Year End Matters
November 5, 2014 - 0
Businesses have year ends to contend with and taxes to pay, just as people do. We are all taxpayers. There are differences that need to be taken into consideration with regard to filing deadlines and requirements.
The year end for people, proprietorships and most partnerships is December 31. Proprietorships and partnerships need to close off their books for the year shortly after year end so that the net profit or loss can be added to the tax return of the owner or owners. In the case of partnerships, the net profit or loss is generally divided among the owners based on a calculation of each partner’s net income or loss in the business year. There are rules and exceptions to some of this when it comes to partnerships which we would be glad to review with you.
Many corporations have year ends at December 31 although they do not necessarily have to. Corporations enjoy the ability to select their yearend date in the early going to optimize their business finances when starting out. Once the year end is selected, it generally remains that date going forward. Changing the date after it is set requires permission from Canada Revenue Agency. We would be happy to discuss the selection of an optimal fiscal year end with you.
Here are a few things to check to make sure you are in compliance with Canada Revenue Agency’s reporting deadlines and requirements:
- All employers must issue T slips (T4s, T5s, T5018s, etc) and file copies with Canada Revenue by the end of February
- Most small business corporations have 2 months after its year end to pay any corporate income tax that is due
- On top of that, tax installments to CRA throughout the year may be required
- A corporation has 6 months after its year end to file its corporate income tax return keeping in mind the earlier deadline if taxes are owed
- Personal tax returns are due to be filed by April 30. Self employed persons have until June 15 to file although they must pay any tax due by April 30
- RRSP contributions made up to 2 months after a year end are usually deductible
- To make sure you don’t miss reporting some income or claiming all deductions look at our personal income tax checklist here
Taxation, especially at the business level, can be a real challenge. We can help. This is a big part of what we do. We welcome you to connect with us to review your tax situation, plan your strategy and assist with calculations and remittances.
For more information contact us