# First year business - when do I have to pay?



## DollaWine (Aug 4, 2015)

Hi everyone,

I've ran a small business this year that I just registered a few months ago. I've made about $15k and expect to make another $5k or so by the end of the year (estimate). When I file my taxes next Spring, when do I actually have to pay my taxes? I was told that first year businesses don't have to pay their tax until the next year so they can prepare their finances, is this rumor or fact? Are there payment plans? If so, I'd like to use my saved up tax money for other things (student loans) and then pay the taxes later on when they're actually due to be paid - when will that be? Thanks for any help.


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## Russ (Mar 15, 2010)

Here's what I think:

I'm assuming that your first business activity occurred in 2016 and that your business is a sole proprietorship. You will have a calendar fiscal year. Your 2016 taxes must be paid by April 30, 2017 to avoid interest charges. Your tax return must be filed by June 15, 2017 to avoid a late filing penalty. If you have a spouse, and if your spouse has taxable income, your spouse has the same deadlines as you - April 30 and June 15.

There is no special rule for first year businesses.


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## DollaWine (Aug 4, 2015)

Hmm.. interesting. So if I underestimated how much I would make and was saving for taxes but didn't save enough... I would have to rush to come up with the extra cash _that quickly_ or face interest charges?


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## Just a Guy (Mar 27, 2012)

If you're a sole proprietor you file with your personal income tax. If you're incorporated, you can technically pick your year end and then have some time after that to get everything filed.

However, if you owe money, the government wants its cut as soon as its legally entitled to collect it. If they owe you money, they're much more forgiving of when you file...still, if you wait too long, they'll come after you because most of the time people owe them money and they'll hit you with stiff penalties and interest. They can't lose.

If you've got a good accountant, he may be able to minimize any taxes owing in the first few years anyway. There are usually a lot of start up costs, and ongoing costs (like an accountant) which can be used as write offs.


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## OhGreatGuru (May 24, 2009)

DollaWine said:


> ... So if I underestimated how much I would make and was saving for taxes but didn't save enough... I would have to rush to come up with the extra cash _that quickly_ or face interest charges?


Yes. It's no different than for anyone who has income that does not have tax deducted at source. In subsequent years CRA will tell you if you need to pay by installments to reduce this risk.


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## DollaWine (Aug 4, 2015)

OhGreatGuru said:


> Yes. It's no different than for anyone who has income that does not have tax deducted at source. In subsequent years CRA will tell you if you need to pay by installments to reduce this risk.


Got it. Thank you


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## davidjean (Mar 27, 2014)

Can I add on a question here?

I'm also new to business this year and have a new GST business account registered with CRA. 

I'm over the $30,000 threshold and owe GST. I'm charging my customers GST that I'll pay to CRA. But how does it work?

Anyone know the particulars? Or how the quick tax method works?

Or anyone know any good links or sites to read for more info? 

Thanks.


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## Just a Guy (Mar 27, 2012)

Generally speaking, you add up the tax you collected, subtract the eligible gst you paid and submit the difference.


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## kcowan (Jul 1, 2010)

As a sole proprietorship, you file on April 30th. Then you use all the equipment and service writeoffs to figure out your GST input credits, and file June 15th. Once you are in the swing, it is pretty easy, Make sure to request yearly filing with the CRA. Those input credits can mount up with all the telephone and computer expenses. Even paper purchases. And, of course, you pay GST on a portion of your home utilities used for your office.


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## DollaWine (Aug 4, 2015)

Follow up question....

My client for my business is in the US so I didn't have to worry about this, but I'm looking to take on a second client that is located in Canada. Again, estimated gross income from my business for this year will be around 20k.

Do I charge my new Canadian client HST, or that only if you make a gross income of 30k or more?


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## Nerd Investor (Nov 3, 2015)

DollaWine said:


> Follow up question....
> 
> My client for my business is in the US so I didn't have to worry about this, but I'm looking to take on a second client that is located in Canada. Again, estimated gross income from my business for this year will be around 20k.
> 
> Do I charge my new Canadian client HST, or that only if you make a gross income of 30k or more?


Once you register for HST, you have to charge it no matter what.
You're not _forced_ to register until your gross sales in four consecutive quarters exceed $30,000. 

So in your situation, if you haven't registered for HST and you don't have gross revenue of $30,000 yet you would not charge any.
You may want to consider registering voluntarily at some point though to recover HST on your purchases.


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