6 Important things to know about corporate tax planning in Alberta for 2023

Corporate tax planning involves understanding and utilizing the various tax laws and regulations to minimize tax liability.

Planning ahead for taxes also means keeping an eye on new provisions that could benefit your business while monitoring the tax rules and regulations as they can change. To make sure that your company is utilising the tax breaks available, it’s crucial to consult with a tax expert.

Here are some important things to know about corporate tax planning in Alberta:

1. Corporate income tax rate

Federal and provincial corporate income taxes are levied against corporations in Alberta. Currently, Alberta’s corporate income tax is 8%, compared to the federal rate of 15% .An Alberta business would pay the federal corporate tax rate of 15% on their taxable income, in addition to the provincial corporate income tax rate of 8% which was implemented by the recent Job Creation Tax Cut policy. So, the total corporate income tax rate for an Alberta business would be 23%. It’s important to note that Alberta business may also qualify for additional tax credit and deductions, which could lower their overall effective tax rate. This indicates that Alberta’s business income tax rate is 23% when federal and provincial taxes are combined. Corporations may also be subject to other taxes, such as payroll taxes and sales taxes.

2. Capital gains

Canada taxes capital gains at a lower rate than it taxes other types of income. Currently, the federal capital gains tax rate is equal to 50% of the standard federal corporate income tax rate, which makes the federal capital gains tax rate 7.5%. The provincial capital gains tax rate varies from province to province – it is currently 6% in Alberta.

As a result, Alberta’s combined federal and provincial capital gains tax rate is 13.5%.

Remember – the capital gain is only reflected in the taxable income to the extent of 50%. Thus, only $50,000 of a corporation’s $100,000 capital gain is taxed.

3. Scientific Research and Experimental Development (SR&ED) tax credit

SR&ED is a federal tax incentive program that promotes research and development (R&D). For businesses that engage in SR&ED, the programme offers tax credits as tax incentives.

Businesses in Alberta can claim a refundable SR&ED tax credit of up to 20% of qualifying SR&ED costs. This means that a corporation doing SR&ED may claim a refundable tax credit equal to 20% of the qualified expenses it incurred. If the credit is greater than the taxes owed, the excess goes back to the corporation. The credit can be utilized to lower the corporation’s tax obligations.

A variety of R&D activities, such as basic research, applied research, and experimental development, are supported by the SR&ED programme. Wages, supplies, and some overhead costs are examples of eligible expenses.

All corporations, regardless of size or industry, are eligible for the programme. However, the borrowing rate may differ for small business corporations and private corporations under Canadian management (CCPC).

Important note – this credit cannot be transferred and can only be used by the entity that paid the qualifying costs.

4. Investment Tax Credit (ITC)

Businesses in Alberta can claim a 10% non-refundable Investment Tax Credit (ITC) on specific qualified capital assets. This means that a corporation may claim a non-refundable tax credit equal to 10% of the costs it incurred to purchase particular categories of qualifying capital property. The credit has the potential to lower the corporation’s tax obligations. Any unused portion of the credit, however, cannot be given back to the company.

The following types of capital assets are eligible for this credit:

machinery and equipment for manufacturing and processing
Equipment for experimental development and scientific research
Hardware and software for computers
construction projects and leasehold upgrades pertaining to manufacturing and processing
Clean energy technology

5. Keep good records

To ensure compliance with tax rules and regulations, businesses should maintain reliable records of all financial transactions.

Some tips that we share with our clients include:

Keep any original invoices and receipts for expenses that you intend to deduct from your income.
Sort your records according to tax years and save them securely.
Keep thorough records of all business-related mileage, travel, entertainment, and donation costs
The cost of the property, the date of acquisition, and any improvements done to the property should all be noted in any capital cost allowance (CCA) claims you submit.
Keep track of all costs associated with running your home office, such as the cost of heating, energy, and insurance, as well as the space used for business.

6. Be aware of the deadlines

Deadlines may change over time, and it’s always best to check with the Canada Revenue Agency or a tax professional to confirm the most recent deadlines.

Corporation Income Tax: A corporate income tax return must be filed no later than six months following the conclusion of the corporation’s tax year. A corporation with a December 31 year-end, for instance, would have until June 30 of the following year to file its tax return.
GST/HST: If your corporation is registered for GST/HST, you have one month from the end of the reporting period to file your GST/HST return. Depending on the GST/HST remittance choices made by your corporation, the reporting period may be monthly, quarterly, or annual.
Payroll deductions: If your firm employs people, the 15th of the month after the pay period is the deadline for submitting payroll deductions to the Canada Revenue Agency (CRA), such as income tax, CPP payments, and employment insurance premiums.
Payments in installments: Your firm may be compelled to make payments in installments to the CRA throughout the year if there is a balance owed on its tax return. The 3rd, 6th, 9th, and 12th months of the corporation’s fiscal year each have a 15-day payment due date.
Tax Filing Extension: Your firm may request a tax filing extension if it is unable to submit its tax return by the due date. However, it must be requested prior to the initial filing deadline, and any unpaid taxes must be paid on or before the deadline.

Tax laws and regulations are subject to change and it’s crucial to stay up to date with any changes. Additionally, it is important to work with a professional tax advisor like the team at Liu & Associates to ensure that your corporate tax planning is in compliance with the laws and regulations and to identify potential tax savings.

Contact our corporate tax planning team today to get started.

When To Consider Corporate Restructuring

Corporate restructuring is a great opportunity to examine your business models and create a plan that will facilitate growth and optimize your business for the long term.

Corporate restructuring is a process that significantly modifies the financial and operational aspects of a company.

While this action is typically taken when a company is facing financial hardships, a company doesn’t have to be in distress to benefit from a restructuring plan.

A corporate restructure even when your business is successful can have major benefits!

Overall, corporate restructuring is done to modify a company’s operation, structure, or debt to limit financial harm or facilitate growth.

What Does Corporate Restructuring Involve?

During a corporate restructuring, the operations, departments, processes, or even ownership may change. However, this can enable a business to become more integrated and profitable.

The results of a corporate restructuring vary according to how the business operates and the reasons for making a change.

It could result in changes to procedures, networks, locations, and computer systems. It’s possible that jobs may be eliminated or employees laid off.

Corporate restructuring is a long and detailed process as both the internal and external structures of a business are altered and adjusted.

Once completed, however, business operations will become smoother and more economically sound putting the company in a better position to attain its goals.

4 Reasons Why You Should Consider Corporate Restructuring For Your Business:

Corporate structuring should not be undertaken lighting. To give you an idea of when it is necessary, here are some situations in which you should consider corporate restructuring:

1. Your Business is Expanding or Refocusing

The business world is dynamic and there’s no predicting when external factors can negatively impact a business or inspire it to change.

Changing the way a business operates through a corporate restructuring can help the business adapt to change.

For instance, the COVID-19 pandemic enforced the need for better telecommunication, improved working systems, revised employee policies, and the accommodation of remote working.

Many companies sought corporate restructuring to ensure that their business continued to thrive during this time.

Likewise, an expansion of a business requires a certain degree of reorganization. As a business grows, it may require setting up new departments, appointing new management, and developing different leadership styles – all of which can be achieved through corporate restructuring.

2. New Shareholders Are Being Brought In

When new shareholders are brought into your business, a company restructuring is necessary to ensure you retain total control of your business.

Restructuring can help you manage the way that dividends are allocated as well as protect your capital contribution to the company.

During the restructuring, you may want to consider issuing different classes to new investors so that voting rights are tailored in a way so that important decisions remain with you.

3. The Company is Becoming Publicly Traded

Companies can become publicly traded through two channels: IPO and Direct Listings.

During the IPO process, new shares of the company are brought to market by an investment bank. Direct listings involve employees selling their shares directly to the general public with no involvement from an investment bank.

Becoming a publicly-traded company is exciting but you don’t want to get too caught up in that excitement.

Instead, it’s important to consider how a corporate restructuring in this situation can help you optimize your stock decisions as you make a successful entrance into the public market.

4. Your Business is Under Corporate Financial Distress

Corporate restructuring can also be beneficial when your company is experiencing financial distress.

Seeking expert advice can help save your company when faced with the following challenges:

Poor Competitiveness
Stagnated Growth
Significant Revenue Drop
Shortage of Cash-Flow
Poor Management
Untethered Expenses
Dependence on Debt
Inefficient Business Structure
Diminishing Customer Base
Decline in Sales

When you can recognize the signs that your business is heading toward financial hardship, you can act quickly and implement a business restructuring that will allow you to restrategize and regain profitability.

Professional Corporate Restructuring Services

Restructuring an entire company is no easy task. However, our experts at Liu & Associates can help you create a customized path to help your business evolve and succeed.

By going over your current financial structure, our team can help you determine the best course of action, whether you are looking to downsize or expand.

Our corporate restructuring service includes changing legal ownership of a company, switching corporate tax structures, strengthening capital structures, and more!

Let us take care of planning and implementing your corporate restructuring plan.

Get in touch with our experienced and knowledgeable team for more information or book an appointment to get started today.

The Connection Between Corporate Finances and Individual Finances

They say that you should never mix business with pleasure – but when it comes to finances, the two are connected in a number of ways.

Because of the connection between corporate finances and individual finances, it’s important to understand that, while you can approach both in very similar ways, it’s not always a good idea to allow the two to mix.

Before we talk about how to keep your corporate and individual finances separate, let’s first look at their similarities and differences:

Similarities Between Corporate Finances and Individual Finances

The similarities between corporate finances and individual finances all come down to money management. No matter the amount sitting in your accounts, how you handle it determines your overall financial success!

Discipline

When it comes to managing finances, both corporate and individual, discipline is important. In order to be successful, you need to focus on spending only when necessary.

If you’re running a company, it can be tempting to spend on unnecessary assets but you need to limit your spending to expenses that are pertinent to running and growing your business.

For personal finances, it’s important to curb spending in order to build up savings.

Investment

Whether you are looking to expand your business or your bank account, you need to make investments in order to grow your funds. In your personal life, this could mean purchasing a home. In business, investing could involve hiring new staff or purchasing new equipment.

Budgeting

Both personal and business finances require budgeting. This involves laying out how much money comes in versus how much goes out and seeing what is left over.

Budgeting takes time and effort – even more so for businesses and companies. In order to effectively budget, you need to involve formal documentation such as income statements and balance statements.

Overall, budgeting requires you to set a spending limit and stick to it so you can achieve your financial goals over time.

Differences Between Corporate Finances and Individual Finances

It’s great that you can approach both corporate finances and individual finances in the same way when it comes to budgeting and investment, but there are some ways that business finances are handled that can be detrimental to an individual.

Temptation

We talked about how corporate finances and individual finances both involve a degree of discipline but one notable difference between the two is that managing personal finances comes with significantly more temptations.

Business finances tend to be more impersonal and purchases are made in the best interest of growth and success.

However, individuals tend to struggle with the temptation to make unwise or extravagant purchases.

Corporate financial decisions are usually made more rationally than personal financial decisions

Collaboration

When a business makes financial decisions, it usually comes as the result of collaborating with staff members, co-owners, financial offers, and accountants. This is to ensure that spending solutions make sense for the company.

Individuals, however, are often not required to confer with family members or any other person to make financial choices.

Leverage

One benefit corporate finances have over individual finances is the use of leverage. Businesses can use leverage as an investment strategy and borrow money to invest in the company’s future.

When done right, leverage is a practice that can help support small businesses by accessing capital in order to expand.

Using leverage when it comes to individual finances is extremely risky and result in devastating losses such as losing your car or your home.

Keeping Corporate and Individual Finances Separate

Even though there are similarities between corporate and individual finances, it’s important to keep them separate.

It’s important to remember that a corporation is an independent entity that should be free-standing from your personal finances.

Here are some reasons why you should keep your corporate and individual finances separate:

Leverage: As we mentioned above, leverage can be highly beneficial for a company but potentially devastating for an individual.
Taxes: You can take advantage of tax deductions and write off business expenses when you keep your business finances separate from your personal finances.
Business Credit: Obtaining working capital for your business and business credit is key to securing larger business loans.
Professional Image: Keeping your company and personal finances separate makes you look like a serious business owner and not just someone who monetized a hobby.
Time and Money: When you keep your corporate finances separate, you can utilize the skills of a professional accountant to streamline your financial process, save you time, and save you money.

How to Keep Your Corporate Finances and Your Individual Finances Apart

When it comes to corporate and individual finances, the “how” is probably just as important as the “why”.

Here are some tips for keeping your finances apart:

Hire an Accountant: A Certified Personal Accountant (CPA) can ensure your company’s bookkeeping is done properly and that your finances remain separated.
Open Separate Accounts: Creating individual accounts for yourself and your business will help you distinguish between your finances.
Business Credit Card: A business credit will allow you to make company-related purchases without using your personal card. It will also help you build credit for your business.
Separate Your Receipts: Ensure that your business receipts and your personal receipts are organized and stored separately so you can easily access them without confusing the two.
Structure Your Business: Establish a legal structure for your business in order to disentangle your personal finances from your business finances.
Pay Yourself: Instead of randomly pulling money from your business to take care of your personal finances, pay yourself a salary to help your company stay on budget.

Let’s Grow Your Business!

Our expert team of accountants at Liu & Associates is proud to offer you the accounting services you need to grow your business and achieve success!

From taxes to bookkeeping, we have you covered! Check out our Corporate Accounting Services or contact us for more information.

Changing Corporate Accountants: How to Start

What do you do if you want to change your corporate accountant but feel stuck with your current one because they have been with you for so long?

While you may be fiercely loyal to your current accountant, you should focus on putting your company’s needs first!

Switching accountants is not an overly complicated process. In fact, most of the steps are taken by your new accounting firm and regulations ensure that file and information transfers are done efficiently.

In this article, we’re going to outline those steps and show you how easy it is!

But because we don’t recommend changing your corporate accountant on a whim, let’s start with some reasons why it could be time for a change:

Reasons to Change Accountants

It’s important that you don’t simply change your corporate accountant on a whim. Here are some main reasons why business owners may seek accounting help elsewhere:

They Aren’t Available

It can be frustrating if you can’t reach your accountant when necessary. In order to make informed business decisions, you need to be able to communicate with your accountant in a timely manner.

They’re Not Easy to Talk To

Even if you can get in touch with your accountant when needed, they may be difficult to communicate with.

Between accounting jargon you don’t understand to feeling like you are not understood, it may be time to change corporate accountants if you find your current ones are not approachable.

They Don’t Understand Your Business

Unless an accountant is industry-specific, they may lack the necessary knowledge to fully understand what you need.

While many accounts are not industry-specific and can perform amazingly, you may consider switching if your current firm doesn’t “get it” when it comes to your business needs.

They Are Not Proactive

The reason you’ve hired an accounting firm for your business needs is that you don’t have the time or know-how to do it yourself.

But if your accountants aren’t being proactive and offering better services or even reminders, it may be time to choose a firm that will offer you guidance throughout the year.

They Don’t Keep Up With Technology

When it comes to running a business, technology is key to being more productive and efficient. An accounting firm that embraces technology can better serve your business needs.

You’re Paying Too Much For Their Services

Especially if they are not meeting your expectations! When you pay for accounting services, you want to make sure you are receiving value and understanding.

It’s All About Timing

Now that you have a better understanding of why you should change corporate accountants, it’s important not to jump ship right away!

Switching accountants should happen during times where your business is experiencing little to no financial activity. This could be during a slow period or even after your year-end tax return has been filed.

The last thing you want is to have files transferred between the old and new accountants during times of high financial activity. Waiting until the right time will help to reduce the stress of switching between accountants.

You’ll also want to tie up any loose ends such as ensuring that any pending payments and transactions are complete. This way, you can avoid disputes over unpaid fees that can get in the way of a smooth transition to the new accountant.

Steps to Changing Corporate Accountants

1. Notify Your Current Accountant

It’s important that you notify your current accountant as soon as possible that you are switching to a new firm. They may be willing to correct the issues you have with their services and prevent the hassle of switching to a new accountant.

However, if you cannot be swayed, it’s important to notify your current firm and end the relationship on good terms. This will help facilitate an efficient transition.

Your new accountant can help you notify your current accountant by drafting a letter of notice.

2. Have Your Files Sent to the New Accountant

By law, your current accountant must turn over your company’s files to the new firm of your choosing.

This begins with a letter of disengagement that requires your previous accountant to provide all relevant information to the new accountant.

Your new accountant will also send your previous accountant a professional clearance letter so that they can accept all necessary files and information during the transition.

3. Confirm That the Files Have Been Transferred

It’s important that you confirm with your new accounting firm that all files have been transferred by your previous accountant.

If not, you can file a complaint with your former firm’s regulatory board if an amicable file transfer is denied.

4. Approve Your New Accountant

The last step in this process is to assign authority to your new accountant. This allows them to perform tax duties on your behalf, such as filing returns.

This step also includes changing the passwords to your relevant accounts so that your former accountant no longer has access.

Questions to Ask a New Accountant

Of course, before you switch to a new accounting firm, you’ll want to make sure you are choosing an accountant that will meet your company’s needs.

Here are some questions you can ask to ensure that they are the right fit:

Who do you normally work with?
What services do you offer?
What do you specialize in?
How do you charge for your services?
What is your response time?
What is your turnaround time?
What technology do you use?
How do you communicate with your clients? (Phone, email, Skype, etc.)
How often do you communicate with your clients?
Are you a Chartered Accountant or part of an association?

Plus, asking these questions beforehand holds them accountable for their answers!

Ready for a Change?

If you’re thinking about leaving your current accounting firm, this information will give you a better understanding of how it works so that you can make your decision with confidence!

At Liu & Associates, our goal is to provide companies with expert accounting services that offer the support you need as well as help you maximize your business’s finances.

If you’re ready for a change, get in touch with us today!

The Benefits of Hiring a Small Business Accountant (Instead of Doing It Yourself)

Have you reached a point with your small business where handling your finances is becoming difficult and stressful?

When you’re passionate about what you are doing, starting a business is easy. Running it, however, involves many moving parts.

And if you don’t have the experience or know-how, the challenge can quickly turn to frustration and even negatively affect your small business’s performance.

So what do you do? The short answer is to hire an accountant who can manage all the financial aspects of your small business.

There are many benefits to hiring an accountant and there are a variety of financial responsibilities they can manage on your behalf.

Keep reading to learn more about these benefits and what an accountant can do for your small business:

Should You Hire an Accountant or a Bookkeeper?

Before we get into the benefits of hiring an accountant for your small business, let’s look at the difference between an accountant and a bookkeeper.

Simply put, an accountant can be a bookkeeper but a bookkeeper cannot be an accountant.

Bookkeepers are able to generate data about the activities of your business through handling day-to-day financial tasks such as recording financial transactions and purchases, managing receipts and tracking sales and payments.

They can provide you with financial insights based on the data collected through bookkeeping.

Accountants, on the other hand, use high-level processes to take that data collected through bookkeeping and produce financial models and projections. They also prepare financial statements, analyze the cost of operations and prepare complex tax returns.

They can also take an advisory role by guiding you through important financial decisions.

You may feel that your small business doesn’t require that level of support in the early stages but, don’t forget, when you hire an accountant you are getting a bookkeeper as well!

Hiring an accountant to focus on bookkeeping tasks is a great way to establish a relationship with someone who has a vested interest in your finances. Once your business starts to grow, you’ll have them by your side helping you through major decisions.

The Benefits of Hiring an Accountant

Before you attempt to handle your small business’s finances all on your own, consider these six benefits to hiring an accountant:

Create a Business Plan

Whether your small business is already off the ground or you’re looking to get it started, an accountant can be beneficial during the early stages by helping you create an effective business plan.

Business plans are crucial when it comes to opening up access to essential finances in order to get your business started or to help your business grow.

An accountant can help you by ensuring all of the necessary financial details are included in the document.

Organize Your Finances

Once your business is up and running, you need to keep a very close eye on your accounts and make sure everything is in order. This is where having an accountant comes in handy.

Your accountant can help to maintain and organize your business accounts year-round, making it easier for you to understand the financial health of your business throughout the year.

An accountant will help you establish a system for organizing receipts and invoices as well as other important financial documentation your business handles.

Record Your Revenues

When your small business provides goods and services to customers and clients, you’re only going to make money if they are invoiced. If you have difficulty keeping track of invoices and payments, an accountant can help you out.

An accountant will ensure that invoices are sent to customers on time and keep track of the payments that are made. They can also keep track of outstanding invoices and missing payments.

In order to make sure you are consistently earning revenue through your business, it’s helpful to have an accountant assist with the billing and invoicing.

Help You Save Money

Yes, hiring an accountant is an added expense but by having your finances properly organized, you’ll end up saving money!

The monthly reports drawn up by your accountant will help you get a clearer picture of where your money is going. This way, you can see where you are overspending and where you can cut back spending.

Having an accountant will help you better understand your overall spending patterns and habits, allowing you to better strategize your business’s finances.

Do Your Taxes

Filing business taxes is nothing like filing personal taxes – and you want to make sure they are done properly to avoid an audit.

You also want to make sure you are maximizing your return by claiming everything you are eligible to claim. For these reasons, it’s best to have an accountant handle your business taxes.

Plus, should you face a random audit, all your paperwork and receipts will be well-organized, making the process quick and painless.

Save You Time

Lastly, you should consider the fact that running a small business is a huge endeavor. There are enough hours in the day to manage every aspect of your business.

Instead of trying to figure out how to deal with your business’s finances on your own, and wasting time doing so, you can hire an accountant to take care of it for you.

They are educated, experienced and able to streamline the process of caring for your business’s financial health.

With an accountant on board, you can shift your focus and energy to growing a successful small business!

We’re Not Just Number Crunchers!

Hopefully, you have a better understanding of exactly how an accountant can benefit your small business and help you save not only money but time as well.

If you’re ready to take your business to the next level, our accountants are ready to help! Liu & Associates is a full-service accounting practice that offers financial services for your small business.

Let’s get in touch today!

How An Accountant Can Help With Strategic Business Planning

Do you know where your business is heading?

Every business needs a strategy in order to reach their goals.

However, without the proper eyes to oversee the myriad of data involved in growth and development, that path can become confusing and impossible to navigate.

That’s why our professional accountants at Liu & Associates want to help you with strategic business planning.

Keep reading to find out what strategic business planning is and how an accountant can help you achieve your company’s goals:

What is Strategic Business Planning?

Strategic business planning focuses on identifying long-term business objectives and ranking them by importance.

This can be a complex process and involves gathering information, analyzing data and conducting assessments of available business resources.

The point of this entire process is to ensure that a company continues to develop financially and socially.

When it comes to strategic business planning, the goal is to identify and improve the framework, goals and direction of a company by considering its marketing capabilities, technological advantages and available resources.

This creates a foundation in order to develop actionable plans and solutions in order for the company to achieve its ultimate goals.

The entire process can be a huge undertaking, which is why having an accountant aid in strategic business planning can be highly beneficial.

How Can an Accountant Help with Strategic Business Planning?

Accountants do so much more than simply organize money and finances.

Highly trained accountants, such as our team at Liu & Associates, are capable of creating an accounting system that checks, supports and lays out a business’s strategic management goals.

They are also able to adapt to change, meaning that they can accommodate new regulations that can affect your business as well as develop new strategies should your business need to head in a new direction.

Being able to factor in all these considerations means that a company can make better and informed decisions on how to save and spend their money.

Accountants can also help businesses create a strategic business plan by:

Setting Profitability Goals. Business decisions cannot be left to chance, especially regarding financial performance. Accountants can collect the right type of data and analyze it so that business owners can make better long-term profitability goals.
Creating Acquisition Strategies. Accountants can help develop acquisition strategies in order for businesses to cut costs, consolidate and make beneficial business purchases.
Supporting Risk Management and Control. Accountants can help companies monitor the status and health of their business activities by quantifying risk management objectives to make them relevant and measurable.

Regardless of what you are planning, our practitioners will make sure it makes sense from a financial point of view.

The best strategy is one that is clearly laid out and easy for your company to follow.

Strategic Business Planning Services

Strategic business planning can cover any number of things, from simple financial goals to future leadership and growth.

While many business owners have a great plan for their company, it can be difficult to create the strategy when you are overwhelmed by the amount of financial information involved in making that plan happen.

If you are starting a business, or interested in getting your company on the right track, don’t hesitate to contact our expert team of accountants at Liu & Associates.

We will be able to take a look at your company and offer advice on many aspects of your business including tax planning and optimization, accounting policy development, business growth and development and cost analysis.

Get in touch today!

When Do I Have to Submit My Corporate Taxes?

It’s a common questions among new business owners: How soon after my business’ year end do I have to file my corporate taxes? Read on for Liu and Associates breakdown of Canadian corporate tax filing deadlines.

Canadian Corporate Tax Returns

The basic rule when it comes to filing your Canadian corporate tax return is that you must submit your return no later than six months after the end of your business’ tax year. This means that each business’s T2 return date will differ depending on their fiscal year end.

Example
If your business’ year end is September 30, your Canadian corporate tax return would be due by March 30.

What Happens If My Year End Lands in the Middle of the Month?

If your year end falls on say, September 16, your due date would be March 16. The six month rule applies just the same.

My Filing Deadline Falls on a Saturday – Now What?!

If your filing deadline falls on a Saturday, Sunday or public holiday, as long as you send your claim on the first business day after the filing deadline you’ll be safe from any penalties!

Note: If you’re hoping to receive a tax refund, you must file your return no later than three years after the end of a tax year.

Alberta Provincial Corporate Tax Returns

Alberta based businesses have to file a separate provincial corporate tax return because Alberta administers their own corporate tax collection. For more information, visit the Treasury Board and Finance website. While filing deadlines are similar to CRA requirements, it’s good to familiarize yourself with both systems to avoid any fines or penalties.

Don’t Leave It Up To Chance

If you are confused or have questions about your corporate tax filings, don’t wait to ask! The experts at Liu & Associates LLP offer corporate tax services to ensure everything is done right and on time. Call us today!

Top Three Things to Ask your Accountant When Setting Up a Business

If you are starting your own company, an accountant is an invaluable resource. Depending on how you set up and run your business, it can save you money and time when tax season rolls around. Read on for three important questions to bring up with your accountant to ensure you are setting your company up for success!

1. what Structure is Best for my Company?

Depending on your start-ups circumstances and projected profitability, your accountant can recommend the best business structure. Whether you go with a sole trader, partnership or limited company, your accountant can advise you of any potential benefits or drawbacks to each structure.

Common Types of Business Structures

Sole Proprietorship
Limited Liability Company
Cooperative
Corporation
Partnership
S Corporation

2. What Records do I Need to Keep?

Keeping up to date business records is sure to make your life easier when it comes to tax time or even worse – an audit. Some of the most common things you’ll need to keep track of include:

Business expenses
Bank & credit card statements
Tax filings
Payroll
Income
Invoices
Purchase orders
Inventory

Other common questions surrounding this topic usually include where should you store these records, and how long do you have to keep them for. Your accountant can give you answers to all these questions are more, as well as offer some tips on how to streamline your record keeping. Here at Liu & Associates, we offer bookkeeping services that can keep this kind of stuff off your plate entirely!

3. Do I Need to Register for a GST/HST Number?

If you provide a taxable property or service in Canada and you no longer qualify as a small supplier, you will need to register for a GST/HST number.

What Qualifies as a Small Supplier?

If you have sales under $30,000 in the current calendar quarter, as well as the last four calendar quarters, your business has small supplier status. This means that you do not have to collect and pay GST/HST. Once you exceed $30,000 in a single quarter, you lose small supplier status and must begin to collect and pay GST/HST.

Regardless of your business’ income, you can voluntarily register for a GST/HST number. A GST number will allow you to claim input tax credits. Your accountant can explain when the best time to register for a GST/HST number is depending on your business’ situation.

Contact an Accountant Today!

Regardless of what stage of business planning you are in, the expert team at Liu & Associates can help! Give us a call to book a consultation with one of our accountants today.

Corporate Bankruptcy — What You Should Know

When a business can no longer pay its debts, the business owner’s may start to consider bankruptcy. Before you make any decisions, be sure to talk to a trusted advisor to see if there are any alternative solutions to your problem. Filing for bankruptcy should always be your last resort. Read on to learn a bit more about corporate bankruptcy, and how Liu & Associates can help.

Small Businesses

If your business is a sole proprietorship or a partnership, a corporate bankruptcy will essentially be a personal bankruptcy. This is because the assets of the business can not be held separately from your personal assets.

Sole Proprietorship

If you have a sole proprietorship and you file for bankruptcy, the business will be seen as a separate venture from the day the bankruptcy goes into effect. If you’d like to start another business, you’ll have to get a new business number and set up new accounts with the CRA.

Partnership

If you are part of a partnership with only two people and you file for bankruptcy, the original partnership will cease to exist. If there are more than two people in the partnership, business continues but some sort of deal must be reached to handle the bankruptcy.

Incorporated Businesses

If an incorporated business files for bankruptcy, it is considered to be an independent legal entity. Therefore, a business owner’s personal assets will be kept separate in most circumstances. When a corporation files for bankruptcy, it can no longer exist. The only way a corporation can keep running is if it pays all its debts when in the process of declaring bankruptcy.

How To Declare Corporate Bankruptcy

If you’ve talked to a licensed trustee, considered your options, and still feel that declaring bankruptcy is the best option, here are a few of the steps you’ll need to take:

Talk to your licensed trustee and fill out the proper paperwork. Your trustee will file these forms on your behalf.
Once the paperwork has gone through, your trustee will begin to sell any property, investments or assets.
All institutions with which you carry a debt will be notified about the bankruptcy by your trustee.
You may need to meet with creditors to determine how they could receive payment for the debt owed to them.
The Office of the Superintendent of Bankruptcy Canada (OSB) may bring you in for questioning regarding your excessive business debt.
There will be some sessions with a debt counsellor to hopefully prevent future debt problems.
Your trustee will create a summary of the actions your took during the bankruptcy and submit this to the OSB.
There may be a hearing to make your bankruptcy official.
Lastly, your debt that qualifies under your bankruptcy will be wiped away and legally discharged.

Liu & Associates Can Help

Business bankruptcies are complicated. If you are contemplating bankruptcy, or are looking for a licensed trustee, contact Liu & Associates. Our team is ready to help you get back on your feet.

5 Small Business Bookkeeping Tips

As a small business owner, we know that you have a lot on your plate. Accounting may seem like a tedious task that is easy to push aside, but if you don’t keep a tight ship when it comes to your books it can make your life extremely difficult come tax time.

Read on to learn Liu & Associate’s five small business bookkeeping tips that will keep your life smooth and simple – even during tax season.

1. Find a Trusted Advisor

Having someone you can go to for sound advice is invaluable as a small business owner. Your advisor can make sure you are handling your finances properly, answer any questions and help you fix any mistakes that might have been made.

Have a small budget? Don’t worry! There are a ton of flexible options out there to make sure you get the advice you need at a price you can afford.

2. Plan for Major Expenses

Set aside some time and map out any major expenses that you foresee happening in the next three to five years. That way, you can plan accordingly and make sure you have the finances in place beforehand. This will save you from scrambling for a loan when these expenses become unavoidable. Be sure to acknowledge your busy and slow seasons, as this will affect how much money you have available to spend.

3. Track your Expenses

Write. Everything. Down. It doesn’t matter if you chose to carry around a notebook, make a note on your phone or write it on a napkin. Keeping track of every business expense ensures that you don’t miss out on any tax write-offs. An easy way to keep track of business expenses is to have one credit card that you use solely for business purposes. This ensures you have a digital copy of all business charges, and removes the stress of having to remember to write down a charge every time you use cash.

4. Keep an Eye on Your Accounts Receivables

When things get busy, it’s easy to forget to stay on top of your accounts receivables. Without receivables, income dwindles! Make sure you have a process (i.e. a monthly report), that lists any past due payments. You’ll also need to have a process for how to handle these accounts. It may be an email, a phone call or sending a second invoice; whatever it is it will ensure you are getting the monthly payments you are owed!

5. Schedule a Time Each Week to Review Your Books

Give yourself some time to sit down and go over your finances. Doing this quick overview once a week will allow you to ensure that everything is in order, and catch any mistakes in their early stages. It doesn’t need to be a big time-drain – 30 minutes/week is generally plenty!

BONUS TIP: Bring in the Experts

Liu & Associates offers flexible and comprehensive small business bookkeeping services that allow you to focus on what really matters – running your business. If you’d like to learn more about how our small business accounting solutions can help, give our team a call today!