What is the best way to to file corporate tax for small startup in Ontario?

Question

Hi,

I have a (very) small startup that I've incorporated in Ontario. I need to file income tax, which I believe means a T2 and a CT23. I don't want to spend $170 for QuickTax. What are my options? Can I do this myself (manually)?

Thanks,

George

Answer 1

$170 for Quick Tax is a great bargain.

It will provide you with step by step assistance and make sure that you've completed your return properly.

I work for an accountant - he's a very small operation so his bills are quite reasonable and rather inexpensive when comparing to a big firm.... Inactive corp returns can still cost $500.  Active companies can pay anywhere from that up to $1500 (depending on the amount of bookeeping that is required at our end).

If you are using Quickbooks for your accounting then you have the added benefit of being able to import your data directly into Quick Tax and just do the adjustments that you need after confirming the entries are all in the right place.  This is the last year that you will have to file a T2 and a CT23 - for years ending in 2009 there is a new combined return and tax remitance and, if it's your first year in business, I highly recommend going to an accountant just to make sure you've got everything set up properly.  It is worth the added cost in the first year - you can take all the adjusting entries for your year end and the working papers that the accountant will give you.  It will be a good base for next year's returns and show you the procedure.   It will also give you a foundation of chart of accounts and examples to use in the future for shareholder contributions, dividends, and asset depreciation.  

If your business is so small that you can't justify a tax prep bill, I would question why you went to the expense of incorporating - usually that is to defer tax in a sheltered location - not for a small business because, as you are learning, the paperwork and gov't requirements are much greater.

Long story short... get Quick Tax if you're not going to an accountant.  Or check the CRA's website for other names of recommended software to do the returns.  Manual is not a good idea.  There are always table that tie in together and one entry links to another... it is not even recommended for people to do their personal returns manually anymore - there are so many credits that are missed when you don't have the benefit of running scenarios in your head and memorizing the tax tables.

Good luck.