Small Business Tax Tips Checklist

February 10, 2025

Checklists & Templates

Small Business Tax Tips Checklist

Running a small business comes with unique tax responsibilities and opportunities. Use this checklist to ensure you’re taking advantage of all available deductions and staying compliant with the Canada Revenue Agency (CRA).

1. Keep Accurate Records

Track Income and Expenses: Use accounting software or hire a bookkeeper to maintain organized records.
Save Receipts: Keep digital or physical copies of all receipts for business expenses.
Separate Personal and Business Finances: Use a dedicated business bank account and credit card.

2. Claim All Eligible Business Expenses

Home Office Expenses: Deduct a portion of rent, utilities, internet, and maintenance costs if you work from home.
Office Supplies: Pens, paper, printer ink, and other supplies used for business purposes.
Travel Expenses: Airfare, lodging, meals, and transportation for business-related travel.
Vehicle Expenses: Deduct mileage, gas, repairs, and maintenance for business use of your vehicle (keep a detailed log).
Advertising and Marketing: Costs for promoting your business (e.g., website, social media ads).
Professional Fees: Fees paid to accountants, lawyers, or consultants for business purposes.

3. Take Advantage of Small Business Deductions

Small Business Deduction (SBD): Reduce your corporate tax rate on the first $500,000 of active business income.
Capital Cost Allowance (CCA): Deduct the depreciation of business assets (e.g., equipment, vehicles, furniture).
Meals and Entertainment: Deduct 50% of the cost of meals and entertainment for business purposes.
Bad Debts: Write off unpaid invoices that are deemed uncollectible.

4. Pay Yourself Efficiently

Salary vs. Dividends: Decide whether to pay yourself a salary (deductible for the business) or dividends (taxed at a lower rate).
RRSP Contributions: Contribute to a Registered Retirement Savings Plan (RRSP) to reduce your personal taxable income.

5. Manage Payroll and Remittances

Register for a Payroll Account: If you have employees, register with the CRA and remit payroll deductions (CPP, EI, and income tax) on time.
Issue T4 Slips: Provide T4 slips to employees by the end of February each year.

6. Plan for GST/HST

Register for GST/HST: If your business earns over $30,000 in a year, you must register for and collect GST/HST.
Claim Input Tax Credits (ITCs): Recover GST/HST paid on business expenses.
File GST/HST Returns: File returns annually, quarterly, or monthly, depending on your revenue.

7. Maximize Retirement and Savings Plans

Individual Pension Plan (IPP): Set up a pension plan for yourself as a business owner.
Tax-Free Savings Account (TFSA): Contribute to a TFSA for personal savings (contributions are not tax-deductible, but earnings are tax-free).

8. Stay Compliant with CRA Deadlines

File T2 Corporate Tax Returns: Due within six months of your fiscal year-end.
Pay Installments: If you owe more than $3,000 in taxes, the CRA may require quarterly installments.
Issue T4A Slips: If you pay contractors or freelancers, issue T4A slips by the end of February.

9. Plan for Tax Savings

Income Splitting: Pay dividends to family members in lower tax brackets (ensure compliance with CRA’s Tax on Split Income rules).
Defer Income: If possible, defer income to the next tax year to reduce your current year’s taxable income.
Accelerate Expenses: Prepay expenses or make purchases before year-end to increase deductions.

10. Seek Professional Advice

Hire an Accountant: Work with a professional to ensure compliance and maximize tax savings.
Stay Informed: Keep up with changes to tax laws and CRA regulations.

Pro Tip:

Use accounting software like QuickBooks, Xero, or Wave to streamline bookkeeping and ensure accurate records. Regularly review your financial statements to identify opportunities for tax savings.

Need Help?

At Jass Accounting and Tax Services, we specialize in helping small businesses navigate the complexities of Canadian tax rules. Contact us today for personalized advice and support to grow your business while minimizing your tax burden.