CORPORATE TAX PREPARATION COURSE: A GUIDE FOR CANADIAN BUSINESSES

Tax season can be a stressful time for businesses, but it doesn’t have to be. Businesses can expedite their tax filing process and avoid expensive mistakes or fines with careful planning and preparation. Knowing the crucial phases in corporate tax preparation is crucial for your financial well-being and compliance, regardless of how big or small your business is.

Understand Your Obligations through Corporate Tax Preparation Courses

The first step in business tax preparation is understanding your obligations. Depending on your business structure, size, and location, your tax requirements may vary. Common corporate taxes include:

Corporate Income Tax

It is a CITR (Corporate Income Tax Return), mandatory for all resident corporations in Canada, that has to be filed every year, even if there is no taxable income.

Not-for-profits, tax-exempt corporations, and inactive corporations are resident corporations in Canada. Tax-exempt corporations, Hutterite colonies, and registered charities need not file their T2 return—i.e. a Corporate Income Tax Return.

Most corporations are allowed to file their returns online. There are eligibility criteria for all non-corporations to file their return. All non-corporations must fulfill these criteria. Remember, the CRA—Canada Revenue Agency—requires two returns for corporations.

T2 Corporation Income Tax Return and T2 Short Return. A T2 CITR is a nine-page return for corporations. T2 Short return is a two-page return with a schedule. These are the two corporation returns CRA has.

A corporate tax course online equips you with knowledge about many more things. The list includes but is not limited only to the following:

• Corporate tax laws and references for federal, provincial, and territorial ridings.
• Federal, provincial, and territorial corporate tax rates.
• Federal tax credits, record keeping, referencing techniques, and dividends.
• Corporate tax payments, reassessments, transfer pricing, and foreign spin-offs.
• Filing procedures and software use.
• Notes related to deductions and credits.
• The best practices to deal with audits.
• Tips for tax savings. 

Everyone with a knack for working with numbers needs to understand all of these tax factions and key information points. 

Employment Taxes

The federal government of Canada considers employees a vital part of strategies devised for the nation’s financial growth. For this reason, all businesses in Canada are obliged to pay multiple employment taxes. Corporations must pay these taxes at federal and provincial/territorial levels. These employment taxes need to be considered:

• Social Security.
• CPP—i.e. Canada Pension Plan.
• Employment Insurance.
• EHT—i.e. Employer Health Tax.

Those who enroll in a corporate tax course online know about all these employment taxes in detail. The most important thing they know is the value of employment taxes in Canada’s overall growth.

Sales Tax

Understanding the sales tax system in Canada is a VERY complex thing. This system works differently from one province/territory to another. Listed below are sales taxes applicable in Canada for corporations/businesses:

• GST—Goods and Services Tax—is a consumption tax businesses collect from consumers of their products.
• HST—Harmonized Sales Tax—is a combination of federal GST and provincial sales tax.
• PST—Provincial Sales Tax—is a tax certain Canadian provinces collect from consumers within their jurisdiction.

A corporate taxation course details the entire sales tax system in Canada. You learn the way these sales taxes and the system works in every Canadian province. 

Excise Tax

Excise tax is a tax imposed on goods imported and exported. This tax is payable under two different circumstances listed below:

• First, when goods manufactured in Canada are delivered to the buyer. Excise duty is collected from the buyer as part of the product/service price.
• Second, when goods manufactured in other countries are imported to Canada. The product importer pays the excise tax.

Excise taxes are often charged on the following:

• Fuel-inefficient vehicles.
• Select petroleum products.
• Air conditioners installed in automobiles.

Excise duties are charged on Cannabis, spirits, tobacco, vaping, and wine products.

All these goods are taxed based on excise tax rates determined by the excise tax rates. All excise taxes levied are a part of the Excise Act 2001.

Therefore, those who enroll in a corporate tax course online learn about excise taxes and duties in detail. They learn about several things related to these concepts, including:

• Excise Tax Act 2001.
• All the taxes imposed under the Excise Tax Act on insurance premiums. 
• ATSC is collected under the Air Travellers Security Charge Act.
• Excise taxes and other levies notices.
• Excise taxes and other levies memoranda.
• Excise taxes and other levies forms.
• Excise tax rates.
• Rates of excise tax on fuel-inefficient vehicles.
• ATSC rates.
• Questions and Answers – Air Travellers Security Charge (ATSC).
• Ruling or interpretation request.
• Excise duty rates.
• Excise duty on cannabis products.
• Excise duty on vaping products.
• Excise duty notices.
• Excise duty memoranda.
• Excise duty circulars.
• Excise duty forms.

This is not the end of the list.

The Art of Financial Recordkeeping

Systematic financial recordkeeping is of the utmost importance for a business. Financial recordkeeping is a way to maintain and prove business health systematically. Tracking transactions and everything else becomes a cakewalk.

Financial recordkeeping is the art of organizing accounting and financial documents. It summarises all your corporate transactions. The process of financial recordkeeping includes the following documents to support your business transactions:

• Ledgers, journals, books, charts, and tables.
• Financial statements, account statements, and income tax returns.
• GST returns, HST returns, and excise tax returns.
• Sales invoices, purchase receipts, and vouchers.
• Contracts, guarantees, bank deposit slips, and bank statements.
• Canceled cheques, Cash register slips, and credit card receipts.
• Work orders, delivery slips, and working papers.
• Logbooks, emails, and all correspondence required to support your business transactions.

Who has to Maintain Financial Recordkeeping?

All corporate entities involved in the following activities must maintain financial record-keeping in Canada. There are a lot of records too, including…

• Businesses that are eligible for filing corporate income tax returns.
• A group of professionals engaged in commercial activities.
• Organizations responsible for paying or collecting taxes or the following amounts:
• Payroll deductions.
• Softwood lumber products export charge.
• Organizations are eligible to file GST and HST returns.
• Organizations that apply for GST, HST refunds, or rebates.
• The organization provides payroll services and financial recordkeeping services.
• Trusts, non-profit organizations, and universities, colleges.
• Municipal corporations, hospitals, and school authorities.
• Political parties’ registered agents.
• Candidates’ official agents during federal elections.
• Registered charities and Canadian amateur athletic associations.
• Registered housing corporations resident in Canada that are exempt from tax under ITA (Income Tax Act) Part 1 due to paragraph 149 (1)(i).
• Registered municipalities, municipal, or public bodies that perform government functions in Canada.
• Registered universities outside Canada—i.e. student bodies that include Canadian students, plus charitable organizations outside Canada receive a gift from His Majesty in Right of Canada.

The Value of Financial Recordkeeping

Systematic recordkeeping adds value to a business in several ways, including…

• Helping manage financial records like corporate income statements, balance sheets, cash flow statements, and payroll records.
• Maintaining compliance with federal and provincial corporate tax laws in Canada become easy.
• Controls of cash flow.
• Preparation of financial statements becomes easy.
• Tax efficiency, tax law obligations, and tracking business growth.
• Effective financial planning for business growth becomes easy.
• Effective tracking of deductible business transactions becomes easy. 
• Avoiding tax penalties becomes easy.
• Helps make effective decisions.
• Maintaining organized records becomes easy.
• Hassle-free tax returns.
• Hassle-free fraud prevention.
• Preparing an accurate corporate income tax return becomes easy.

Your business will reap all these benefits once you master financial record-keeping skills. A corporate taxation course online can help you master the financial record organization skills mentioned below:

Income Statements

The organization of income tax statements for corporate tax is compulsory for businesses. An income tax statement is also known as a Profit and Loss, otherwise known as P&L or Earning Statements. It shows an organization’s revenue, business expenses, and profit over a certain period. It is a core component of a business’s financial statements, balance sheets, cash flow statements, and payroll records.

Picking up a reporting period, trial balance report generation, revenue calculation, gross margin calculation, income calculation, net income calculation, and the inclusion of operating expenses, income taxes, and cost of goods sold is essential for organizing an income statement. These are the things a corporate taxation course teaches you to help you organize the income statements of your business.

Balance Sheets

A balance sheet is also one of the most important financial documents of a business. It reveals the following:

• Assets of a corporation/business.
• Liabilities of a business.
• Shareholders’ equity.

It is used for the following key ratios of a business:

• Current ratio.
• Debt-to-total assets ratio.
• Debt-to-equity ratio.

All this becomes possible with a course. Enrollment in the best corporate tax course online in Canada makes it possible. You learn to gather financial information, classify total assets and liabilities, equity share calculation, and balance sheet balances to organize balance sheets.

Cash Flow Statements

This financial document helps track the money that comes into and goes out of your company over a certain period. It shows every single financial change in the cash flow of your business. It shows three different types of cash in-flow and outflow related to the following operating, investing, and financing activities. To explain further…

Operating Activities

The list of operating activities includes cash collected from customers, cash paid to suppliers, taxes, wages, rent, and utilities.

Equipment purchases, proceeds from equipment sale, and the cost of building acquisition are called investing activities.

Financing Activities

The process of obtaining a term loan, term loan repayment, and receiving share proceeds is called financing activities.

The statement includes every change in cash inflow and outflow because of operating, investing, and financing activities. Dividends and prepaid taxes are also included in cash flow statements.

You can ensure all this only if you are familiar with the direct and indirect methods used to prepare it. This is an important thing you learn only through the best corporate tax preparation courses online in Canada.

Payroll Records

The CRA requires all companies, businesses, and organizations to maintain full payroll records of every professional they employ. The CRA wants payroll record management for at least six years from the end of the last tax year they relate to. Effective, systematic, and regular payroll record management makes it easy for employers to prepare and file income tax returns with Federal and provincial government agencies. Employers are expected to keep all sorts of records. The list includes but is not limited to…

• Personal information of employees.
• Information related to employment.
• Tax documents.
• Documents pay rates.
• Tax deductions.
• Hours worked.
• Benefit contributions.
• Records of paid and unpaid leaves.
• Reimbursement forms.
• Pay records.
• DTI—Direct Deposit Information.
• Operating expenses.
• Employee benefits.
• Depreciation.

All this can help maximize dedication credits, operating expenses, employee benefits, depreciation, and R&D credits. But how? The best corporate tax preparation courses online in Canada answer this question effectively.

This is Where We can Help

An important thing every corporate taxation course teaches students about is the difference between corporate tax deductions and corporate tax credits.

Your level and quality of knowledge about these two concepts help maximize deductions and credits for your business.

• Corporate Tax Deductions

It is the amount businesses subtract from their total income. It reduces the taxable income of your company.

• Corporate Tax Credits

Tax credits reduce the amount of tax a company pays on taxable income. They include both non-refundable AND refundable tax credits.

A corporate taxation course is the best way to learn in detail about it. The course can teach you about several more things. Some key topics covered include…

• How To Maximize Deductions and Credits

Many things can help reduce taxable income including some items students do not often know about:

• Advertising, bad debt, delivery, insurance, and travel.
• Office expenses, prepaid expenses, property taxes, rent, and supplies.
• Business startup costs, business tax fees, and licenses and dues.
• Capital cost allowance, freight and express, and fuel cost (except for automobiles).
• Interest and bank charges, fee penalties, or bonuses paid for a loan.
• Fees are deductible over five years, and fees are deductible in years incurred.
• Interest deductible on the workplace that is no longer used commercially.
• Interest on loans made against insurance policies and capitalization of interests.
• Interest related to the workplace in your residence.
• legal, accounting, and other types of professional fees.
• Maintenance and repairs, and management and administration fees.
• Meals and entertainment, salaries, wages and benefits, and telephone and utilities.

• Operating Expenses

The Canadian corporate taxation system allows business owners to deduct travel expenses they incur to operate their business while they are away from home. This includes…

• Prepaid expenses and accounting and legal fees.
• Advertising expenses, business tax, fees, licenses, and dues.
• Insurance expenses, interest, and bank charges.
• Maintenance and repairs, and meals and entertainment.
• Office expenses and salaries, including employer contributions.
• Business start-up costs and motor vehicle expenses.

•  Employee Benefits

An employer needs to understand that some employee benefits are tax deductible, whereas some are not. Employee benefits like group life insurance and provincial health plans could be tax deductible in initial cost and the cost of the employer’s contribution.

Employee benefits like employment insurance, retirement compensation arrangement, deferred profit sharing, registered pension plan, dental plan, and short/long-term disability are tax deductible only in the initial cost.

What is more important is complete knowledge related to some tax basics and the list of deductions. CPP (Canadian Pension Plan), EI (Employment Insurance Premiums), and income tax for every pay period are an essential part of this list of basic tax deductions.  This is an important thing every corporate tax course online guides about.

 Depreciation

Tax depreciation is a part of corporate income tax. Every online corporate tax course in Canada focuses specifically on this concept. It is a depreciation expense a taxpayer claims. A taxpayer claims it on a tax return to compensate for the loss of tangible assets’ financial value. We are talking about the loss of financial value of assets businesses use to generate income. The courses teach you about the assets eligible for depreciation, asset depreciation classes, asset depreciation calculation strategies, and a lot more to lower the taxable income of your business.

• Research and Development [R&D] Credits

The concept of R&D credits in the Canadian corporate income tax system is important for business. It helps businesses in the following ways to undertake research activities in so many ways…

• It reduces the taxable income of your business.
• It provides investment credits. 
• It reduces corporate tax liabilities.
• It increases the economic growth of a business.
• It increases job creation opportunities.
• It helps attract global investments for business growth.
• Your business maintains competitiveness with global economies.

R&D tax credits are available to corporations in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, Saskatchewan, and in the Yukon Territory for corporations that meet the eligibility criteria. The facility is not available in the Northwest Territories, Nunavut, and the province of Prince Edward Island. A corporate taxation course is the easiest way to learn about it in detail.

How Businesses stay Compliant with Deadlines?

Staying compliant with corporate income tax deadlines is mandatory for businesses in Canada. Businesses that don’t abide by the deadlines face penalties and other legal consequences. All businesses in this part of the world must manage multiple important corporate tax obligations throughout the year. The management involves a focus…

• Quarterly Estimated Tax Payments

Quarterly estimated tax payments are an important part of your corporate income tax payments system in Canada. Its due dates depend on the corporate tax year and the way you pay your corporate income tax installments—i.e. monthly or quarterly.

A strong Canadian corporate tax course of choice will educate you about all the concepts related to it. For example:

• How to pay corporate income tax quarterly instead of monthly.
• Due dates of installments.
• Balance due dates.
• Timely payment processes.
• Interest and penalties.

Learn about it to reduce your business’s taxable income.

• Submission Of Estimated Taxes

Businesses that expect to owe over $3,000 in taxes for the current fiscal year must submit quarterly payments of their estimated corporate income taxes. Paying installments before deadlines is a must to avoid penalties and legal consequences. Learning about the best payment calculation strategies based on the current estimated year, prior-year-tax, and two-year average method, filing deadlines, and payment deadlines is important for you through enrollment in one of the best corporate taxation courses in Canada.

Regular Payroll Tax Deposits

The CRA expects businesses with employees to deduct and remit payroll taxes regularly. The list of such payroll taxes includes the following:

• Income tax.
• CPP.
• EI.

The frequency of payroll tax deposits is monthly, quarterly, and accelerated.

The Canadian Revenue Agency closely monitors all payroll deposits. Non-compliance leads to interests, penalties, audits, and additional fines. This is something you will learn about through a corporate taxation course in Canada.

Accurate payment calculation, timely corporate income tax return filing, not missing the payment and filing deadlines, regular and accurate recordkeeping, seeking tax accounting services, using corporate taxation software, having a CRA My Business Account, regular deductions, the use of CRA Payroll Deductions Online Calculator, use of payroll software, corporate tax calendar creation, payment automation, professional corporate tax consulting services, and regular review of notices from CRA helps businesses in Canada stay complainant with the Canadian corporate income tax system.

It’s a lot to know but all of it valuable. Enroll in a corporate taxation course online offered by the BITTS International Career College. We cover all of this material and more. Hurry—grab your spot before someone else grabs it!