Taxes, Tax Planning and Recordkeeping

The three levels of government in Canada (federal, provincial, and municipal) have distinct responsibilities and taxing authority. Unless you are a tax expert, sorting through tax regulations can be confusing and time consuming. We recommend that you consult a professional accountant. One way of finding a good accountant is by asking other small business owners for recommendations.

A professional accountant can do the following:

1. Make sure your business is set up to meet all tax regulations and requirements
2. Make sure you are claiming all eligible tax deductions and expenses
3. Help you set up a simple, effective recordkeeping system for tax purposes
4. Serve as your agent in negotiations with Revenue Canada
5. Save you time, so that you can focus on the income-generating aspects of your business

Taxes on Sole Proprietorships and Partnerships

Sole proprietorships and partnerships can deduct the same expenses from taxable income as corporations can. These expenses must relate to the generation of business income. However, your business income, or share of the business income, in a partnership, is taxed personally.

You must pay quarterly tax installments based on either an estimate of your tax payable for the year or on the tax paid the previous year. For more information, to obtain tax guides, or to open an installment account, contact Revenue Canada.