Edmonton Business For Sale | Strategic Tax Payments
Often, entrepreneurs believe that they can strategically plan how they file their corporate taxes, in order to help deal with their strained cash flow says Edmonton Business For Sale. The way they would do this, is by avoiding filing their tax return, and hopes to use the money that they were going to pay taxes, in generating more revenue for their business and filing later. Or, business owners donít have the money in order to pay their taxes, so they believe that by delaying their filing, they can come up with the money that they need to pay their taxes. This is not a great strategy, because the penalties for filing late are so extreme, that business owners who want to avoid them at all costs. Plus, there is literally no benefit to filing late at all.
The penalties that are associated with filing corporate taxes late, is 5% of the taxes that are owing, plus 1% interest per month. If a business owner happens to oh multiple years, for each of the years passed the first one that they owe, they get assessed a penalty of 10% of the taxes that they owe plus 2% interest per month. Not only can these amounts out of superfast, but business owners also get an additional interest slapped onto the outstanding taxes that they owe which is 6% a year in addition to the penalties. These are significant amounts of penalties that literally donít need to be paid. Simply by filing their taxes on time, business owners can avoid these penalties altogether says Edmonton Business For Sale.
Many business owners believe that they can save interest on the taxes that they owe by filing late, however this is owners start accruing interest on the taxes that they owe three months after their corporate year says Edmonton Businesses For Sale. This is three months before their corporate year-end is actually due, and is in interest charge of 1% a year, which is so small that business owners shouldnít have to worry about avoiding the interest that they would be willing to take the penalties of filing late a way to avoid the normal interest charges that are accrued. Business owners should look at it as saving a minimum of 5% for filing on time.
If business owners know that they have missed their filing deadline, they should approach CRA to admit to them that they made an error says Edmonton Business For Sale. The reason for this, is because if the business owner admits their mistake, before Canada revenue agency start sending them demand letters, business owners can often get the penalty fees waived. These penalties are what add up expenses. This is called voluntary disclosure, and can work significantly to reduce severe penalties for business owners. If business owners find themselves in a situation where they thought they could be smart and increase cash flow and then realized there mistake, or if they just honestly miss that deadline this strategy can work for them.
Thereís many reasons that an entrepreneur would run into cash flow problems says Edmonton Business For Sale. The statistic from industry Canada says that 50% of all entrepreneurs end up failing within five years. And that 29% of those entrepreneurs say that running out of money was the reason that their business failed. There are so many things that business owners need to be aware of in their business, that worrying about penalties that come from late tax filing shouldnít be one of them.
When it comes to tax filing, business owners have three different states to think about. Edmonton Business For Sale says they have to know when their personal tax deadline is to file, when their corporate tax deadline is the file and in addition to both of those, they also need to know when there GST is due.
Personal tax filing deadline is the same for almost every citizen in Canada across the board. Every one as the filing deadline of April 30. This is true unless a business owner or their spouse owns and unincorporated business. The deadline for the proprietors to file their personal taxes is June 15. Business owners can strategically use the fact that the threshold and what is considered a proprietorship is extremely low. If there is any money that a business owner made that was not to run through their own corporation, is able to be used as a threshold for an unincorporated business. There are several reasons why a business owner may have made additional money throughout the year no matter how insignificant says Edmonton Business For Sale. They may have babysits a friends child, water plants or got mail for someone who is out of town, mowed the lawn were sold the walk. Even if they made $50 throughout the entire year in additional fees that they did not invoice to their corporation, business owners can claim that this is a proprietorship, and then use that claim to be able to file a month and Ω later on June 15.
The other filing deadlines that business owners need to keep in mind, is when they are corporate taxes are due. Edmonton Businesses For Sale says that the corporate taxes are due six months after a businesses fiscal year end. Since business owners can choose their own fiscal year end, it can be any time the business owner has chosen. Business owners should keep in mind, that they start accruing interest on the taxes that they owe at three months. This interest is only 1% per year on the entire amount, so itís small, and the penalties that come with paying late are much higher, so business owners definitely needs to be able to file on time to avoid paying high penalties.
Edmonton Business For Sale says that the other deadline that business owners need to keep in their head, is when there GST is due. It may seem bizarre, but there GST is actually due three months after their corporate year end. That means that there GST is due before their corporate taxes are due, which can make it extremely hard to file their GST on time says Edmonton Businesses For Sale but business owners who are keeping track of the GST that theyíre collecting from their clients, should at least know how much they need to pay the government to avoid incurring penalties.