Income taxation in Canada has become increasingly complex. Tax laws and regulations are constantly changing, making it difficult in many respects for the small business owner to keep current, let alone understand the relevant tax laws. Proper tax planning is critical to the entrepreneur and accurate records must be kept in any type or size of business.
It is recommended that a small business owner consult a professionally qualified accountant from the onset.
We further recommend that the entrepreneur read the Canada Customs and Revenue Agency’s ‘Guide for Canadian Small Businesses’ and ‘Business and Professional Income’ guide, both designed for the self-employed individual. They introduce the business owner to the process of reporting earnings and paying income tax on business profits as well as what expenses you’re allowed to deduct. They can be accessed from:
Checklist for new small businesses
Make sure you understand the income tax rules as they apply to your business. Individuals pay taxes on their share of the net income of unincorporated businesses when they file their personal income tax return. Corporations must file income tax returns both Federally and Provincially.
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