Economical Corporate Records Maintenance for Canadian Businesses

Yes, tax is withheld from Employment Insurance benefits before the money reaches you, but the amount held back is often less than you end up owing. It is worked out on the benefit alone and ignores the employment or self-employment income you earned in the rest of the year, so a balance is common at filing. You can ask Service Canada to withhold more. Report the full benefit on your T1.

Register with the CRA for a business number, which is the account identifier the agency uses for your business. You can apply online through Business Registration Online, by phone, or by mail, giving your legal name, business activity and, for a corporation, your incorporation details. Incorporating often triggers a business number automatically. You then add program accounts on top of it, such as GST/HST, payroll and corporate income tax, as each obligation begins.

Parliament writes federal tax law: the government proposes changes, usually in a budget, and the bill must pass the House of Commons and the Senate and receive Royal Assent. Each province and territory legislates its own income tax and sales tax, and municipalities set property tax. The Canada Revenue Agency does not make law; it administers and interprets it, and its published guidance does not bind the courts.

Two separate charges. The late-filing penalty is a percentage of the balance owing when you file after the deadline: 5% of that balance plus 1% for each full month late, to a maximum of 12 months. Interest is charged on any unpaid balance and on the penalty itself, compounded daily at the prescribed rate the CRA sets each quarter. Look up the current quarter's rate on the CRA's prescribed interest rates page.

Lottery and most gambling winnings, gifts and inheritances received, the Canada Child Benefit, the GST/HST credit, most life insurance death benefits, growth and withdrawals inside a TFSA, and child support is not taxable to the recipient where the order or written agreement falls under the current rules, though support under an older order can still be both taxable to the recipient and deductible to the payer, so confirm the date and terms of your order. Strike pay and most personal injury awards also sit outside income. Everything else is presumed taxable, including tips, side income and foreign income, whether or not a slip was issued for it.

Sign in to CRA My Account and open the tax returns section, where past returns, notices of assessment and slips are stored for several years and can be viewed or saved. For years that are no longer online, call the individual enquiries line or send a written request and the CRA will mail copies. Keep your own records six years from the end of the last tax year they relate to.

Request it from Ontario's Ministry of Finance through their online tax compliance verification service. You sign in, identify the business, and the system checks your provincial tax accounts; if everything is filed and paid, the number is issued immediately. If an account is in arrears or a return is outstanding, the request is refused until you fix it, so file and pay first. Sole proprietors and corporations both use the same service.

Reducing tax by using the rules is legal; hiding income is not. Legitimate planning means registered plans, deductions and credits you qualify for, sensible timing of income and capital gains, and a business structure that fits what you do. An arrangement whose main purpose is to defeat the tax rules can be undone under the general anti-avoidance rule, with interest and penalties. Not reporting income is evasion and carries prosecution risk.

Personal rate and bracket changes almost always apply from 1 January of the tax year, so 2026 rates apply to income earned in 2026 and show up on the return you file in 2027. Federal 2026 brackets start at 14%. Corporate changes can land mid-year: Ontario's small business rate is 3.2% and falls to 2.2% effective 1 July 2026, and a fiscal year straddling that date is prorated between the two rates.

Register through Business Registration Online, or by phone or mail, and the CRA issues the business number together with the program accounts you request: GST/HST, payroll, corporate income tax, or import-export. Incorporating federally usually generates the number automatically, so check whether you already have one before applying again. Open the GST/HST account before your first return is due and the payroll account before the first remittance, since deadlines run from the obligation, not the registration.

Yes. A resident corporation files a T2 for every tax year it exists, even with no revenue and no tax payable, and that filing is usually called a nil return. It is due six months after the fiscal year end. Skipping it invites penalties, holds up loss carry-forwards and leaves payroll, GST/HST and benefit accounts out of step. If the corporation is genuinely finished, dissolving it properly is cleaner than filing empty returns forever.

Start with complete expense claims: the business share of vehicle costs backed by a mileage log, home office space, supplies, subcontractors, insurance and professional fees. Business meals and entertainment are only partly deductible, and the restriction applies to the whole bill including tax and tip — record the full amount and apply the limit on the return. Register for GST/HST when the rules require it so input tax credits can be recovered on purchases. Then use RRSP room to level out a strong year, and look at incorporating once profits sit well above what you draw for living costs.