Congratulations — you’ve incorporated your business in Ontario. Now what? Your first corporate year-end is one of the most important milestones in your business’s financial life. Here’s everything you need to know to get it right.
1. Choose Your Fiscal Year-End Wisely
Unlike personal tax returns which always follow the calendar year (December 31), a corporation can choose any fiscal year-end. Once chosen, it’s locked in unless the CRA approves a change.
Common choices and their implications:
- December 31 — Aligns with calendar year; simplest for owner-managers who also file personal returns
- March 31, June 30, or September 30 — Spreads workload for your accountant; can allow income-shifting between corporate and personal years
- Anniversary of incorporation — Common default but not always optimal
The fiscal year-end is established by the date of your first T2 return. If you’re not sure what to choose, talk to a CPA before your first year-end arrives — you generally can’t change it later without CRA approval.
2. File Your T2 on Time
Your T2 corporate tax return is due 6 months after your fiscal year-end. For a December 31 year-end, that’s June 30. However, any taxes owing are due just 2 months after year-end (3 months for CCPCs eligible for the small business deduction). Late payment interest starts accruing immediately after the due date.
3. Set Up Your Payroll Account If You’re Paying Yourself a Salary
If you plan to pay yourself employment income from the corporation, you need a CRA payroll account (ending in RP) and must remit CPP, EI, and income tax source deductions on schedule. Missing remittances triggers automatic penalties and directors can be held personally liable.
Alternatively, many incorporated owners pay themselves through dividends, which avoids the payroll setup but has its own trade-offs. Read our article on salary vs. dividends for incorporated owners to understand the difference.
4. Register for GST/HST
If your corporation’s taxable revenues will exceed $30,000, you must register for GST/HST. Many new corporations should register voluntarily from day one to claim Input Tax Credits on startup expenses. Read our full guide: When Do You Need to Register for GST/HST?
5. Maintain Your Minute Book
Ontario corporations are legally required to maintain a minute book containing the articles of incorporation, bylaws, shareholder register, director register, and minutes of all meetings. An out-of-date minute book is one of the most common compliance issues found during due diligence for business sales or financing. Keep it current from year one.
6. Get Your Bookkeeping in Order
The quality of your first year-end T2 depends entirely on the quality of your books. If you’ve been tracking everything in a spreadsheet, that’s fine — but make sure every transaction is categorized, receipts are retained, and the bank is reconciled. Ideally, move to accounting software (QuickBooks, Wave, or similar) as soon as possible.
7. Understand What’s Deductible
Your corporation can deduct reasonable expenses incurred to earn income. Common first-year deductions include:
- Professional fees (legal, accounting)
- Office expenses and supplies
- Business portion of home office (if applicable)
- Business portion of vehicle expenses
- Marketing and advertising costs
- Technology and software subscriptions
- Salaries and benefits paid to employees (including yourself)
8. Work With a CPA From the Start
The decisions made in your first corporate year — fiscal year-end, salary vs. dividends, GST/HST structure, bookkeeping system — have long-term consequences that are costly to undo. A CPA can set you up correctly from day one and save you far more than their fee through proper planning.
Just incorporated in Ontario and not sure where to start? Contact CMP Accounting — we work with new corporations across Ottawa and Canada to get their first year-end right.