Bookkeeping Services for Small Business near Me

Income tax is tax charged on the income you earn in a year, levied by both the federal government and your province or territory. Rates are graduated, so successive slices of taxable income are taxed at higher rates, and credits such as the basic personal amount reduce the tax calculated. Employment income is taxed through payroll withholding and settled on your T1 return. Quebec residents also file a separate provincial return with Revenu Quebec.

A tax credit reduces the tax you owe, whereas a deduction reduces the income the tax is calculated on. Non-refundable credits, such as the basic personal amount or tuition, can bring tax down to nil but pay nothing beyond that. Refundable credits, such as the GST/HST credit, are paid out even when no tax is owing. Almost every credit is claimed on the return, so filing is what releases the money.

For personal income tax, your account number is your social insurance number. For a business it is the nine-digit business number plus the two-letter program identifier and four-digit reference, so corporation tax, GST/HST and payroll each have their own account. Select the matching payment type and the correct tax year or period as well: a payment posted to the wrong program or year leaves the balance you meant to clear still outstanding and still accruing interest.

No. GST/HST you collect is not revenue: you hold it on the CRA's behalf and remit it. Report sales net of the tax on your T2125 or corporate financial statements, and post the tax collected to a liability account rather than income. Including it overstates both revenue and profit. If you are not registered and charge no tax, gross sales are simply the amounts you billed your customers.

A write-off is an expense deducted from income so that tax applies to a smaller amount. It is not a refund of what you spent: the saving equals the expense multiplied by your marginal rate. Employees may deduct very little, while a business or self-employed person can deduct reasonable costs incurred to earn income, though categories such as meals and entertainment, vehicles and home office are restricted. Keep receipts, because the CRA can ask for them years later.

No. Insurance premiums are an exempt financial service, so no GST/HST appears on them and there is no input tax credit to claim. Provinces levy their own taxes on certain premiums, and Ontario applies retail sales tax to some group benefit and insurance premiums, which is why an invoice can still show a tax line. The premium itself stays deductible as a business expense where the coverage relates to earning income.

Because you remit the tax you charged customers, less the GST/HST you paid on business purchases. Tax you collect was never your money, so when collections exceed your input tax credits, the difference is payable. The usual reasons a bill feels large are missed input tax credits, receipts too thin to support a claim, the quick method applying to your sales, or the collected tax having been spent as working capital. Bank it separately.

Usually yes, if you are not registered. Non-resident digital suppliers such as ad networks and software subscriptions must register under CRA's digital economy rules and charge GST/HST to Canadian customers who are not registered themselves. If you give the platform a valid GST/HST number, it generally stops charging the tax and you account for it yourself where the rules require. Tax charged on genuine business purchases is normally recoverable as an input tax credit once you are registered.

It stays out of taxable income but often counts elsewhere. Amounts such as most lottery winnings and income earned inside a TFSA are not taxed at all. Some other receipts are exempt from tax yet still have to be reported, because the CRA uses net income and family net income to test benefits and credits. So an amount that costs you no tax can still reduce a benefit. Lenders and landlords apply their own definitions again.

A true operating lease is deducted as a current expense over the period it covers. An arrangement that is really a financed purchase is capitalised instead, and you claim capital cost allowance on the asset plus the interest portion of the payments. Passenger vehicle and some equipment leases face separate deduction limits. Accounting standards may put a lease on the balance sheet even where tax still treats it as rent, so the two figures differ. Check the CRA's business expense guidance.

All of it. No threshold lets cash go unreported: tips, side jobs, weekend work and cash sales are income the moment you earn them, and the CRA can reassess unreported amounts with penalties and interest. Keep a log of dates, amounts and payers, and deposit takings so records reconcile. Self-employed cash earnings go on Form T2125 with your T1 return; cash tips earned as an employee are employment income, not business income, and belong on the other-employment-income line of the T1 instead.

Students cannot deduct residence fees or apartment rent from income, and rent earns no federal credit. What a student can claim is tuition, the interest paid on an eligible government student loan, and moving costs in some situations. Where the province pays a rent-based benefit, Ontario and Manitoba among them, the rent goes on that provincial schedule instead. Filing a return with little or no income still preserves unused tuition amounts and keeps benefit payments flowing.