Congratulations on the incorporation of your new business! This is an exciting time for you & your future. You may wonder what you will need to do to ensure you stay on top of your tax reporting obligations and so you don’t get too overwhelmed with all of the new processes involved with running your business.
The top 3 things you should accomplish right way:
- Determine what will be your new fiscal year-end. As your business is its own separate legal entity, it can choose any day of the year to define its reporting period, and is not limited to the calendar year, as with an un-incorporated business. Pick a date that is in your least busy time of year if possible, so that you can concentrate on gathering all documents needed for your accountant.
- Register for a business number with CRA. This can be done over the phone and your accountant can help you with this process.
- Set up your bookkeeping or filing system. This is the foundation of your business and needs to be organized and consistent throughout. The biggest advice I give my clients is if you will be outsourcing your bookkeeping to your accountant, you should ensure your documents are filed by month and by payment source. Keep all receipts paid from the bank in one folder, and all receipts paid from the visa card in another, etc.
A final note to consider is that your first year’s tax filing is due within 53 weeks of your date of incorporation, and eventhough businesses normally incur a loss in their first couple years of operations, you may not owe taxes as a result, but you could incur failure to file penalties for not meeting this deadline.
Please feel free to contact our office to discuss this topic further.
Florida Proulx, BBAA, CPA-CGA