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I need some clarifications about the rules/laws of canadian sole proprietorship business tax filing… please...?

Question: I need some clarifications about the rules/laws of canadian sole proprietorship business tax filing… please…?

(Posted by: canadamanaaaa on 2009-05-04 00:33:59)

I started a Canadian sole proprietorship business about 13 months ago but only made $5500 in the first year. Do I still need to file my taxes for the company this year? I thought I could just keep track of that income and add it to next year’s revenue and tax filing. I also heard a couple years ago that a small business company does not need to file taxes for the first 3 years or something because the government assumes that you probably won’t turn a major profit in your first year or two. Is that true? Any clarifications to all this would be greatly appreciated.


Answers:

Posted by: quizzard123 on 2009-05-04, 08:16:05

No, you need to file tax returns every single year. You cannot carry forward income, although you can carry forward losses. You will occasionally see individual provinces offering tax holidays for new business, but even in those cases, you have to file a return, and in any event you still have to pay federal taxes. If you’re this unclear on the process, I strongly suggest you speak with a qualified accountant. Mistakes can be very costly.

  

Posted by: Sparky on 2009-05-04, 19:11:17

You should file an income tax return, even if you have no profit. If your net business income after expenses is greater than $3,500, you are required to pay into the Canada Pension Plan, even if you don’t have to pay income tax. Also, if you have a loss (your expenses outweigh your income in a given year), file the return so that the CRA knows about it. The loss can then be claimed against taxable income in any of the future 20 years.

  

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