Bookkeeping for Toronto businesses

One tax account, fully recoverable

Ontario harmonised its provincial sales tax with the GST, so a single 13% HST covers both and is administered federally. In the ledger that means one tax account, one registration and one return — and, importantly, the provincial component behaves exactly like the federal one: it is recoverable as an input tax credit rather than becoming a cost embedded in purchases. Businesses that have only ever operated in Ontario often meet that distinction for the first time when they buy from a supplier in a province with a separate provincial sales tax and find that some of the tax on the invoice is not coming back. Input tax credits covers what is recoverable.

The quick method is a bookkeeping decision

Eligible smaller businesses can elect to remit a prescribed percentage of tax-included sales instead of tracking input tax credits transaction by transaction. Whether that helps depends on how much taxable input the business actually buys: a service business with low purchases often gains, while a business buying significant goods and equipment generally does not. The relevant point for the ledger is that the choice changes how everything is coded, so it is made once and applied consistently rather than evaluated at year end. The quick method works through the arithmetic.

Employer health tax accrues every month

Ontario levies an employer health tax on remuneration, and unlike a payroll deduction it is an employer cost that has to be provided for as payroll is run rather than met when a return falls due. The rate is chosen from payroll bands using total Ontario remuneration before the $1,000,000 exemption is deducted, and only then is the exemption subtracted from the taxable base. Where an employer expects to cross the exemption during the year, accruing through the year avoids a single unbudgeted charge appearing late. Associated employers share one exemption and must file an allocation agreement.

Costs recharged to clients

Toronto has a dense population of agencies, studios and consultancies that buy things on behalf of clients — media, print, contractor time, software licences — and recharge them. How those are recorded changes what the business appears to be. Recorded gross, revenue and cost of sales both inflate and the margin percentage collapses. Recorded net, revenue reflects what the business actually earned. Neither is wrong in every case, but the treatment has to be decided deliberately, applied consistently, and match how the tax on those recharges is being handled, because the two questions are related.

Where the receivables ledger tells the truth

Service businesses that invoice on completion or monthly retainer accumulate receivables faster than they notice, and an aged listing reviewed monthly is the cheapest early warning a business has. It shows which accounts are stretching before they become collection problems, and it distinguishes a genuinely disputed invoice from one that was simply never chased. Reviewed once a year it does neither. Where a specific debt is established as uncollectible during the year it is deductible, while a general allowance against receivables at large is not, so the identification has to actually happen. Writing off bad debts covers the requirements.

The registry return that is not on the tax calendar

An Ontario corporation files an annual return through the Ontario Business Registry within six months of fiscal year end. It is a corporate-law filing rather than a tax one, so it does not appear in the CRA correspondence that most owners use as their reminder system, and it is routinely missed. Keeping the deadline on the same calendar as the corporate year end — alongside the return and the balance due — is a bookkeeping habit rather than an accounting one, and it prevents the good-standing problem that surfaces when a lender or purchaser asks for a certificate.

Working remotely from Abbotsford

EverStone is a sole practitioner CPA firm at 32615 South Fraser Way in Abbotsford, British Columbia. There is no Toronto office and no local staff. Bank and card feeds arrive electronically, documents are exchanged securely, and the file sits in cloud accounting software you hold your own login to. HST is administered federally and Ontario corporate tax is collected through the federal return, so nothing about the work depends on being in the province. One CPA keeps the monthly ledger and prepares the year end from it.