A Corporate Return With Nothing Left to Reconstruct
The T2 is where a year of decisions gets turned into one number and your name goes on it. Everything that made the year good or difficult is already fixed by the time it is prepared. What is still in play is whether the return reflects it accurately.
Corporate preparation runs $1,500 to $2,500, quoted before any work starts. It is the filing at the centre of our tax preparation service, and the one most incorporated businesses in BC come to us for.
You know what the return costs before it is started
Owners have been trained to expect the opposite. The complaints that surface most often about corporate tax work are not about the fee itself. They are about the fee arriving unannounced, climbing a third in a year with no explanation attached, or a five-minute phone call turning into a line on an invoice.
Our number is quoted upfront and it holds. Bundle your personal return with it and the T1 for you and your spouse is included, because your corporate and personal taxes are one decision split across two forms and we would rather prepare them together. Questions about your own return are part of the fee rather than metered against it, and if something genuinely outside the scope comes up, such as modelling the tax effect of a purchase you are considering, you hear the $120 hourly rate before the work begins instead of reading about it later.
The return is only as good as the trial balance underneath it
A T2 prepared on top of books that were assembled in March is a well-formatted estimate. The adjustments get made in bulk, the judgement calls get made under time pressure, and nobody has the appetite to question a number when the deadline is the following week.
Here is the order the work actually happens in:
- Every month, the accounts are reconciled and the transactions are categorized while the year is still fresh
- As the year closes, depreciation, accruals, and shareholder loan activity are brought current
- The financial statements are finalized from those closed books
- The return is prepared from the statements, with the tax positions reviewed against them
- You review it, ask whatever you want to ask, and it is filed
By step four there is nothing left to reconstruct, because the reconciling already happened twelve times inside monthly bookkeeping instead of once in March. That is the entire difference between a return that reports your year and a return that approximates it.
How you pay yourself is the biggest decision on the return
Salary and dividends are not interchangeable. Salary is a deduction for the company, creates RRSP room, and carries CPP on both sides. Dividends do none of those things, and they arrive on your personal return in a different form and at a different rate. The right mix depends on what the corporation earned, what you need to live on, and what you are planning next.
It matters most where the owner is also the main employee. In a corporation whose entire payroll is one or two people, the compensation decision drives most of what the return ends up saying. We work it through with you before the year closes, while it is still a choice, rather than reporting after the fact on whatever happened to be withdrawn.
The filing deadline and the payment deadline are not the same date
This catches good operators every year. Your T2 is due six months after your fiscal year end, but the balance owing is due before that: two months after year end for most corporations, three for a Canadian-controlled private corporation claiming the small business deduction. It is entirely possible to file on time and still be charged interest.
Late filing has its own cost on top, starting at 5% of the unpaid balance and adding 1% for each further month it stays outstanding. We work backward from your payment date rather than your filing date, give you an estimate of what you will owe well before it is due, and file when the return is right rather than when the calendar finally forces it.
T2 Corporate Tax Preparation FAQs
Yes. A Canadian corporation files a T2 for every tax year it exists, including years with no revenue at all. Owners who incorporated for a project that never took off are often surprised by this, and the penalties for the missed years are usually larger than the cost of having filed nil returns on time. If you have skipped a year or two, that is fixable.
Complexity, mostly. How many bank and credit card accounts, whether there is inventory or equipment being depreciated, shareholder loan activity, more than one revenue stream, and the condition of the books we start from. You get the number before any work begins, not an hourly rate that reveals itself on the invoice afterwards.
Yes, and when you bundle it with the T2, the T1 for you and your spouse is included at no extra cost. That is deliberate rather than a promotion. How you pay yourself out of the company lands on both returns, and preparing them separately is how people end up with a salary decision on one that does not match the dividends reported on the other.
Very little. The information that goes into the return is the same information we have been reconciling every month, so there is no request for a year of statements and no hunt for missing receipts. We ask about anything that needs your judgement rather than our records, such as an asset purchase or a shareholder transaction, and then you review and sign.
With the books, not the returns. Filing an old year on top of records that were never reconciled just puts a signature on a guess. We rebuild the missing periods first through catch-up bookkeeping, then file the years in order so each one closes with an opening balance that matches the year before it.
