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Personal Taxes
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All- In-One Accounting & Business Consulting
Servicing Central and Southern Alberta: Edmonton, Calgary
Servicing Northern Alberta & British Columbia: Grande Prairie, Peace River, Dawson Creek, Fort St. John, Terrace

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What you need to know. What you need to have.
Taxes are a pain for just about everyone except Accountants, but they are an inevitable and unfortunately a fact of life.
The rules are constantly changing and it can seem like the honest taxpayer is not able to "catch a break". Please don't despair!
Canadians can do certain things to limit their tax exposure and can do certain things to maximize their taxes besides the regular type of Deductions (which we will get into here).
The best piece of information is Keep track of what your write-offs are.
I know that can be hard, but it is the ONLY way to truly help, help yourself, and save you money if hiring an Accountant to do your taxes, as without being organized, this is the number 1 reasons taxes cost you.
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Step 1.
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Choose to either do it yourself or
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Hire an Accountant
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For most people, finding the right Accountant is the most important step in reducing your taxes.
Now with this said we think it is very important to understand what an Accountant will be able to do for you and your finances, and is your best bet to find the right accountant that can help you choose a plan and understand what is viable and what is not.
Look for an accountant through friends and colleagues whose tax profiles are similar to your own. Most importantly, keep up-to-date with your tax situation and keep an eye out for anything your accountant may have overlooked - accountants are still human. The more you understand about your own tax situation and the ways to reduce your exposure, the better prepared you will be to take full advantage of your accountant's expertise.
Lets get down to the terms to give you some insight on what it all means:
What are Taxes?
Taxes are amounts we remit to our Provincial and Federal Governments to fund public services like roads, schools, and retirement benefits. Though there is often debate about how effectively tax dollars are used, the principle remains: taxes serve the public. The amount of tax you owe depends on your income, and in Canada, we follow a pay-as-you-go system. This means your employer withholds taxes from your paycheck, or if you’re self-employed, you pay through installments. In general, the more you earn, the higher your tax rate, making it a progressive system.
Tax Deductions
Both Canada’s federal and provincial governments offer deductions to reduce taxable income or directly reduce the amount of tax you owe. These deductions can promote certain activities (like saving for retirement) and ensure taxpayers don't overpay.
What is a Deductible Expense?
A deductible expense refers to costs that are subtracted from certain types of income to lower your taxable income. For example:
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Capital gains (declared on Schedule 3) allow you to deduct certain costs or exemptions.
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Investment income (declared on Schedule 4) often permits deductions for carrying charges and interest.
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Self-employed individuals (filling out Form 2125) can deduct business-related expenses from their income.
If you incur a loss from these activities, you may be able to deduct it from other income, which reduces your overall tax burden.
Deductions that Reduce Taxable Income
After calculating your total income, certain deductions can be applied to reduce the amount subject to taxation. For instance, RRSP contributions, childcare costs, and employment-related expenses like moving costs can be deducted. Your total income minus these deductions equals your net income. In some cases, you may also qualify for additional deductions, like losses from previous years or deductions for northern residents.
Deductions that Reduce Taxable Income
After calculating your total income, certain deductions can reduce the amount subject to tax.
Common deductions include:
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RRSP contributions
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Childcare costs
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Employment-related expenses (e.g., moving costs)
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Your total income minus these deductions equals your net income.
Additional deductions may apply in special cases, such as:
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Losses from previous years
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Deductions for northern residents
Deductions that Reduce Income Tax
Canada offers deductions that reduce the income tax owed, calculated using Schedule 1.
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Examples of these deductions include:
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Basic personal amount for all taxpayers
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Amounts for a spouse, dependents, or specific age brackets
Although individual deductions might seem small, they can add up to significant savings.
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To maximize savings, review your tax form line by line to ensure all deductions are claimed.
Non-Refundable vs. Refundable Tax Credits
Non-Refundable Tax Credits:
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These reduce your tax payable to zero but cannot result in a refund.
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Common non-refundable credits include:
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Student loan interest
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Medical expenses
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Public transit passes
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Refundable Tax Credits:
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These credits can result in a refund if the credit exceeds your tax liability.
Example: Working Income Tax Benefit
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If the total credits exceed the amount of tax owed, you’ll receive a refund.
Where to File Your Taxes File online or by mail:
Online options:
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NETFILE: For taxpayers preparing their own tax return and submitting it electronically to the CRA.
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EFILE: For taxpayers using a registered electronic filing service provider (e.g., Liberty Tax Service) to submit their return electronically on their behalf.
Both options require CRA-certified tax preparation software or web applications.
By mail:
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Mail your completed paper tax return to the CRA tax center for your region using the envelope included in your tax package.
Self-Employed Tax Return
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If you are self-employed, you must determine if your business is:
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Sole proprietorship
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Partnership
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Corporation
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Sole-proprietorship/Partnership: Report income on the T1 general return using form T2125.
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Corporation: File a separate T2 tax return, which is independent of your personal taxes.
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Keep adequate records to determine your tax obligations and document business deductions.
Tax Instalment Payments
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Periodic income tax payments made throughout the year to avoid owing a large amount on April 30th of the following year.
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You may need to pay in installments if not enough income tax was withheld from your earnings.
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The CRA will send an Installment Reminder if you are required to pay in installments, including:
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Suggested payment amounts
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Due dates for payments
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The installment threshold for individuals has increased to $3000.
To see when installment payments are due, refer to the CRA’s "Installment payment due dates" page.
Looking to see what you might owe or looking for worksheets. Check out our Online Worksheets and links.
Details on Dates & Penalties for Filing Taxes Late
Interest
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If you have a balance owing, compound daily interest is charged starting on May 1st for any unpaid amounts.
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This includes balances resulting from reassessments.
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Interest on penalties starts accruing the day after your return is due.
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The interest rate can change every three months.
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If you owe from previous years, compound daily interest will continue to be charged on those amounts.
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Payments made are applied to amounts owed from previous years first.
Income Tax Evasion
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Common forms of tax evasion include:
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Under-reporting income: Failing to report all earnings, such as cash payments or freelance work.
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Claiming non-deductible or overstated expenses: Including personal or inflated expenses as tax deductions.
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Consequences of Tax Evasion in Canada:
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Criminal charges: Tax evasion can result in criminal prosecution, leading to heavy fines or imprisonment.
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Fines and penalties: Taxpayers may face fines up to 200% of the taxes evaded, plus the taxes owed.
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Imprisonment: Severe cases may result in up to 5 years in prison.
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Importance of compliance:
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Tax evasion affects public services funded by taxes, like healthcare and education.
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The CRA offers the Voluntary Disclosures Program to allow taxpayers to correct errors and avoid penalties.
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Late-Filing Penalty
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Late-filing penalty:
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If you owe tax and do not file your return on time, you will be charged a penalty.
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The penalty is 5% of your current tax year balance owing, plus 1% of your balance owing for each full month your return is late (up to a maximum of 12 months).
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Increased penalty for repeat offenses:
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If you were charged a late-filing penalty in any of the previous three years, your penalty for this year may increase.
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The increased penalty is 10% of your current tax year balance owing, plus 2% of your balance owing for each full month your return is late (up to a maximum of 24 months).
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Tax Audits & Reviews
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Pre-assessment Review Program:
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Reviews deductions and credits claimed by the taxpayer before issuing a Notice of Assessment or refund.
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Peak period: February to July.
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Processing Review Program:
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Reviews deductions and credits claimed by the taxpayer after issuing a Notice of Assessment or refund.
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Peak period: June to November.
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Matching Program:
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Compares information on the taxpayer’s return to information from third parties (e.g., employers, financial institutions).
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Areas of focus:
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Employment income, investment income, Canada Child Benefit (CCB), GST/HST credit, Guaranteed Income Supplement (GIS), RRSP deduction limit, spousal-related claims, child-care expenses, provincial tax credits, and tax reductions.
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Peak period: September to March.
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Failure to File Income Tax
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Late-filing penalty if return not filed by April 30:
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If you owe tax and don’t file your return on or before April 30, the CRA may impose penalties and interest.
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The late-filing penalty is 5% of your current year balance owing, plus 1% for each full month your return is late (up to a maximum of 12 months).
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Higher penalty for repeat offenses:
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If you were charged a late-filing penalty in any of the previous three years, your penalty may be higher.
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Advice to avoid penalties:
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Even if you cannot pay the full amount by April 30, it is strongly recommended to file your return to avoid being charged with Income Tax Evasion.
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Self-Employed
Individuals who are self employed- also known as Sole Proprietors do have some adjustments to dates and processing but not to Interest and Payments required.
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Filing Deadline for Self-Employed Individuals: Self-employed individuals (sole proprietors) and their spouses or common-law partners have until June 15, 2024, to file their 2023 income tax and benefit return.
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Extended Due Date for 2024: Since June 15 falls on a Saturday, returns will be considered on time if filed by June 17, 2024.
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Payment Deadline for Taxes Owed: Despite the extended filing deadline, any taxes owed for the 2023 tax year must be paid by April 30, 2024. Interest will start accruing on any unpaid balance as of May 1, 2024.
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Consequences of Late Payment: Filing by June 15, 2024, will prevent late-filing penalties, but interest charges may still apply if tax amounts are unpaid by April 30, 2024.
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Income Reporting: Self-employed individuals must report all income from their business activities, including any additional income streams associated with the business.
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Deductions for Business Expenses: Sole proprietors may claim various business expenses, such as home office costs, vehicle expenses, and professional fees, to reduce their taxable income.
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Records and Documentation: The CRA requires that all records and receipts supporting income and expense claims be maintained for at least six years.
For more information regarding Self-Employment, please see our More Info and pages.
Curious about how to avoid triggering a CRA review or tax audit?
Understanding the process behind different types of tax reviews and the common reasons that lead to them can help you stay on top of your tax obligations. We will walk you through everything you need to know, from pre-assessment reviews to common mistakes taxpayers make—ensuring you're prepared and informed.
MORE INFO
Understanding your T4: What Each Box Means
Your T4 form, also known as the “Statement of Remuneration Paid,” is a key document you’ll need to file your taxes in Canada. It is completed by your employer and outlines your total income and deductions for the year. Employers are responsible for filling out each section accurately, as this ensures that all income, taxes, and benefits are reported correctly to the Canada Revenue Agency (CRA). Here’s a quick guide to what each box means and why it’s important:
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Box 14 – Employment Income: This box shows your total employment income, including regular pay, bonuses, and other taxable amounts. This amount is crucial, as it is the primary income figure the CRA uses to calculate your tax liability.
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Boxes 16,16a,17,17a,18: These boxes display the amount you and your employer contributed to CPP and EI throughout the year. These deductions are important because they contribute to your future retirement benefits (CPP) and insurance protection (EI).
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Box 16 and Box 17 – Canada Pension Plan (CPP)
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For 2024 we now have Box 16A and Box 17A, used for CPP2:
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Starting in 2024, the Canada Pension Plan (CPP) introduces an additional layer of contributions for higher-income earners, reported on T4 slips as CPP2 in Box 16A. This new contribution applies to income above the existing Year’s Maximum Pensionable Earnings (YMPE) and up to a newly established limit, the Year’s Additional Maximum Pensionable Earnings (YAMPE).
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Employers and employees each contribute an additional 4% on income between these two limits, while self-employed individuals contribute at 8%. Box 16A allows employees and employers to report these contributions separately from the regular CPP contributions shown in Box 16. This change enables clearer tracking and compliance under the enhanced CPP structure, designed to support future retirement income while aligning contributions with higher earnings brackets.
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These adjustments ensure that higher earners contribute proportionately, while all contributions continue to provide retirement, disability, and survivor benefits through the CPP.
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Box 26 reflects "CPP/QPP Pensionable Earnings," which are the earnings used to calculate the contributions to the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP). This box shows the income on which CPP contributions are based, and it typically aligns with the income in Box 14 (Employment Income) but may vary if certain earnings are not pensionable.
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Box 18 – Employee EI Premiums: This box shows your EI contributions. Like Box 17, it ensures that you have the appropriate coverage under the Employment Insurance program. and its corresponding Box 24 for Earnings
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Box 24 represents "EI Insurable Earnings," which is the amount of an employee's earnings that are subject to Employment Insurance (EI) contributions. This amount is used to calculate how much EI both the employee and the employer must pay for the year
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Box 20 – Registered Pension Plan (RPP) Contributions: If you’re part of a pension plan through your employer, this box shows your contributions. These contributions can reduce your taxable income and support your retirement savings.
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Box 22 – Income Tax Deducted: This box shows the total amount of income tax your employer withheld and sent to the CRA on your behalf. It helps the CRA determine if you owe additional taxes or are eligible for a refund.
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Other Boxes most commonly used Box 40, Box 32, Box 33, Box 34: Your T4 may have additional boxes for items like union dues, taxable benefits, and other deductions. Each of these boxes has a purpose, either reducing your taxable income or indicating other amounts relevant to your taxes.
Understanding each section of your T4 helps you know what was deducted from your pay and how it affects your tax return.
Employers play a key role in filling out these boxes accurately, which supports smooth tax filing and ensures the CRA has all necessary information to calculate your tax obligations properly.
If you have questions about any specific box, your employer should be able to help, however often employers are making careless mistakes and are uninformed. If you suspect and error it is your employers responsibility to make the appropriate adjustments on Account. If you show or see anything in Box 40, please note the likelihood of you requiring T2200 or other documentation is high.
We offer no cost consultations id need and have also listed resources here on our website that may assist you, please feel free to reach out for any clarifications.
Common Deduction Requirements
Are you aware of all the tax deductions and credits you may be missing?
From motor vehicle expenses to medical costs, moving deductions, and the Canada Workers Benefit (CWB) previously the Working Income Tax Benefit (WITB), there are many opportunities to reduce your tax bill. Whether you're claiming vehicle fuel and maintenance, home office deductions, or tuition credits for your children, maximizing these benefits can put more money back in your pocket. Learn more about how these deductions apply to you and how you can ensure you're claiming everything you're eligible for.
Discover the full list of allowable expenses, credits, and deductions to make sure you're getting the most out of your tax return. Keep reading for expert advice and easy-to-understand explanations on how to save more this tax season!
Incorporate or Sole Proprietorship? Let's Break It Down?
Each province has its own set of rules for setting up a business, and one of the most important decisions you'll face is whether to remain a Sole Proprietorship (Self-Employed) or take the step to Incorporate your business.
It’s the age-old question: To Incorporate or not to Incorporate?
For many small business owners, this decision eventually crosses their minds. Incorporation has several advantages, but there are also some drawbacks, and it's crucial to weigh both carefully. Don’t rush—consider every aspect to ensure you’re making the right choice for your business.
Remember, your decision isn’t permanent. As your business grows, you can always transition from a sole proprietorship or partnership to an incorporated structure when it makes sense. In fact, many businesses start out small and incorporate later as they expand.
Each province offers step-by-step guides and unique requirements for business registration, and at Forge Accounting & Management Services, we're here to guide you through the entire process.
Is incorporation the right move for your small business? Curious about whether incorporating your business is the right move? Incorporation offers significant advantages like limited liability, tax flexibility, and increased credibility—but it also comes with responsibilities and costs. Discover the pros and cons, and how incorporation can impact your business success. Let’s explore together!