Generally, a taxpayer must keep all required records and supporting documents for a period of six years from the end of the last tax year they relate to. For example, all the records related to the tax year ended December 31, 2021, will have to be retained till December 31, 2027.

For corporations, the tax year is the fiscal period and for individuals, it is the calendar year.

A business can be carried on primarily under two arrangements as a “Sole proprietor” or as an “incorporated business”. Both options have varying tax implications:
1) Sole-proprietor, whereby all the business operations are reported under your personal tax based on a calendar year.
     The net income will be subject to tax at the personal tax rate and could be as high as 48% (33% Federal and 15% Provincial in Alberta).
     If there are losses, then the losses can be used to offset your income from other sources.

2) Incorporated business (Corporation), whereby the Company reports all the business activities, based on the Company’s year-end, the Company can      pay a salary or a dividend to the owner.
     The Company, in most cases, will be able to use tax incentives and the tax rates on the net income could be as low as 11% (Combined Federal &      Tax Alberta corporate income tax).
     The Company and the shareholder are seen as two different entities, and any losses in the company cannot be used to reduce your other taxable      personal income. The shareholder is required to declare any income earned from the company in his / her personal tax return.

If you decide to incorporate the business, we can discuss with you during our initial meeting the best share structure tailored to your needs as well as the tax planning opportunities.
The company will first have to be legally set up and the process involves:
a) Determining the following information:
     Name of the corporation: If you want a particular name, we will have to perform a name search to ensure that there are no pre-existing      businesses with identical or similar names. Otherwise, the Company can be incorporated as a “numbered company” like 202212345 Alberta Ltd.
     Rights of each class of shares: These are outlined in the Articles of Incorporation and have to be submitted during the incorporation process.

b) Type of Incorporation:
     Once the above information is determined, the Company can be incorporated provincially under the Alberta Business Corporations Act or      federally under the Canada Business Corporations Act.
     Most corporations will choose the provincial incorporation if their business operations will be restricted to that province. Some companies may,      however, prefer federal incorporation and then registration with each province in which they operate.

c) Business number registration:
     The registry will provide you with a business number as soon as you incorporate, which is the Corporate Business number also called the “RC”      account. If you need GST and Payroll, we will have to contact the Canada Revenue Agency to open those “RT” and “RP” accounts.

A Company can select any year-end that is within 53 weeks (371 days) from the date of incorporation.

The choice of a year-end date is critical and will impact future tax planning.

A company would then have 3 months from its year-end to pay any Income Tax owed.

A company will have six months from its year-end to file the tax return.

In Alberta, companies are required to file both Federal and Provincial income tax returns (in certain cases, companies are exempt from filing the Alberta Tax Return).

There are certain businesses for which the GST may not apply including healthcare professionals.

A Corporation is not necessarily required to register for GST if the revenue does not exceed the $30,000 threshold over four consecutive calendar quarters. The company may choose to voluntarily register.

If, however, the income exceeds the threshold of $30,000, then the corporation must register and start charging GST on its sales.

The effective date of registration is usually the day you request your GST account (or up to 30 days before that day).

The GST reporting period depends on revenue as well as the frequency that you select. If the Company’s annual taxable sales are $1,500,000 or less, it may select an annual, quarterly, or monthly GST filing.

If you have a monthly or quarterly reporting period, you have to file your GST return and remit any amount owing no later than one month after the end of your reporting period.

If you have an annual reporting period, you usually have to file your return and remit any amount owing no later than three months after the end of your fiscal year.

If you are an annual filer and your net tax for the previous fiscal year was $3,000 or more, and your net tax for the current fiscal year is $3,000 or more, you have to make quarterly installment payments during the current fiscal year, even if you have a rebate that reduces your amount owing to less than $3,000. If you do not remit installments, you may incur penalties and interest.

An annual return is a report that has to be filed with the registry every year confirming that the company is still active and reporting any change of address, shareholders, or directors. This filing is separate from the income tax returns and can be filed directly with any Registry.

A corporation that fails to file this annual return for two consecutive years may be “struck off”. Will then need to revive the entity to continue to operate and file its tax returns.

If the company was incorporated federally, you will have to file two annual returns every year (the federal and the extra-provincial)