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Common Questions Small Business Tax Accountants Answer

Small business owners can confront financial penalties from the CRA, like other businesses, if they don’t file taxes timely. Small business tax accountants can help small business owners file taxes on time. Many small businesses hire tax accountants for the same reason besides tax planning. However, small businesses have questions in their minds about filing taxes and tax-related matters. Hence, tax accountants have to answer those questions to help small businesses understand tax-related concerns. Here are the common questions that small business owners often ask tax accountants:

Q1. Can My Business Structure Affect the Way to File Taxes?

A1. Business legal structure will determine how small business owners must file tax returns. Here is how:

  1. A sole proprietor will need to file personal and business taxes on the same tax return.
  2. Incorporate businesses will need to manage a business and personal income separately. They will need to file a corporate and personal tax return. 

Q2. Why Do I Need to Have a Business Number?

A2. You need a business number to establish employees’ payroll, HST or GST registration, import/export, and file a corporate tax return. 

Q3. Is It Mandatory for Me to Have a GST/HST Number?

A3. It’s mandatory to register if you provide taxable property and services in Canada. Additionally, a GST number will allow you to claim your input tax credits. 

Q4. How Much Tax Will I Need to Pay as per My Income?

A4. Taxes you will need to pay as per your income are derived from a tax rate of 3.2% as lower to 11.5% as a higher tax rate. Nonetheless, the income tax rate can vary with time in Canada. Hence, you must know the current tax rate for the tax season when you file your small business taxes.   

Q5. Can I Mention Mortgage as an Expense If I Work from Home?

A5. If you do most of your business from home, you can indicate an interest portion of your mortgage as an expense. Plus, the amount is contingent on how much square footage your designated workspace takes up within your home.   

Q6. How Much Business Mileage Should I Claim?

A6. Maintaining a log will help you record the exact distances you travel. Avoid using flat rates as relying on generalities will deny your claims.    

Q7. Will I Need Receipts to File Taxes?

A7. It’s important to keep receipts to file taxes showing your expenses and contributing to your business income generation. Otherwise, they won’t do any good for you.  

Moreover, filing taxes isn’t easy for small businesses due to complexities. Hence, small businesses should hire tax accountants to file taxes on time in the tax season and avoid penalties from the CRA.

Conclusion

Small business tax accountants can help small business owners file taxes on time. Small businesses also have questions in their minds about filing taxes and tax-related matters. Here are the common questions that small business owners have for tax accountants:

Q1. Can My Business Structure Affect the Way to File Taxes?

Q2. Why Do I Need to Have a Business Number?

Q3. Is It Mandatory for Me to Have a GST/HST Number?

Q4. How Much Tax Will I Need to Pay as per My Income?

Q5. Can I Mention Mortgage as an Expense If I Work from Home?

Q6. How Much Business Mileage Should I Claim?

Q7. Will I Need Receipts to File Taxes?

About the Author:-Sohail Afzal is a CMA (Certified Management Accountant) and the Founding Partner of a professional accounting firm, GTA Accounting. He understands the needs of small-scale businesses & corporations and offers them tax advice to overcome their tax burdens. He is a professional author who often writes articles related to accounting.

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