New Corporation Setup: Bookkeeping, Tax Structure and CRA Accounts

A new corporation needs four things in place before its first year end: a bookkeeping system, the right CRA program accounts, a plan for paying the owners, and a calendar of filing deadlines. Set these up in the first months and the first T2 is routine; skip them and the first year turns into catch-up work.

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What has to be set up in the first 90 days?

Setup item	Why it matters	When
Business bank account in the corporation’s name	Keeps corporate and personal money apart, which every later filing relies on	Before the first sale or expense
Bookkeeping file in Xero or QuickBooks Online	Every T2, GST/HST return and financial statement is built from it	First month
Year end	Sets every T2 deadline. The first tax year can be shorter than 12 months but no longer than 53 weeks	Before the first T2
GST/HST, payroll and import-export accounts	Each is opened only when the corporation needs it	Before the first HST invoice, pay run or shipment
Owner pay plan	Decides between salary, dividends or a mix	Before the first payment to an owner
Shareholder loan record	Tracks money moving between you and the corporation	From day one

Which CRA accounts does a new corporation need?

Account	Program	When you need it	What it means for your books
Corporation income tax	RC	Every corporation	One T2 a year, due 6 months after the year end
GST/HST	RT	Once taxable sales, including those of associated businesses, pass $30,000 in one calendar quarter or over four consecutive calendar quarters; earlier by choice	Tax charged on invoices; input tax credits claimed on business costs incurred after registration
Payroll	RP	Before the first salary payment to anyone, owners included	Source deductions remitted; T4 slips each February
Import-export	RM	Only for commercial imports or exports	Customs accounts tied to the business number

Voluntary GST/HST registration trades paperwork for refunds. If your first year has large start-up purchases and your customers are businesses that claim the tax back, registering early often pays. If you sell to consumers and stay under the threshold, it often does not. Our voluntary HST registration calculator runs the numbers.

Should the owner take salary, dividends or a mix?

Point	Salary	Dividends	Shareholder loan
Deductible to the corporation	Yes	No	No
Payroll account and remittances	Yes	No	No
CPP contributions	Yes, employer and employee shares	No	No
Creates RRSP room for the owner	Yes	No	No
Slip	T4	T5	None
When the owner pays tax	Through payroll deductions on each pay	On the T1 for the year the dividend is paid	Repaid in time: on a taxable interest benefit, unless interest is paid at CRA’s prescribed rate. Not repaid in time: on the full loan, see below

A shareholder loan is not a way to pay yourself. Money you take from the corporation that is not salary, a dividend, or a repayment of money you lent it has to be repaid within one year after the end of the corporation’s tax year in which you took it. If not, it is added to your income for the year you took it, under subsection 15(2) of the Income Tax Act. Repaying it with a new loan does not count.

Many owners use a mix. We set it before the first payment, using both the corporation’s T2 and your own T1, which is why we file them together in the Corp + Personal Tax bundle.

How much tax does a new Ontario corporation pay?

A Canadian-controlled private corporation in Ontario pays a combined federal and Ontario rate of 11.2% (from July 1, 2026) on up to $500,000 of active business income a year, through the small business deduction. A tax year that straddles July 1, 2026 is prorated.

The $500,000 is shared with associated corporations, cut for a tax year shorter than 51 weeks, and reduced when passive investment income passes $50,000.

Income above that limit, and investment income, is taxed at higher rates. Our first-year corporation tax calculator estimates the tax on a short first year.

What are the deadlines in year one?

Filing or payment	Due	Applies when
T2 return	6 months after the year end	Always
Balance of corporate tax owing	2 months after the year end, or 3 months for many small CCPCs that claim the small business deduction	When tax is owing
Tax instalments	Not required in the first tax year	From year two, if tax for both the current and the previous year is over $3,000
GST/HST return	1 month after each monthly or quarterly period; 3 months after the year end for annual filers	Once registered
Payroll remittances	By the 15th of the month after the pay date, for regular remitters	Once salary is paid
T4 and T5 slips	Last day of February after the calendar year	When salary or dividends were paid

Use our first-year deadline calendar to date each one against your own year end, and the fiscal year end calculator to choose that year end.

What does setup cost with us?

Our fees are fixed and annual, with no hourly billing. The pricing calculator shows your final fee before tax for the services you choose, and your engagement letter on the same screen. See how Gondaliya CPA works for the six steps from fee to onboarding.

Where does this stage fit?

Before operations, an inactive corporation files nil returns at Corp Nil Filing for $300. After setup, as the corporation grows, a bank may ask for a CPA compilation report. All six stages are on your corporation from opening to closing.

Frequently Asked Questions

When should a new corporation start bookkeeping?

From the first transaction. Bookkeeping started at year end means rebuilding months of bank activity, and the first T2 waits on it.

Does a new corporation pay tax instalments?

Not in its first tax year. Instalments apply only when the corporation’s tax for both the current and the previous tax year is over $3,000, and a first year has no previous year.

Can the first tax year be shorter than 12 months?

Yes. The first year can end on any date you choose, as long as it is no more than 53 weeks after the corporation was formed. A short first year means an earlier first T2.

Do I need a payroll account if I pay myself dividends only?

No. A payroll account is needed only when the corporation pays salary or wages to someone, including you.

When must the corporation register for GST/HST?

Once its taxable sales, including those of associated businesses, pass $30,000 in a single calendar quarter or over four consecutive calendar quarters. It can register earlier by choice. Taxi and ride-share businesses register from their first sale.

Which accounting software do you use?

We work in Xero, and we are a 2026 Xero Awarded Firm.

Who Reviewed This Page

Sharad Gondaliya, CPA

CPA Ontario member 61040184 (verify on the CPA Ontario directory). Also a US CPA in Washington and Montana.
Gondaliya CPA Professional Corporation, CPA Ontario Registered Firm, ID 61330051 (verify the firm).
Registered EFILE electronic filer. 1450+ 5-star Google reviews. Multiple award-winning team, 2026 Xero Awarded Firm.
55 Queen St E, Suite 1205, Toronto, ON M5C 1R6. 647-212-9559. info@gondaliyacpa.ca. Open 9:00 AM to 8:30 PM, Monday to Sunday.

Last reviewed: October 14, 2026, by Sharad Gondaliya, CPA.