Small Business Tax Preparation [Free Checklists]

Last updated: Feb. 4, 2024 

Tax season can be a daunting time for small business owners in Canada. Being well-prepared for tax time is important, as obligations to the Canada Revenue Agency (CRA) and tax laws can be complex.

Here we provide you with a comprehensive, printable small business tax preparation checklist that lists all the documents you need to file your return, and tax write-offs you shouldn’t miss out on. From organizing your documents to identifying tax write-offs and deductions, we’ve got you covered.

Before you begin, download a printable checklist for your 2023 tax return here: 

Step 1: Gather Your Documents

Before diving into the tax preparation process, it’s essential to gather all the necessary documents. This includes financial records, invoices, receipts, bank statements, and any other relevant paperwork. By having everything in one place, you’ll save time and ensure accuracy when filing your taxes.

Business Records

• Deposit slips
• Bank statements
• Business credit card statements
• Business income records
• Sales invoices
• Receipts
• Bank deposit slips
• Fee statements
• Contracts
• Loan Agreements and year-end balances statements
• Detailed year-end inventory listing
• Receipts on capital purchases or sales in 2022

If you have employees and/or subcontractors

• T4SUM: Summary of Remuneration Paid
• Worker’s compensation payments or benefits
• Payroll, source deductions and taxable benefits for employees
• If you make payments to subcontractors (construction only)
• T5018: Statement of Contract Payments

Tax slips, correspondence and receipts

• 2022 Tax Return(s)
  • T1, T2125
• 2022 Notice(s) of Assessment
• CRA correspondence received throughout the year
• Instalment payments made for income tax, GST/HST/PST and payroll
• T4: Statement of remuneration paid
• T4A: Pension, retirement, annuity, and other income
• If you’re in a partnership, also include:
  • T5013: Partnership information return

If you have an incorporated business, also include

• T2: Incorporation income tax return for 2022
• Shareholder transactions and dividends
• T2 Financial Statements
• T5SUM: Return of Investment Income
• Articles of Incorporation
• Annual Registry Return

For more information on your obligations, refer to our Ultimate Guide for Incorporated Small Business in Canada.

Investment information

• RRSP contribution slips
• T3 slips
• T5 slips
• TFSA Transactions
• T5008 Statement of Security Transactions
• Stock purchases and sales invoices

Personal receipts (T1 only)

• Receipts for eligible medical expenses
• Receipts for charitable donations
• Tuition or educational expenses
• Interest paid on student loans
• Childcare expenses
• Moving expenses

Step 2: Understand Your Tax Obligations

As a small business owner, it’s crucial to understand your tax obligations. Learn about the various tax forms you must fill out, like T2125 for sole proprietors and T2 with schedules for corporations. Additionally, be aware of important and specific requirements for your industry.

The tax filing deadline for the 2023 tax year for self-employed individuals and their spouses or common-law partners is June 15, 2024. If you owe taxes, you must pay by April 30, 2024. To ensure you’re compliant, we always recommend filing and paying by April 30, 2024.

If your business in incorporated, your filing deadline is six months following your fiscal year-end. For example, if your year-end is December 31, 2023, you must file your T2 Return by June 30, 2024.

NEW: Canada’s government has made changes to the T3 filing rules, affecting most private trusts. New filing rules apply for tax years ending after December 30, 2023. Read our latest blog to understand the changes and ensure compliance.

Step 3: Identify Small Business Tax Write-Offs

One of the key benefits of tax preparation is maximizing your deductions. Take the time to identify potential tax write-offs that apply to your business. These may include expenses related to home office space, equipment, vehicle usage, professional services, and more. Keeping detailed records throughout the year will help you identify these deductions accurately.

List of Small Business Tax Write-Offs

• Advertising
• Bad debts
• Business taxes, licenses, and memberships
• Business insurance premiums
• Charitable donations
• Delivery, freight and express costs
• Depreciation expenses (Capital Cost Allowance)
• Interest and bank charges
• Legal and accounting fees
• Meals and entertainment
• Motor vehicle expenses
• License and registration fees
• Fuel and oil costs
• Insurance
• Interest on money borrowed to buy your vehicle
• Maintenance and repairs
• Leasing costs
• Parking fees (business only)
• Office expenses, stationery, and supplies
• Payment Processing Fees
• Property leasing costs and taxes
• Repairs and maintenance
• Salaries, wages, and benefits incurred by you as an employer
• Gross salary amount paid to employees
• Employer paid CPP and EI contributions
• Employer paid premiums for sickness or disability insurance
• Telephone and utilities
• Travel expenses
• Utilities

Work-From-Home Expenses

• Business use of home expenses
• Cleaning materials
• Electricity
• Heating
• Home insurance
• Mortgage interest
• Property taxes
• Portion of rent paid

Step 4: Leverage Tax Credits

In addition to write-offs, small businesses can leverage various tax credits to reduce their tax liability. Familiarize yourself with the credits specific to your industry, such as research and development credits or job creation tax credits. Consult with a tax specialist if needed to ensure you’re taking full advantage of available tax credits.

Step 5: Seek Assistance from a Small Business Tax Specialist

People will tell you that you can do your small business taxes alone or with the help of online software. However, the right tax specialist can do more than prepare and file your taxes.

You need a tax specialist who will be your long-term partner in business. Your tax specialist should offer a variety of services, pay full attention to you and your business, and provide accurate tax advice for today and for your long-term plan.

Besides filing your returns, your tax provider should be the one you turn to when you’re thinking about a major financial decision and want to know the tax implications before you jump in. They should be able to point you in the right direction when it comes to the financial health of your business. And they should always return your emails and phone calls throughout the year, not just at tax time, and without sending you a bill each time you talk.

Remember, being prepared, staying informed and seeking assistance when needed will help you through a smoother and less stressful tax season.

Free Guide: Tax Strategies Owner’s Manual for Small Business Owners

We know you’re dreading it, but it’s got to be done – and with a little preparation, you can fulfill your tax obligations without any stress. Our comprehensive tax strategies toolkit will help you get organized for tax time.

Learn what information and key documents you need to prepare so you’re ready for the tax filing deadline. There’s even a printable checklist that lists all the documents you’ll need as a business owner, and tax write offs you shouldn’t miss out on. Get the prep out of the way so you can get back to running your business.

 

About FBC

With more than 70 years of Canadian tax experience, we offer unlimited tax support, consulting and audit representation for Canadian business owners. For one flat fee. Our tax experts will run the numbers to create an optimized tax return that helps minimize headaches and maximize your tax savings.

Leave your unique tax situation to us. We’ll get you every dollar you deserve. Book online or call us at 1-800-265-1002.