You took that first step and incorporated your start up but what comes next? The various tax terminologies out there and not knowing where to start can be over-whelming. Once again stressing on our favorite line, not starting out right in the initial stages can lead to future compliance issues with the tax-man. This post summarizes various obligations a company may have given the model and the type of business.
Sales Tax
If you sell a good or provide a service that is taxable and make over $30,000 in revenues worldwide, you are mandated to register the company for GST/HST. Once registered you must charge the applicable sales tax rate on all sales. In addition, if you carry on business in a non-participating province (i.e. Quebec, Saskatchewan, Manitoba or British Columbia) you maybe also be required to register for provincial sales tax. Once registered, mark your calendar for all the filing and remitting due dates. Your company will be assigned an annual, quarterly or a monthly filing frequency based on the amount of revenue. You may very well also be on two different schedules with the Federal and the Provincial Government.
Payroll
Your company is growing, so you’ve planned to hire employees. Now that comes with more tax obligations starting with registering for a payroll account. CRA requires the employer to withhold Canada Pension Plan (CPP), Employee Insurance (EI) and Income Tax from the employees’ salaries and remit it to the government. In addition to withholding from the employees’ salaries, the company is also required to contribute towards the employees’ CPP and EI and remit the amounts to the government. Similar to sales tax, you should also note down remitting due dates that varies for each company depending on the amount of remittance. By the 28th of February each year, all companies must pay all outstanding remittances from the previous year and file T-slips as applicable; this may include T4, T4A, T5, etc. In addition, depending on the industry you operate in you may also be required to register and pay for WSIB. Provincial health tax laws are also something that needs to be considered based on the province.
Corporate Income Tax
Lastly, when your company’s fiscal year has ended, you are required to file and pay corporate income tax. Depending on the CCPC status, the company has two or three months to comply. Numerous tax planning opportunities can be taken advantage of to reduce the overall tax burden. Companies are subject to tax laws differently based on their operations and facts. Consult an expert before making these decisions to ensure compliance and to save on tax dollars.
