Avoid Costly Tax Penalties: A Must-Read Guide for BC Small Businesses

Starting a small business is tough enough without the headache of Canadian tax rules weighing you down. Did you know the Canada Revenue Agency (CRA) rakes in around $625 million every year from small businesses just in interest, fines, and penalties? And that’s not even counting what you owe in provincial taxes, employee health taxes, or WorkSafeBC premiums.

Too often, small business owners—especially startups—try to handle bookkeeping and payroll themselves to save money. But waiting until year-end to get professional help means mistakes often go unnoticed until it’s too late… and those mistakes can cost you. Let’s break down the most common tax traps you want to avoid.

1. Employee vs. Contractor Misclassification

Classifying someone as a contractor when they’re really an employee can hit you hard with retroactive payroll taxes, CPP contributions, EI premiums, and penalties. This is a big one—get it right from the start. (I’ve got an article on this if you want to dive deeper.)

2. Not Registering for GST/HST

If your business makes over $30,000 in a year, you must register for GST/HST. Even if you’re unsure about your revenue, signing up voluntarily lets you claim Input Tax Credits on your business expenses—which can save you money.

3. Late Filing and Payment Penalties

CRA and provincial tax authorities don’t care if you owe taxes or not—you’ll get penalized for filing or paying late. Some agencies even require payment before you file. Underpay, and interest piles up, making things worse. Timely filing and payment are non-negotiable.

4. Mixing Personal and Business Finances

Using the same bank account for personal and business expenses is a recipe for confusion. It makes bookkeeping a nightmare, risks missed deductions, and can mess with your financial reports. Start with separate accounts—it’s a game-changer for clarity and compliance.

5. Sloppy Bookkeeping

Showing up to tax season with a shoebox full of receipts or scattered digital files means higher accounting fees, lost deductions, and possible filing delays. While DIY accounting software and spreadsheets can definitely help keep things organized, they can also complicate matters if not used properly. Plus, when the books are a mess, many CPAs end up doing the bookkeeping — at a much higher cost than hiring a professional bookkeeper upfront. The key is to keep your books tidy and consistent all year round.

Smart Moves for Small Business Owners

Navigating tax rules is complicated—and getting it wrong can be expensive. That’s why outsourcing your bookkeeping and payroll to experts like LEVELUP PAYROLL SOLUTIONS is a smart investment. Professional bookkeepers specialize in staying ahead of deadlines and compliance, often saving you money come tax time. Plus, they’re usually more affordable than hiring accountants.

Not ready to outsource? No worries. Use the handy deadline chart below to stay on track and dodge penalties. Check your remittance and reporting frequency to make sure you are meeting all the correct deadlines.

Updated Tax Deadlines and Payment Schedule for BC Small Businesses

Tax Type / Filing Entity	Filing Frequency	Filing Due Date	Payment Due Date	Notes
T1 – Individual Tax Return	Annual	April 30 (following year)	April 30 (following year)	If due date falls on weekend, next business day applies
T1 – Self-Employed / Sole Proprietor	Annual	June 15 (following year)	April 30 (following year)	Filing extended; payment still due April 30; installments may be required
T2 – Corporate Tax	Annual	6 months after fiscal year-end	2–3 months after year-end	CCPCs have a 3-month payment deadline
T3 – Trusts	Annual	90 days after year-end	Same as filing date	Calendar year-end unless elected otherwise
T5013 – Partnerships	Annual	March 31 (calendar year-end)	N/A (partners pay via T1/T2)	Deadline varies if non-calendar year-end
GST/HST – Annual (Sole Proprietor)	Annual	June 15	April 30	Payment due April 30; filing allowed later
GST/HST – Quarterly	Quarterly	1 month after quarter-end	Same as filing date	Example: Q1 due April 30
GST/HST – Monthly	Monthly	1 month after period-end	Same as filing date	Example: January due February 28
PST – BC (Monthly)	Monthly	End of following month	End of following month	Example: January PST due February 29
PST – BC (Quarterly)	Quarterly	End of month after quarter	Same as filing date	Q1 (Jan–Mar) due April 30
PST – BC (Annual)	Annual	End of following January	Same as filing date	Applies to low-volume sellers
EHT – BC (Payroll ≤ $1,000,000)	Annual	March 31	March 31	Employers with payroll ≤ $1 million are exempt from EHT
EHT – BC ($1,000,000.01 – $1,500,000)	Annual	March 31	March 31	5.85% tax rate applied only on payroll above $1 million
EHT – BC (Payroll > $1,500,000)	Annual	March 31	March 31	1.95% tax rate on entire payroll
EHT – BC Instalments	Quarterly (if required)	June 15, Sept 15, Dec 15, March 15	Same as filing date	Based on estimated annual tax
WorkSafeBC – Premiums	Monthly / Quarterly / Annual	Monthly: last day of next month; Quarterly/Annual: Jan 20, Apr 20, etc.	Same as filing date	Quarterly & annual due by specific dates; monthly due end of next month