Your first year in business, with the books set up right
What a new Canadian business has to sort out with the CRA in year one, and how to set up invoicing and records so tax time is quiet. The checklist comes first; Setttle comes after.
The first-year checklist
Six things to settle before they become deadlines.
- 01
Get a business number
From the CRAA sole proprietor needs one only when they open a CRA account, such as GST/HST. A corporation gets one when it incorporates federally or in most provinces; in Quebec, Newfoundland and Labrador and the territories, register for one separately.
- 02
Watch the GST/HST threshold
$30,000You have to register once your taxable sales go over $30,000 in one calendar quarter, or over four consecutive calendar quarters, and then register within 29 days. Keep a running total from your first invoice so it doesn't arrive as a surprise.
- 03
Decide whether to register early
Voluntary registrationYou can register before you reach $30,000. You then charge GST/HST on your sales and claim back the GST/HST you pay on business expenses. It often suits a business whose clients are registered too, since they claim the tax back themselves.
- 04
Put the right details on invoices
$30 and upOnce you're registered, an invoice of $30 or more needs your GST/HST registration number and the tax charged, or a note that tax is included. From $150, also show your client's name, the payment terms and a description of the work.
- 05
Keep business money separate
From day oneOpen a business bank account and run every sale and expense through it. Checking your books against the bank then takes minutes a month, instead of a weekend in April.
- 06
Keep records for six years
6 yearsKeep invoices, receipts and bank statements for six years from the end of the tax year they relate to. Records about the business itself, like share registers and long-term property, are kept for as long as the business exists.
When income tax is due
- Sole proprietor
- Report business income on form T2125 with your personal return. The return is due June 15, but any tax owing is due April 30.
- Corporation
- File a T2 return within six months of your fiscal year-end. Tax owing is usually due two or three months after year-end.
- Instalments
- If you owe more than $3,000 ($1,800 in Quebec) this year and did in either of the two years before, the CRA asks for quarterly instalments. Setting aside part of every payment from the start keeps that from hurting.
- Provincial sales tax
- In British Columbia, Saskatchewan, Manitoba and Quebec, provincial sales tax is separate from GST and has its own registration rules. In HST provinces it's one tax.
Where Setttle fits
Invoicing and bookkeeping that start simple and keep up as you grow.
- Invoices with the tax right
- Add your GST/HST number once and it's on every invoice, with tax worked out on each line. Clients can pay online through Setttle Payments.
- Your sales in view
- Sales and the GST/HST you've charged are in your reports, so you can see the $30,000 line coming.
- Bank matching
- Connect your bank and matching activity is matched. Anything uncertain waits in one inbox with its evidence.
- Your accountant is free
They get read-only access and one year-end export with GST/HST schedules. See what an accountant receives.
- From $9 a month
Micro covers one company and 20 invoices a month. Max has a 7-day trial with no card. See pricing.
Questions, answered plainly
Something else? hi@setttle.ca
No. Under the $30,000 threshold, registering is your choice. Registering early means charging GST/HST from then on, and claiming back the GST/HST on your business expenses.
No. It covers the steps most new businesses share, and your situation may differ, especially for a corporation. An accountant can confirm what applies to you, and in Setttle their access is free. Read the tax disclaimer.
Start the books with the business
Set up invoicing, GST/HST and your bank in one place, and give your accountant free access.