Koroll & Company Blog

While verbal agreements may have been sufficient in past business dealings, we are increasingly seeing deal breaking and lawsuits happening as a result of verbal agreements or contracts that are poorly drafted.

Unfortunately, small business owners, especially those just starting up, continue to enter into verbal agreements without even realizing the risk they are putting themselves in.

Whether your business is large or small, you will face a number of legal issues when first starting up. The difference is, that as a small business owner, you likely don’t have the same access to legal counsel that your larger counterparts would have.

That is why, before going into business, you should be fully aware of the costly legal mistakes small business owners can make. This will allow you to get the necessary support where you are sure to need it.

Like a sole proprietorship, partnerships are not seen as a separate entity and therefore do not file a separate tax return. Instead, the partners include their share of the partnership income/losses for the year on their personal, corporate or trust income tax returns.

Each partner also has to file financial statements or a Statement of Activities (i.e. Form T2125 - Statement of Business or Professional Activities). 

As a small business owner, it is important for you to understand your business and be accountable to the Canada Revenue Agency (CRA) who holds you responsible for reporting your business activity through tax returns and remittances.

To do this effectively, you must understand the necessary processes and the information you need to collect and retain. You must also understand the factors that impact the growth and success of your business. 

As of 2019, Canadian Controlled Private Corporations (CCPC) who were previously entitled to the Small Business Deduction may be subject to a claw-back that reduces their deduction, if it doesn’t eliminate it completely. 

If you are a small business owner, you have a lot of responsibilities – one of which is planning for the tax season so that you can optimize your after-tax position and have more money to put back into your business. 

As the holiday season rolls in, gifts become top of mind – for family, friends and even employees. As a business owner it is important to understand the rules governing gift giving so that you can optimize your after-tax position. 

Well-managed records are critical to the success of any company, but unfortunately, this is something that falls by the wayside for many businesses.

The problem is that poor record keeping often leads to missed opportunities and, when looking at taxes, your records can be the difference between you optimizing your tax return and paying substantially more than you ever should have.