Are You in Danger of Missing Your Business Income Tax Deadline?

Do you know when you are required to file income tax returns for your business with the Canada Revenue Agency (CRA)? The following is a guideline to use to make sure you file in time to avoid penalties.

If you are a solopreneur or self-employed, the deadline is June 15th whether you owe tax or not. If you owe, you should pay by April 30th to avoid interest. Keep in mind that if the date falls on a weekend or holiday, it is due the following business day. This also becomes the effective date for any spouse or common-law partners as they are unable to file without your income. There are many software applications online for free to file these returns. Keep in mind that the software won’t know all of the tax benefits you can take advantage of. For this you need the advice of an expert.

If you are a corporation, you must file your tax return within 6 months of your corporate year end, however you should pay within 3 months to avoid interest. So if your year end is December 31, you must file by June 30. If your company owes tax and you don't have the funds to pay it off, file anyway! If your filing date ends on a weekend or holiday, it is due the following business day.

For information on penalties, refer to the CRA website. In short, you want to avoid these.

Keep in mind, no matter what type of business you have, you must keep your records for 7 years in good order in case the CRA decides to audit you. Having systems in place for records is imperative.

This is Why Your Small Business Needs Revenue Streams

Have you ever taken the time to consider all that your small business has to offer? Different activities which generate revenue can be organized into revenue streams. Grouping your activities this way will tell you which are doing well and which are not - valuable information for you to use to make decisions about your business.

If a revenue stream is not doing well, you may want to drop this activity all together. Or you may want to place more focus on making it viable, such as by cutting costs, increasing prices, or doing more marketing.

Taking a new product or service to market? Include it as a revenue stream in your business plan. If you don't meet your revenue forecast in the period of time expected, it’s time to re-evaluate. Keep in mind most business plans cover a period of 3 to 5 years.

Ways to Manage Cash Flow

I've already written about the importance of a cash flow plan. So, did it make you run straight to your desk and start planning? Keep in mind, most cash flow plans are a forecast of what you see happening in the next 12 months, or even as little as 6 months in some cases. Base it on the goals you have set for your business.

There are many factors that dictate what will happen in the time frame you selected. There are few things we know for certain, such as the cost of employees, loans, how quickly your customers pay their bills, and what your turn around time is to pay your vendors. Factor in things like future purchases and supplies, new employees and any capital expenditures, and, of course, paying yourself!

Some of my clients use software that sends out automated reminders to their clients. This way they are always aware of payments coming into their account and how late they are. One such method is to use an accounting software linked to PayPal.

Other ways to ensure your cash is there when you need it are:

• Ask for deposits when receiving orders; generally people don't mind paying 50% up front.
• Manage your Receivables properly; if your terms are net 30 days, ensure you receive your payments when due by possibly offering early payment discounts.
• Ensure a quick turnaround on inventory by not purchasing an abundance before it’s required.
• Invoice on a daily basis.
• Analyze which methods of receiving payment work fastest for you. There are so many ways to get payments today. For those on the road, there is even Square for debit and credit card payments upon delivery. PayPal, cheque. You name it!
• Never pay your own vendors until the payment terms are up. If you know a vendor will accept payment terms past 30 days, use this opportunity.

Always update your business plan (hopefully you have one of those!) and include a cash flow plan.

Need help? Contact me and I can help you prepare one.