Before you had a child, you worked tirelessly at a corporate job to make ends meet. After bringing your baby home, you decided to ditch the commute and the 9-to-5 to start a home-based business. Now you make your living from the comfort of your own home and have more time to care for your family and capture precious milestones, like the little one’s first steps. You’ve got the skills to parent your small business towards success, but do you know how to get the most from your income tax and benefit return?
Big life events, like getting married and having a baby, are often followed by an outpouring of gifts from family and friends (bonus!). Unfortunately, this doesn’t happen when you start your own business. You have probably spent a lot on advertising, supplies, and a new website. The good news is that you might be able to deduct these costs and any other reasonable expenses you paid to earn business income, leaving more money in your pocket to reinvest in your business.
After baby goes down for a nap, you retreat to your home office to tackle bookkeeping, prepare orders for shipping, and check your emails. If you use part of your home as your primary place of business or to meet clients on a regular basis, you may also be able to deduct part of your maintenance costs such as heat, home insurance, electricity, cleaning materials, and more. You may even be able to deduct some of your rent or mortgage interest. To learn more about running a business from your home, go to cra.gc.ca/smallbusiness, click “Income taxes,” then “Expenses.” You can also read the Canada Revenue Agency’s Income Tax Folio S4-F2-C2, Business Use of Home Expenses.
Registering for a GST/HST account
Not sure if you need a goods and services tax/harmonized sales tax (GST/HST) account? Go to cra.gc.ca/gsthst and click “Register for a GST/HST account” to see if you need to register for one. Even if you don’t have to, you might benefit from a GST/HST account. It lets you claim input tax credits on the GST/HST paid on your business expenses. Revenu Québec
manages the GST/QST in Quebec, so if your business is there, go to revenuquebec.ca.
Child and family benefits
But don’t let your savings end there! Make sure your family has applied for the Canada child benefit, a tax-free, monthly payment made to eligible families to relieve the costs of raising children under the age of 18. You can apply by selecting “Apply for child benefits” in My Account at cra.gc.ca/myaccount or by filling out and submitting Form RC66, Canada Child Benefits Application. You may also be eligible to receive the goods and services tax/harmonized sales tax (GST/HST) credit, a tax-free payment paid out four times a year that helps offset the GST or HST that you pay. For more information on these and other benefits that may be available to you, go to cra.gc.ca/benefits. To check the status of your benefit application, or your next payment date and amount, you can use the MyCRA or the MyBenefits CRA mobile apps at cra.gc.ca/mobileapps.
After you apply for these child and family benefits, you have to file your income tax and benefit return every year to keep getting these benefit payments, even if you have no income for a year. If you have a spouse or common-law partner, they also have to file a return every year.
Completing your tax return
The legislated deadline for most Canadians to file their income tax and benefit return is April 30. Since that date is a Sunday in 2017, the CRA will consider your return as filed on time and your payment to be made if the CRA receives your submission or it is postmarked no later than May 1. Self-employed individuals and their spouses or common-law partners have until June 15 to file their returns. However, if those persons have a balance owing to the CRA, that amount is due no later than May 1.
When it’s time to file your return, don’t risk your reputation and your business by intentionally underreporting your income. If you get caught evading tax, you may face fines, penalties, or even jail time. It’s not worth the risk. Don’t participate in the underground economy. For more information, go to cra.gc.ca/undergroundeconomy.
As a full-time boss and parent, there just aren’t enough hours in the day. Take advantage of NETFILE to file your tax return and free up your schedule
for some me time. Filing online with NETFILE-certified software is easy, secure, and helps the CRA process your return much faster. If you’re entitled to a refund, you can enjoy your money in as little as eight business days by combining online filing with direct deposit. Learn more at cra.gc.ca/directdeposit. For a list of software and web applications, even some that are free, go to netfile.gc.ca/software.
If you have tax owing, or have to pay tax by instalment, take advantage of pre-authorized debit to set up your payments in advance. To learn more about your payment options, go to cra.gc.ca/payments.
CRA mobile apps
You might count on a mobile app to track your baby’s sleep and feeding schedule, but how about receiving friendly reminders of your tax deadlines? You won’t miss an important date again with the CRA Business Tax Reminders app, free on Apple iOS, Google Android, and BlackBerry mobile platforms. You can create reminders and alerts for instalment payments, returns, and other tax-related business matters, so you won’t get burned by penalties and interest. With all these services available online (and on your mobile!), it’s easy to stay on top of your tax affairs year-round. Go to your app store and download the app!
You can also stay up to date by receiving your notice of assessment online! Register for online mail through the CRA’s My Account or My Business Account service available at cra.gc.ca/login.
The CRA has webpages for small businesses with examples of tax scenarios that may apply to your situation. For everything you need to know about reporting your income and expenses and registering for GST/HST and payroll accounts, go to cra.gc.ca/smallbusiness. The CRA also has a series of videos for small businesses at cra.gc.ca/videogallery. If you’ve gone through the website and still need help, you can call 1-800-959-5525 to speak with a CRA agent.