Being a businessman is great, especially when your business is generating a good amount of profit. But we all know that nobody can become successful overnight. You might have worked so hard for your business to make it successful and achieve financial freedom. However, running your business is just one part of it. The second, equally important part, is the tax preparation and payments. You know very well that corporate tax preparation and planning are vital for your business’s longevity and success.
It is not difficult to prepare and file corporate taxes. There are some important things regarding the corporate tax that you have to know. You can contact a professional accounting firm if you don’t want to get into the hassle of preparing and filing corporate taxes. They will handle everything for you while you do the strategic planning for your business.
However, it would help if you had some understanding of corporate taxes. In this article, we will guide you through the nitty-gritty details of corporate taxes.
Read along to figure it out!
Preparing Corporate income Tax
As the corporations are separate legal entities, they’d have to file a T2 corporate tax form each year. This rule applies to all the corporations in Canada, even if the corporation has been idle. Note that there is only one exceptional case where the corporation is registered as a charity for the whole year.
Some conditions have to be met to complete and file a T2 short return. They are:
- It is a Canadian-controlled private corporation for the entire tax year.
- The net income has to be nil or a loss for income tax purposes this year.
- The establishment is permanent in just one province or territory.
You’d be required to use the General index of Financial information when you complete the T2 corporate income tax form. Preparing and filing the T2 is much more complex than the T1 Personal income tax Return. That’s why we recommend that you get in touch with the professional CPA of an accounting firm in Toronto to guide you throughout the process.
Filing the Corporate tax Returns
The vital thing to know is the time of the filing. Corporations must submit corporate income tax within six months after the fiscal year’s completion. For example, when your business’s fiscal year ends on February 31st, you have to make sure that you file the corporate income tax return by August 31st.
Generally, filing the corporate tax can be done through the internet, including the non-resident corporations and corporations claiming an SR&ED amount.
The CRA would help guide you regarding the Corporation internet filing and let you know if you qualify for it.
Those corporations with annual gross revenue exceeding $1 million have to file their corporate income tax electronically.
Now, you should be familiar with the process of preparing and filing the corporate tax. Apart from that, when you do the planning and preparation for the Corporate taxes timely, it becomes easier for you. Most importantly, it would help if you got everything well organized and in order. Secondly, don’t miss out on the transactions and record them to know the revenues, expenses, and net income. Lastly, you shouldn’t delay the filing process of the corporate tax as taxes play an essential role in the filing. For any other questions or legal guidance, you can always contact us and we would be happy to help you out.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.