Know the Tax Rules
Know when you have to pay your taxes.
Although businesses don’t have to file their official paperwork for taxes (and GST owing) until June 15, 2010, you need to have a rough idea of the amount owing for both GST and taxes and pay it by the end of April or you’ll have to pay interest.
Know what is taxable income.
The amount you need to use to calculate how much tax you owe is your adjusted gross income less eligible deductions and exemptions. For companies, a rough guide is to deduct costs and expenses from gross (total) sales. Capital losses (deductible), bad debt (deductible), and capital gains (taxable, but not in the same way as income) can complicate things, as can debt-for-investing or business interest (deductible).
Know how to declare barters.
Treat bartered goods or services at the cash value they have, as if you offered these items to a stranger. You’re also responsible for collecting and remitting any GST that would apply to a cash sale of that amount.
Know what you can deduct.
Interest on loans is deductible if the debt is used for the purpose of business and investing. But, be careful, as you must keep “regular debt” separate from deductible debt. If you're self-employed in a home-based business, you might be able to deduct a portion of your mortgage interest (for example, you can deduct 10% of your mortgage interest if 10% of your home is your home office and main place of business). You can find more detailed information on business expenses at the Canada Revenue Agency website.
Know when to use an accountant.
If you're not sure how to calculate and file your business taxes, you should enlist the help of a professional to make sure it's done right. After all, accounting expenses are tax deductible. To find a good accountant, you can contact the Certified General Accountants (CGA) Association of B.C.
About The Author
This article was authored by a member of the Small Business BC team. When you find yourself asking "How do I...?" Give us a call. We'd be happy to help.
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