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Last updated: Feb. 8, 2017
More and More Canadians Operating Online Businesses
Canada is a country of small businesses. In fact, 97.9% of Canadian businesses have fewer than 100 employees.
Of the 1.16 million active businesses in Canada, micro-enterprises (one to four employees) make up 54.1% of all private employers—the largest group in the country.
Many of these small business owners work from the comfort of their homes and operate an online business, and for good reason.
The retail sector and the way people shop is undergoing a huge transformation:
- 82% of Canadians shop online
- 76% research products online before making a purchase
And they’re spending a lot of money. Canadians will spend $39.0 billion online by 2019; this will make up 9.5% of all retail purchases.
E-commerce is here to stay, and small online business owners need to adapt to make sure they can meet the challenges of the changing retail environment.
This also includes keeping up to date on the changing tax laws and regulations that apply to those who operate an e-commerce business.
Below are some top tips that will help you get organized as the deadline for your 2016 tax return is due.
1. Remember Tax Deadlines
Most Canadians need to file their personal tax return by April 30.
If you’re self-employed or own a small business, your tax return for 2016 has to be filed on or before June 15, 2017.
But, if you have a balance owning for 2016, it needs to be paid on or before the April 30 deadline (May 1 this year due to April 30 being a Sunday). If the tax return is not filed by June 15, interest and penalties may apply.
2. Keep Your Bookkeeping Up to Date
Keep your books up to date.
This gives a clear indication of your business’s income and expenses. Also, make sure the information is correct. Failing to do so could lead to penalties or an audit.
3. Understand Requirements for Sales Tax
When selling products or services online, you need to comply with all provincial and territorial rules.
Even though you don’t have a physical address in other provinces or territories, you need to be aware of different tax rules for selling to customers in different regions.
For example, different parts of Canada have different regulation for e-commerce, online sales contracts, and terms or conditions of a sale.
With regards to sales tax, if you’re selling out-of-province, you need to know how and when to charge different sales taxes (GST, HST, PST).
If you sell goods and services to customers outside of Canada, you are not required to collect GST/HST or PST if it is delivered outside of Canada.
If an international customer makes a purchase in your province or territory, they do need to pay the GST/HST and PST.
4. Be Aware of Tax Deductions
If you run an online business there are a large number of tax deductions you need to be aware of.
Some of the more popular tax deductions you may qualify for include home office, depreciation on capital assets (CCA), and business expenses.
5. Hire a Consultant
Most Canadian small business owners would rather concentrate on operating their business than pouring over receipts and preparing their taxes.
Hire a professional tax expert with experience in tax planning, tax preparation, bookkeeping, and dealing with Revenue Canada. This allows you to focus on building your business and earning income and not spending time keeping up to date on the Income Tax Act and rulings.
FBC, Helping Online Business Owners Prepare Their Taxes
If you run an online business and are looking for tax experts that understand your specific business needs, the tax specialists at FBC can help.
As Canada’s largest and most experienced tax consulting firm for small businesses, FBC has worked exclusively with Canadian small business and agribusiness owners since 1952.
Thanks to our comprehensive understanding of Canadian e-commerce, small business, and agribusiness tax law, we can help you minimize your income tax and maximize your available tax credits. To help you concentrate on running your business, our tax specialist will also come to your office or home.
For more information on how an FBC tax consultant can help your online business, farm, or small business prepare and file your annual income taxes, call us today at 1-800-265-1002, or submit an online form and an FBC tax specialist will contact you at your earliest convenience.
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