Even the most diligent business owners make tax mistakes that cost money or trigger CRA attention. Here are the most common ones we see at CMP Accounting.
1. Mixing Personal and Business Finances
Using your personal account for business transactions creates a bookkeeping nightmare and raises red flags. Open a dedicated business account from day one.
2. Not Registering for GST/HST on Time
Once taxable revenue exceeds $30,000 in any four consecutive quarters, you have 29 days to register. Miss this and the CRA can retroactively assess you for all GST/HST that should have been collected — out of your pocket.
3. Poor Record-Keeping
The CRA requires records for a minimum of six years. Scan receipts immediately and reconcile monthly.
4. Claiming 100% Business Use on Vehicles
This is one of the fastest ways to trigger an audit. Keep a mileage log and be honest about personal use.
5. Missing Instalment Deadlines
If you owe more than $3,000 in tax, the CRA expects quarterly instalments: March 15, June 15, September 15, December 15.
6. Claiming Personal Expenses as Business
Gym memberships, personal meals, vacations framed as business trips — the CRA denies these and may assess gross negligence penalties.
7. Filing Late
Late filing penalties start at 5% of the balance owing, plus 1% per month for up to 12 months. Always file on time even if you can’t pay.
8. Missing Payroll Remittances
Missing CPP, EI, and income tax remittances triggers automatic penalties. Directors face personal liability for unpaid payroll remittances.
Avoiding these mistakes starts with the right support. Reach out to CMP Accounting.