season, which is all about last year, oddly enough.
Here are a few things you, as a business owner, will need to consider when you set out to file your return. But with the right corporate tax team in your corner, tax season needn’t be any trouble.
The all-important “when”
Let’s start with the most important point of all – the tax deadlines. Unlike personal tax deadlines, corporate tax deadlines do not have to fall on December 31st.
But corporate tax returns must be filed no later than six months after year-end; for example:
If the business’s tax year end falls on the final day of a month, the tax return is due no later than the last day of the sixth month after that. So, for a year ending November 30, 2021, the return would be due on May 31, 2022.
If, however, the last day of the tax year is not the last day of a month, you would have to submit your return on the same day in the sixth month following year end. So, if the year ends on November 14, 2021, the return will have to be submitted on May 14, 2022. Also, please never have an mid-month reporting deadline/year-end – this will create a reporting nightmare for payroll, sales tax and corporate tax purposes. Always stick to a month-end, if you incorporate mid-month, you can select any month-end, within 53 weeks from incorporation, to be your year-end.
It’s important to remember that the due date for balances owing for corporate tax purposes will come before the filing deadline. Taxes owing are due two months after year end, while an extension to three months is available if you meet the following requirements:
- The company and all associated companies earned taxable income that amounted to less than $500,000 in the previous year. This is quite common, particularly for smaller businesses.
- The corporation claimed the small business deduction.
- The company is a Canadian Controlled Private Corporation.
Why you should consider letting a professional accountant do the legwork
The right accountant can make tax season fly by for your company, minimizing complications by sorting out your accounts and making sure you are 100% tax compliant. Revenues and expenses will be organized accurately, and budgets and financial statements will be a breeze to navigate. An accountant will also look for opportunities to lower your tax burden through tax planning, available credits and ask the pertinent questions to assess whether other funding (Financing, grants, subsidies) opportunities are available to your business.
Accountants remove the compliance headaches of annually filing your tax returns, ensuring completeness, accuracy and timely reporting. This freedom allows the business owner to focus their efforts on running and growing the business in the current year instead of looking back to the past.
Tax can be complicated – particularly if you are not a trained professional, while tax legislation is not for the faint of heart. Certified accountants are required to stay in the know about the latest regulatory frameworks so that you don’t have to be.