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It is that time of year when all self-employed persons should be preparing to meet with their accountants or reviewing their tax requirements. Failure to comply with tax deadlines may result in assessment of penalties and interest. Some key points to consider are:
- My Business Account. It is recommended that you register for My Business Account with CRA. You can contact CRA at 1-800-959-5525 to register by telephone or register online using your online banking access. My Business Account will allow you access to various CRA business accounts including income tax, GST, payroll, T5018, etc., and allow you to manage your address, direct deposit, registering a representative such as an accountant and online mail.
- GST. You generally must register for a GST account if at any 3-month period in the year or in total for any 12-month period your income is $30,000 or more. The deadline for registering is 29 days after you hit this threshold. CRA will advise when your reporting period starts. (Your reporting period is the last day of the month following.)
- Payroll. You must register for a payroll account if you have employees and deduct withholdings on their behalf. Your remittance must be made by the 15th of the month following your filing period. CRA will advise what your reporting period is. For example.
- Quarterly – average monthly withholding amount of $0 to $2,999.
- Monthly – average monthly withholding amount to $25,000.
- Income Tax. Although your deadline for filing your self-employed tax return is not until June 15th, you must remit any taxes owing for the current tax year by April 30th. This amount is in addition to any required installment payments you were advised were payable on your prior year income tax assessment notice.
- T5018 Statement of Contract Payments. If your business is primarily in the construction industry and you pay subcontractors, you must issue a T5018 slip for every subcontractor reporting to CRA all amounts of $500 or more paid from all sources (cash, cheque, barter, etc.) during the year.
- Record keeping. Good record keeping is critical for your business. Your supporting documents for your business income and expenses are to be retained for 6 years after the end of your tax year. The benefit of good record keeping is to reduce accounting costs and allow you to readily provide documents for any routine information request or audit by CRA.
Filing business income taxes can be complicated and missing something could have a major impact on your bottom line. It makes sense to do your research and/or engage the services of a professional to ensure everything is filed properly and on time.
This post was written by Debora Kwasnicky of D. Kwasnicky & Associates Inc. for CAIRP