Skip to content

A Simple Guide to File Small Business Taxes in 2021

affordable income tax service

Whether you run a small business or own an MNC, all businesses are required to pay taxes. However, the tax policy differs for each business sector. Some small businesses are supported by governments, while others have to pay huge sums of money to operate smoothly. Whatever the business type is, if you run a business, you should be familiar with corporate taxes.

There are various types and sizes of business organizations. Some are set up and run from the home office whereas some have specific locations or buildings for proper operations. Therefore, each business has a different model to follow. Some hire in-house professionals while others outsource expertise. In the case of tax filing, all businesses should seek professional income tax return services.

Before handing over all the tax work to your experts, you should gather all your financial data, bank statements and receipts to effectively evaluate your tax deductions. For that reason, it is of utmost importance to hire an experienced accountant to regularly maintain your books.  Otherwise, tax preparation will cost you time and money.

Here is a simple guide to preparing for small business taxes in 2021.

  • Gather all business account statements
  • Hire professional accountants
  • Calculate your tax deductions
  • Prepare before time

Gather all business account statements:

Before starting with your tax preparations, you should collect all your accounting and financial data. If you use an accounting program to manage all your business accounts, it would not be a hassle to do so. But if you do not use accounting software for business management, you should collect all bank statements, credit card receipts, bills and complete account details.

Again, hiring a full-time bookkeeper or an online accounting firm to manage your business accounts will make your tax filing process much easier. You will have a record of everything in one place and only you will have to check up with last year’s tax returns.

Hire professional accountants:

Getting an expert opinion is always the best choice. Many small businesses in Canada try to manage their business accounts themselves. But takes a lot of time and effort to prepare for the best tax plans beneficial for the business. Therefore, hiring an accounting expert to handle your personal and corporate taxes will make things easy and organized for you.

Experienced accountants or accounting firms will collaborate with their team of tax experts to prepare the most suitable and the most feasible tax plans for your business. Tax policies are continuously evolving with time. It is nearly impossible to spare extra time keeping update with the new tax laws and regulations. Also, if there is any mistake, it might cost you hundreds of dollars. Therefore, hiring an accounting firm to effectively manage your business accounts and taxes is a valid option.

Calculate your tax deductions:

The Canadian government is updating tax laws according to the current economic condition. This might benefit some businesses to enjoy tax deductions. Thus, if you keep monitoring such changes, you can prepare for the best tax deductions.

Furthermore, your hired accounting firm will also guide you on the prevailing market conditions. They will surely file your taxes on time with a complete deduction plan. It is also important to contribute some amount to local charities as well, as this money spent can be counted for a tax deduction. Similarly, small business owners should separate their personal and corporate bank accounts. Separating your household spending and business expenditures will greatly impact your overall earnings and taxes. Vehicle and office expenditures should be recorded properly in the ledger or online accounting system to avail of the best tax plans.

Prepare before time:

Meeting deadlines is the most important. Tax preparations should be conducted according to annual or quarterly taxes. If you have to hire a part-time tax expert to assist you in your corporate tax filing, you should start hiring before time. Otherwise, you can easily consult any affordable income tax service in Canada to prepare your taxes on time. Tax planning takes time. So, it is better to start the tax preparations and gather financial data before the last date.

Tax season is extremely stressful. To pay your taxes on time, you should be aware of your tax deadline or hire an expert to handle the entire process professionally. This will reduce your tension and make the tax filing process easy and successful.