Corporate Tax Services Toronto and the Size of Your Business

How business size effects your taxes

So you have a corporation but it’s not a big conglomerate, in fact you have just a few employees. Yet you have the same business obligations that the big Corporations do, but on a smaller scale. In any event just as the big guys need an accountant, so do you.

As a small corporate business owner you first need to know what type of Corporation you are. Most likely you are a Canadian Controlled Private Corporation (CCPC).   This is the first thing your accountant needs to know because it dictates how the taxes are to be done.   Then he needs to see your articles of incorporation, and determine when your year end tax filing date is, and also your business number.

These are starter basics, now you need to know that there are differences when it comes to Corporate tax services.   There are small business corporate tax services, and then those professionals who only take on clients that are classed as large Corporations.   Each accounting firm sets its own guidelines as to who they want to take on as their clients pertaining to this category.

There is a lot of criteria that is taken into account when determining the classification of a business in regards to its size.   It may include the total of sales, the assets, and to some degree the type of business.

It is not just the CRA that needs to determine the size of a Corporation as many different types of financial institutions need to determine this as well.   In many cases it is the number of employees on staff that gives a good indication of the Corporate size.

If your business is one that is producing goods or products for sale and you have less than a 100 employees to accomplish this, then in general you would be classed as small.   On the other hand if you are providing services, then if you have less than 50 employees for this you most likely would be in the small business category. From these figures up to about 500 puts you in the medium category, and over this considers you as large.

It used to be that those businesses that employed five or less employees were called micro businesses, but that doesn’t mean that they are any less important to the economy.

While there are different reasons as to why it is important as to how your business is classified for example with the lending institutions, one of the most important aspects is how the CRA views your business.

It can mean the difference of you qualifying for the small business deduction, or are you going to end up in the Personal Services Business Corporate tax category which does not qualify for the small business deduction.

So this is one of the main issues that you want to be able to address with your Corporate tax services accountant. You want to discuss what your options are in regards to how your business is being classified, and what your advantages and disadvantages would be to change this, or if you should.

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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