Income Taxes

New Business Tool Kit

Income tax laws are extensive and can be confusing for an individual starting a business. This chapter does not cover all the tax ramifications of a new business; however, it provides some guidance on complying with the laws. An accountant or tax lawyer should be consulted when you are dealing with income taxes. Income taxes have a direct and potentially significant impact on the cash flow of your business.

Income Tax Forms

Each type of legal entity is required to file a different type of income tax form.

1. Corporation. A corporation is considered a taxable entity and is required to file a federal T2 Form and possibly a provincial tax return.
2. Partnership. A partnership is not a taxable entity. It is treated as a conduit through which taxable income is passed to the individual partners for inclusion in their respective tax returns. A partnership may be required to file a T5013 Partnership Information return. A partnership is required