Ads
keep this website free for you. TaxTips.ca does
not research or endorse any product or service appearing in
ads on this site.
Before making a major financial decision you
should consult a qualified professional.
The type of income tax returns you have to file will depend on whether your
business is incorporated. If you have an incorporated
business, you must complete a corporate (T2) tax return for the business, and
you must also complete a separate personal (T1) tax return.
If your business is incorporated,
the business losses (non-capital
losses) cannot be used to reduce income on your personal tax
return. However, the non-capital losses of the corporation can be carried back, or
carried forward to apply against corporate income in other years.
See non-capital
losses for information on carry-back and carry-forward
periods.
If your
business is not incorporated, then you only have to file a personal (T1) tax
return. The income or loss from the business (proprietorship or
partnership) will
be included on your personal tax return. With your personal
tax return, you will have to file a "statement of business activities" which includes an income
statement for your business. If you have a loss from your business, and
you have other income such as employment or investment income, then the
business losses will reduce the other income on your tax return. If you
have business losses which exceed your other income in the current year, this non-capital
loss can be carried back, or carried forward to apply against
income in other years.
It can be very beneficial to
seek the help of an accountant (CPA) to set up your record-keeping
when you first start your small business. After that,
even if you are able to do your own bookkeeping and tax returns, having them
reviewed by your accountant/tax advisor can often save
you money and avoid problems.
Unless you are trained in
preparing corporate tax returns and are up to date on current tax laws, a T2
corporate tax return should always be prepared or reviewed by a professional
accountant.
When using our detailed Tax
Calculators, your net business income or loss should be entered as
self-employment income.
Tax Tip: Get professional
help with your business income tax!
Facebook
| Twitter
| See What’s New, stay
connected with TaxTips.ca by RSS or Email
The information on this site is not intended to be a
substitute for professional advice. Each person's situation differs, and
a professional advisor can assist you in using the information on this web
site to your best advantage.
Please see our legal
disclaimer regarding the use of information on our site, and our Privacy
Policy regarding information that may be collected from visitors to our
site.