How to Pay Dividends: Completing the T5 Slip and Summary
Self Employed, Small Business, Business Tax Ronika Khanna Self Employed, Small Business, Business Tax Ronika Khanna

How to Pay Dividends: Completing the T5 Slip and Summary

If you are the owner of a Canadian corporation, you can choose to pay yourself (and other shareholders) dividends instead of a salary. Alternatively, some shareholders also take dividends in addition to a salary depending on their tax planning strategy. If you do decide to pay yourself dividends, it is important to ensure that you prepare the proper documentation for Revenue Canada (CRA) and if you live in Quebec, Revenue Quebec (MRQ) since this must be reported as investment income on your personal tax return in the calendar year in which the dividends are paid. If you are paying dividends to a Canadian shareholder, you must issue a T5 slip while non resident shareholders receive an NR4 slip. The T5 dividend slips are generally due by February 28th of the calendar year following the year in which the dividend was paid Although no income taxes are due at the time of filing the T5 slips with the government, interest and penalties apply for late filing . The process of submitting preparing and submitting the dividend declarations and the documents that need to be filled out and returned to the CRA and MRQ are discussed below:

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Know Your Small Business Tax Deadlines For 2024

Know Your Small Business Tax Deadlines For 2024

As we approach the new year, it will be time soon to start working on everyone’s favourite activity i.e. getting your tax stuff in order :) . Below are the deadlines that all small businesses need to know for 2024.

Download our free Canada unincorporated business tax deadline calendar for 2024 (both Federal and Quebec).

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Guidance on Registering for Payroll and Remitting Source Deductions

Guidance on Registering for Payroll and Remitting Source Deductions

 There comes a time for many small business owners when they decide that they need to hire employees.  This is usually an excellent sign as it means a) the business is growing and b) the small business owner has learned to delegate.  It also means that additional paperwork needs to be filled out and additional taxes need to be paid.  The simplest option when deciding to augment your workforce is to have the new worker invoice the business, based on hours worked or some other formula.  Unfortunately, there are very specific rules as to who qualifies as a self employed contractor.  Essentially, if your have someone that works full time, has little flexibility with respect to the hours that they work and you provide the tools such as a desk/office, computer etc, then there is a good chance that the tax authorities will classify them as an employee.  In this case, where your worker is clearly an employee, you must register for payroll, pay them a salary and submit regular, periodic payroll reports and payments to the Canada Revenue Agency (CRA).  As usual, if you live in Quebec, you must submit to Revenue Quebec (MRQ) as well. 

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Should you register for GST/HST and QST and What it Means to Be Zero Rated
Self Employed, Business Tax Ronika Khanna Self Employed, Business Tax Ronika Khanna

Should you register for GST/HST and QST and What it Means to Be Zero Rated

When starting your new Canadian small business or launching into self employment, it is essential to determine whether you are required to register for GST/HST (and QST if you have a started a business in Quebec). The simple answer is that if you anticipate that your annual gross revenues (total sales) are going to exceed $30,000 and your products or services do not qualify as Exempt or Zero rated (explained below) , then you are required to register for GST/HST and collect sales taxes from your Canadian customers and clients. The $30,000 limit applies to the last 4 quarters of revenues. If you decide not to register for sales tax upon the inception of your business/self employment, then you must monitor your sales revenues over a rolling 4 quarter period and register once you are close.

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Know Your Small Business Tax Deadlines For 2023

Know Your Small Business Tax Deadlines For 2023

Somehow we are almost one month into 2023 (!) and it is time for business owners (and individuals) to start thinking about one of their favourite subjects i.e. taxes. I have compiled a list of the deadlines that all of you should know and also updated my annual business tax deadline calendar.

Sign up to download our free Canada unincorporated business tax deadline calendar for 2023 or Quebec unincorporated small business tax deadline calendar 2023.

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How to Register a Small Business in Quebec

How to Register a Small Business in Quebec

Budding entrepreneurs wanting to setting up a small business (or becoming self employed), either on a full time or part time basis, are often not sure where to start.  The process of registering a business in Quebec, depending on your circumstances,  can actually be quite straightforward .  Below we look at the questions that you need answer to determine your business registration obligations:

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Know Your Small Business Tax Deadlines For 2022

Know Your Small Business Tax Deadlines For 2022

With the beginning of a new year upon us, tax submission deadlines for individuals and businesses are starting to loom. Every small business owner must adhere to these deadlines or risk facing penalties for late filing of returns plus interest on any overdue balances. Knowing these deadlines can help you ensure that you don’t simply waste your hard earned money and run afoul of CRA and RQ. I have compiled a list of deadlines for all unincorporated small business owners which includes sole proprietors and self employed individuals.

Note that the usual deadline for sales tax (GST/HST and QST) payments and income tax returns is April 30th. However, since this falls on a Saturday, the deadline is pushed to Monday, May 2nd, 2022.

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Do you have to charge QST if your business is located outside of Quebec?
Small Business, Regulatory/Legal, Business Tax Ronika Khanna Small Business, Regulatory/Legal, Business Tax Ronika Khanna

Do you have to charge QST if your business is located outside of Quebec?

Quebec is unique in a number of different ways. This is great if you enjoy exposure to different types of culture and cuisine. It isn’t so great where it comes to tax. Almost every type of tax filing in Quebec requires an additional return, which often has different rules and calculations from the federal tax filings. Quebeckers are resigned to this and fortunately tax software or a good accountant tends to make the management of taxes significantly easier.

Prior to January 1st, 2019 a business, even if they had customers in Quebec, did not have to worry about Quebec based taxes as long as they did not have a physical or significant presence in Quebec. This changed on January 1st, 2019 when Quebec implemented a comprehensive set of rules for businesses located outside of Quebec, that, if they meet certain criteria, are now required to collect and report Quebec Sales Tax (QST or TVQ) on sales made in Quebec.

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Tax Return Checklist for Individuals and Unincorporated Business Owners

Tax Return Checklist for Individuals and Unincorporated Business Owners

The deadline to file tax returns is starting to loom large, resulting in anxiety for some individuals and small business owners. The good news is that the stress can be managed fairly easily with some simple organization techniques. The best starting point is to evaluate your tax situation and prepare a checklist of all the documentation that you will need with respect to your specific tax situation. A checklist can help reduce (or eliminate) important items that might get forgotten in the rush to put everything together (and its always satisfying to cross something off the list). I have compiled a list of some of the more common income, deductions and credits that the majority of taxpayers are likely to have:

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What Small Business Owners Need to Know About Income Tax Instalments
Self Employed, Small Business, Business Tax Ronika Khanna Self Employed, Small Business, Business Tax Ronika Khanna

What Small Business Owners Need to Know About Income Tax Instalments

Transitioning from being a full time employee to small business ownership or self employment means that you need to cultivate self discipline. You can no longer rely on your employer to take care of business functions that do not relate to your job ,and must take a much more active role in ensuring that you remain on top of your obligations whether it is collecting payments from customers, paying bills or ensuring that you do not run afoul of Revenue Canada. One of these obligations requires that you pay your own income taxes, which you are required to pay when you file your income tax return. Additionally, once you exceed a certain income threshold you are also required to pay income tax and sales tax instalments.

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Is the Quick Method of Reporting GST/HST & QST the Right Choice for your Small Business

Is the Quick Method of Reporting GST/HST & QST the Right Choice for your Small Business

If you are self employed or a small business with annual sales between $30,000 and $400,000, it might make sense to select the Quick Method of reporting your GST/HST and QST, which is essentially a simplified method of reporting sales taxes . While regular reporting of sales taxes requires that you calculate all amounts collected and paid on eligible expenses, the quick method (or simplified method as it is also referred to)requires the application of a single reduced rate to your sales while GST/HST and QST paid on expenses is not deductible. The key details of the Quick Method and its suitability for your business are discussed below:

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How to Change Your Personal Tax Return After It Has Been Filed
Business Tax Ronika Khanna Business Tax Ronika Khanna

How to Change Your Personal Tax Return After It Has Been Filed

Despite your (and/or your accountants’)best efforts , occasional errors or omissions relating to your personal tax return are unavoidable. It is possible that you forgot to include a tax slip, overstated your expenses or was unaware of a specific tax credit. Luckily there is fairly simple mechanism that allows you to change your tax return, which can either be done online or by filling out a form and mailing it in.

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Quebec’s Small Business Tax Deduction and How It Relates to Payroll Hours
Regulatory/Legal, Business Tax Ronika Khanna Regulatory/Legal, Business Tax Ronika Khanna

Quebec’s Small Business Tax Deduction and How It Relates to Payroll Hours

Revenue Quebec, in the March 2017 budget (or economic plan as they like to call it) decided that a small business wasn’t a small business for the purposes of the tax deduction, unless a minimum number of payroll hours was worked by employees of the business.   Initially they had wanted to impose a minimum number of 3 full time employees to qualify for the deduction, however, after realizing that many businesses had several part time employees during the year, they changed the requirement to a minimum number of hours worked to 5,500 hours per year.  This could be a combination of full time and part time employees.  Consequently, many businesses that had qualified for the small business tax rate were no longer eligible.

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4 Alternatives for Preparing Your Small Business Payroll
Small Business, Technology, Business Tax, Accounting Ronika Khanna Small Business, Technology, Business Tax, Accounting Ronika Khanna

4 Alternatives for Preparing Your Small Business Payroll

Paying salaries to employees (or yourself) requires more than just determining the gross amount to be paid.  The Canada Revenue Agency and Revenue Quebec require that employers calculate a variety of taxes on the salaries paid, remit them to the federal and provincial governments and prepare annual reports demonstrating that the calculations are correct and all salary deductions have been paid.  This can be a lot of work for business owners whose time is better spent generating sales and building their businesses.  Luckily there are many options for small business owners to calculate their payroll and salary remittances, many of which simplify the process:

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