Taxes are due to be paid to the CRA by April 30 each year. This is true for everyone from individuals to small business owners. However, there is somewhat of a grace period that runs to June 15 that comes with interest charges. With help from our team at Leonard Tam Professional Corporation, you can plan for taxes and have them professionally prepared for tax day without paying a late-filing penalty from the CRA. If you have other questions about filing your taxes, read our short guide below.
Will my small business pay a late-filing penalty?
If your business isn’t able to file and pay your taxes by the April 30 deadline, you will be subject to late-filing penalties. The CRA has established a late-filing penalty of 5% of your owed balance. You’ll also have to pay an additional 1% for each month you’re late filing your taxes for up to 12 months.
Due to the ongoing COVID-19 pandemic, the CRA extended tax day to May 17 for 2021, but it is projected to go back to April 18 in 2022. You can plan ahead to avoid late-filing penalties and interest.
How can I plan for taxes?
Planning for taxes can save you time, stress, and money. You can save throughout the year to ensure that you have the proper amount of money you need, you won’t have to scramble to catch up or make your deadline. Work with a tax professional to find out how much you should be saving for taxes each month so you can have it set aside as tax day approaches.
What is the small business tax rate?
If you’re not sure how to get started planning for taxes for your small business, get started by saving 9% of your revenue as this is the Canadian tax specifically for small businesses as of 2020. A small business is considered a firm that has fewer than 100 employees. Of all Canadian businesses, 98% fall into this category. Should you grow to more than 100 employees, your business would be subject to an 18% tax rate.
Can I reduce my tax responsibility with tax deductions?
The short answer here is yes you can. However, it’s important to understand what is considered an eligible deduction and what isn’t. For instance, you can write off your travel expenses and vehicle costs if it’s all related to the work you do for your company. In contrast, you cannot use a company vehicle to take your family on a road trip and deduct the cost of gas. However, if you happen to be taking your family with you on a long-distance job, then you can. Be sure to keep track of your receipts so you can validate the costs. If you’re not sure about which expenses to deduct, speak with your accountant.
Book a meeting
Get help with your small business' taxes so you can avoid a late-filing penalty from the CRA. Our experts at Leonard Tam Professional Corporation can help you plan for your taxes for the upcoming year so you can successfully meet the impending deadline. Book your meeting today by calling 416-783-2222 or send a message using our online contact form. We look forward to speaking with you regarding your company and helping you get prepared for tax season.