It's that time of year again...we are heading into tax season. It's a hectic time for us, as we help entrepreneurs and small businesses get their taxes ready and file them. We know it’s a busy time for you too, as you gather all of the information that you need.

So we wanted to help you out - here’s what you need to know for your 2021 taxes. In this post, we are going to cover:

Dates that you want to remember
What you should compile for your sole proprietorship business income tax
Special Considerations
How to prepare for a better 2022

Please note that this article will focus on sole proprietors and entrepreneurs. Your taxes will be different if you have a partnership or a corporation. We encourage you to reach out to us to discuss your specific situation.

Noteworthy dates for your 2021 taxes

To begin, here are some dates that you're going to want to jot down in your calendar right now:

March 1

Deadline for RRSP contributions

April 30

Deadline for Personal Returns (T1s)
Sole proprietorship tax balances due
HST payments due (for annual filers)

June 15

Deadline for sole proprietor tax returns (T1s)
HST returns due (annual filers)

April 30, July 31, October 31, and January 31

HST returns due (quarterly filers)

Preparing to File Your Taxes

Now that you know when some key dates are, it's time to start compiling what you'll need to file your taxes.

For a sole proprietorship business, you will need to summarize all of your business income and expenses. In fact, why not pop over and download my checklist now?

Work from Home Expenses

If you are an employee, you have two options for claiming your home office expenses this year: 1) Temporary Flat Method; or 2) Detailed Method.

Under the Temporary Flat Method, you can claim $2 per day for every day you worked from home up to $500 (it was $400 in 2020).

Alternatively, you can use the Detailed Method. You must obtain a T2200S from your employer, track your expenses and keep your receipts. Then you must calculate the square footage percentage your office space takes up within your home. The CRA lists all the home office expenses that you can claim as an employee.

COVID-19 Benefits

There are many benefits that the government is currently offering that may impact your taxes.

Canadian Worker Lockdown Benefit

The Canada Worker Lockdown Benefit (CWLB) provides short-term financial assistance to people who cannot work due to a COVID-19 lockdown. It is only available when a COVID-19 lockdown order is in place in your region.

You can receive $270 ($300-10% taxes) each week, if eligible, between October 24, 2021, and May 7, 2022. You must report these payments as income.

COVID-19 rent and property expense support

You may be eligible to claim your commercial rent or property expenses through one of the rent and property expense support programs. If you are a sole proprietor, you must include the total rent subsidy amount you received for the tax year on line 8230, “Other income” of form T2125, Statement of Business or Professional Activities.

COVID-19 wage and hiring support

You may be eligible to claim your commercial rent or property expenses through one of the rent and property expense support programs. If you are a sole proprietor, you must include the total subsidy you received in 2021 on line 8230, “Other income” of form T2125, Statement of Business or Professional Activities.

COVID-19 Programs - How They Impact Your Taxes

While the CRA withholds 10% taxes, you may be required to pay more depending on your unique tax situation. The CRA will issue a T4A for any subsidy that you receive. When you file your personal income tax return, you must report these payments as income.

Preparing for a Better 2022

If you have come across this article because you are stressed out, don't worry - you are not alone. Many entrepreneurs struggle to keep their financial records organized and are overwhelmed come tax time.

The good news is that we are here to help! Here are just two ways that I'm supporting entrepreneurs during this tax season:

The Money-Smart CEO Program

This self-paced course will take you from your QuickBooks Online account set up to record and manage your numbers like the CEO that you are!

You will have access to the expertise of a CFO to help build an accounting system tailored to their specific business. You will understand the key metrics to grow your business and give you the confidence to make strategic decisions. Not to mention you’ll have a solid understanding of your tax position before your return is even filed!

Learn more about this program here.

Tax services with Jennifer Kapedani, CPA

We assist with:

T1 Personal returns for Sole Proprietors
T2 Corporate Tax Returns
GST/HST
T4/T5 Filing
Payroll remittance filing

Our tax preparation includes:

A personalized review of your business finances
Assistance summarizing eligible expenses and determining available tax credits
30-minute phone/video conference to review the draft tax return prior to filing, and discuss any related issues
Electronic filing and CRA confirmation

All tax returns are prepared by a qualified CPA who will take the time to understand your business. Our CPAs make sure your return is properly prepared and accurately reported but will also make sure you are maximizing all of your deductions!

Learn more about our tax services here.

Preparing Your 2021 Taxes: What You Need to Know