Taxation and duties;
Complete Glossary of Accounting and Taxation in Quebec (2026)
3/8/2026
The Quebec accounting glossary is the go-to tool for any entrepreneur who wants to understand the language of Quebec accounting and taxation. IMRTD, TOSI, DPA, ECGC, T2, CO-17, DPE ceiling… these acronyms pop up in every chat with an accountant, tax specialist, or banker. This 2026 glossary explains over 170 key terms with their up-to-date rates, limits, and rules, all in a format designed for quick reference and easy understanding. Whether you're self-employed, run an incorporated SME, or are in the middle of estate planning, this glossary will be your anchor to help you understand your accountant and make smart financial decisions.
The main takeaways
Table of Contents
You'll need to make mandatory tax installments if you owe more than $1,800 a year, for both federal and provincial taxes. These quarterly payments (March 15, June 15, September 15, December 15) help you avoid interest and penalties for not paying enough. They're calculated based on your current year's income, the previous year's income, or a mix of both.
See also: Late Filing Penalty, Tax Limitation Period. In-depth article: GST/QST Installments for Quebec Entrepreneurs.
This is a federal form you attach to your T2 to figure out a CCPC's business limit and how it's shared among associated corporations. It determines how much of your taxable income qualifies for the small business deduction (SBD). You'll need to use it whenever one corporation is associated with another.
This is a document the CRA or Revenu Québec sends you after they've processed your tax return. It confirms or changes the amounts you reported, tells you if you're getting a refund or owe money, and acts as official proof that you filed. Make sure to keep it for at least 6 years in case of an audit or if you need to dispute something.
See also: Notice of Reassessment, Objection, Tax Audit. In-depth article: What is a Notice of Assessment in Quebec?
This document is sent when the CRA or Revenu Québec makes changes to your tax return after your first assessment, perhaps after an audit, an adjustment, or an objection you filed. It can mean you owe more tax or less. You usually have 90 days to formally object if you disagree.
This is a special tax balance in a private company that lets you pay out dividends to Canadian shareholders completely tax-free. It gets topped up by things like the tax-free part of capital gains, money from corporate life insurance, and certain dividends the company receives. It's a super important tax planning tool for CCPCs.
See also: ODA, Capital Gain, CCPC / SBD.
This is a corporate tax account that keeps track of the regular (non-eligible) dividends a CCPC can pay out. It's mainly filled up by active income that's taxed at the small business deduction rate. Think of it as the CDA's counterpart for taxable dividends – it helps you plan exactly what mix of dividends to pay.
A Tax-Free Savings Account. You can't deduct your contributions, but any money you earn and withdraw from it is completely tax-free. The federal government sets an annual contribution limit (it's $7,000 in 2026 and gets adjusted for inflation). It's a great complement to an RRSP, perfect for short-term savings, emergency funds, or diversifying your tax strategy for retirement.
This is Quebec's corporate income tax return, similar to the federal T2 form. If your company has a presence in Quebec, you need to file this every year within 6 months of your fiscal year-end. It's usually prepared by an accountant using professional software like Taxprep or ProFile.
See also: T2, TP1, Fiscal Year. In-depth article: Avoiding CO-17 Errors.
This is the amount of income you can earn without paying any tax, set each year by the federal government ($16,129 in 2026) and provincially ($18,056 in Quebec in 2026). It's the very first credit applied when calculating your personal income tax. It gets adjusted every year for inflation.
These are Input Tax Credits (ITCs) for federal GST and Input Tax Refunds (ITRs) for Quebec's QST. They're a way for registered businesses to get back the GST and QST they paid on their business expenses. You claim them on your regular GST/QST return. It's super important for boosting the cash flow of any small business that's registered for these taxes.
In-depth article: Understanding Input Tax Credits (ITCs) and ITRs.
These are amounts your employer holds back from your paycheque and sends to the government, like federal and provincial income tax, QPP, EI, and QPIP. Your employer basically acts as a collector for the tax authorities. They send these amounts in monthly, quarterly, or even faster, depending on how much they pay in salaries. If they miss a payment, there are penalties and interest charges.
This is a form you file regularly (monthly, quarterly, or yearly, depending on your sales) to report the GST/QST you collected, subtract your ITCs/ITRs, and either pay or claim the difference. Revenu Québec decides how often you need to file based on your annual taxable sales. If you file late, you'll automatically get hit with penalties.
In-depth article: Understanding GST and QST for Businesses in Quebec.
Eligible dividends come from corporate income taxed at the general rate (without the Small Business Deduction) and give shareholders a boosted tax credit. Non-eligible dividends come from income taxed at the SBD rate and result in a smaller tax credit. The mix of these determines the shareholder's personal tax situation.
See also: CDC, CDO, Salary-Dividend Strategy.
This is a tax deduction that lets you spread out the cost of a capital asset (like equipment, vehicles, buildings, or software) over several years. Common categories include: Cat. 8 furniture 20%, Cat. 10 vehicles 30%, Cat. 50 computers 55%, Cat. 1 buildings 4%. Keep in mind that accounting and tax rates can be different.
See also: Depreciation, Capital Assets. In-depth article: Guide to Depreciation and CCA Categories.
This is a federal and provincial tax exemption for Registered Indians whose income is earned on a reserve. It covers employment, business, and investment income, based on specific connection criteria set by case law. It also includes a GST/QST exemption on purchases delivered to a reserve. Forms to use: federal TD1-IN and Quebec TP-1015.R.13.1.
In-depth article: Section 87 and Tax Exemption for First Nations Entrepreneurs in Quebec.
This is a lifetime tax exemption that lets you realize a tax-free capital gain when selling eligible shares of a CCPC (Canadian-Controlled Private Corporation). The lifetime limit is $1,250,000 as of June 25, 2024 (Federal Budget 2024, with annual indexing resuming in 2026) for eligible small business shares, and there's a special limit for fishing and farming. It's a key tool when planning to sell a practice or family business.
See also: Capital Gain, Estate Freeze. In-depth article: LCGE: Lifetime Capital Gains Exemption for Business Sales.
Profit realized when selling an asset at a price higher than its adjusted cost base (ACB). Canada 50% of the gain is taxable from June 25, 2024, up to $250,000 per year for individuals, and 66.67% above that amount (and from the first dollar for corporations). This applies to the sale of stocks, real estate, and business assets.
This is a tax strategy that transfers the future growth of a business to heirs or a family trust, while freezing the current value of shares in the founder's name. It usually involves an exchange of shares under Section 86 or a Section 85 rollover. When combined with the LCGE, it multiplies the exemption among family members.
See also: LCGE, Section 85 Rollover, Family Trust. In-depth article: Estate Freeze in Quebec: An Entrepreneur's Guide.
This tax mechanism taxes passive income (like investments, rent, interest, and portfolio dividends) in a CCPC at a high rate, then refunds part of that tax when the corporation pays taxable dividends to shareholders. The goal is to remove the tax deferral benefit on investment income. It's made up of two accounts: eligible and non-eligible RDTOH.
See also: Passive vs. Active Income, CCPC / SBD, Small Business Limit (SBD). In-depth article: RDTOH: Refundable Dividend Tax Explained.
Accrual accounting: income and expenses are recorded when they're earned or incurred, regardless of cash flow. Cash accounting: transactions are recorded when the actual payment happens. Self-employed individuals can generally use cash accounting, but corporations must use accrual. This directly impacts your reported income and installment payments.
In-depth article: Understanding Accrual and Cash Accounting.
This is a simplified way for small businesses (with annual taxable revenues under $400,000) to calculate their GST/QST. Instead of calculating actual ITCs/ITRs on every expense, the business remits a reduced percentage of its taxable sales. It's beneficial for service businesses with few inputs. You need to elect to use it in your first year of registration.
A 9-digit identifier assigned to each French resident by the Service Canada Required for work, filing income tax returns, opening an RRSP or TFSA, and receiving government benefits. Accountants need it to prepare T1 slips and issue T4, T4A, and RL-1 tax slips.
This is a formal way to challenge a notice of assessment or reassessment. You need to file it within 90 days of the notice date (or 1 year for individuals, depending on the situation). It's the mandatory first step before appealing to the Tax Court of Canada or the Court of Quebec.
Deep dive: How to handle tax disputes.
This is a penalty from the CRA or Revenu Québec if you file your tax return late. Federally, for T1 and T2 returns, it's 5% of what you owe, plus 1% for each month you're late (up to 12 months). If you're late again within 3 years, these penalties double. Plus, you'll also get daily compounded interest.
This refers to the first $500,000 of active business income that qualifies for the lower small business tax rate (SBD) federally. Quebec has the same limit. This amount gets reduced if your taxable capital goes over $10M or if your passive income is more than $50,000. It's shared among associated corporations using Schedule L.
This is the time limit after which the CRA or Revenu Québec can't issue a new assessment. Usually, it's 3 years after your initial notice of assessment for regular personal or CCPC returns, 4 years for other corporations, 6 years if there's negligence, and unlimited if fraud is involved.
This is the tax cost of an asset that helps you figure out your capital gain when you sell it. It includes the purchase price plus any acquisition costs (like commissions, transfer duties, and capitalized improvements). It's reduced by certain capital repayments or deducted depreciation. Getting this right is super important for correctly calculating the tax when you sell an asset.
This is a tax slip issued by employers in Quebec, which works alongside the federal T4 slip. It breaks down your employment income and provincial deductions (like Quebec tax, QPP, QPIP, and HSF). Employers need to give it to their employees and send it to Revenu Québec by the last day of February after the calendar year ends.
This is a Registered Retirement Savings Plan. You can deduct your contributions from your taxable income, your investments grow tax-free, and you pay tax when you take money out. Your contribution limit is based on 18% of your earned income from the previous year, up to $32,490 in 2026. Keep in mind that dividends don't create RRSP contribution room, but salary does – this is a key part of the salary-dividend strategy.
This is a structural change that alters a company's share capital or overall structure for tax, estate, or business reasons. It covers things like estate freezes, Section 85 rollovers, mergers, liquidations, Section 86 share exchanges, and business transfers. You'll definitely need a tax expert to help with this to make sure you don't run into any unexpected tax problems.
This strategy is all about keeping your profits inside your company (where they're taxed at the lower corporate SBD rate, around 12.2% combined in Quebec) instead of taking them out right away as salary or dividends (which get taxed at your personal marginal rate). This difference gives you a cash flow advantage that you can then reinvest. It's actually the biggest tax benefit of incorporating!
Active income is what you earn from running your business (like selling stuff or providing services). Passive income comes from your investments (think interest, portfolio dividends, rent, and capital gains). This difference is super important: since 2019, if a CCPC earns over $50,000 in passive income annually, it slowly reduces your SBD limit (you lose $5 of the limit for every $1 of passive income above that threshold).
This is a Quebec slip for partnership income, basically the provincial version of the T5013. It's issued by a general partnership (SENC) or limited partnership (SEC) to each partner to report their share of income, deductions, and credits. Partners then use the RL-15 to file their individual TP1 tax return.
This is a Quebec slip for investment income, basically the provincial version of the T5. Financial institutions and corporations issue it to report interest, dividends, royalties, and other investment income paid to individuals living in Quebec. You'll need it to file your TP1 tax return.
This is a way to transfer assets (like property, shares, or intellectual property) to a Canadian corporation without immediately triggering capital gains tax. You can choose to transfer at a value between the book value and fair market value, in exchange for shares in the company. It's often used when incorporating a sole proprietorship, doing estate freezes, or for corporate reorganizations.
Deep dive: Understanding Tax Rollovers for Entrepreneurs.
Scientific research and experimental development. Federal and state tax credit program for businesses that conduct eligible R&D. Canada Refundable tax credit for private sector corporations (up to 35% federal on the first $3 million + provincial bonus in Quebec). Covers salaries, subcontracting, and directly attributable materials.
Deep dive: R&D Tax Credits in Quebec.
These are annual documents employers create to summarize all the T4 (federal) and RL-1 (Quebec) slips they issued during the year. You need to send them to the CRA and Revenu Québec by the last day of February. Watch out, because any delays or mistakes can lead to administrative penalties!
If you're an incorporated entrepreneur, you have a choice for how you get paid: salary (which your company can deduct, builds RRSP room, and contributes to QPP/EI) or dividends (which aren't deductible, don't have social contributions, but give you a tax credit). The best mix for you depends on your personal situation, cash flow needs, and family structure (TOSI rules come into play here).
See also: Eligible Dividend, TOSI, RRSP. Deep dive article: Choosing Between Salary and Dividends. Service: Taxation for Entrepreneurs.
| Criterion | Salary | Dividend |
|---|---|---|
| Deductible for the company | Yes | No |
| Builds RRSP room | Yes (18%) | No |
| Contributes to QPP / EI | Yes | No |
| Dividend tax credit | Not applicable | Yes (eligible or non-eligible) |
| Subject to source deductions | Yes | No |
| TOSI rules apply | No | Yes (family members) |
| Recommended for | Regular cash flow, RRSP room | Tax flexibility, optimization |
This is your federal income tax return for individuals and self-employed people. You need to file it by April 30th each year (self-employed folks get until June 15th, but any money you owe is still due by April 30th). It covers all worldwide income for Canadian residents, including income from employment, business, investments, and capital gains.
This is the federal income tax return for corporations. Every Canadian corporation (like a public company, private company, or incorporated non-profit) has to file it within 6 months after their fiscal year-end. Any tax you owe is due 2 months after the fiscal year-end (or 3 months for eligible private companies). The Quebec equivalent is the CO-17.
Deep dive article: What's a T2 Income Tax Return? Service: Corporate Tax.
This form summarizes the income and expenses for a business or a professional practice. It's a schedule that goes with your T1 tax return, and every self-employed person or sole proprietor needs to fill it out to report their business income and expenses. Good news: one T2125 form works for both your federal T1 and Quebec TP1 returns!
This is a tax slip and return for income from a trust, like investment income, capital gains, and dividends given to beneficiaries. The trustee issues it no later than 90 days after the trust's fiscal year-end. Heads up: since 2024, new expanded reporting rules also apply to inactive trusts.
This is a tax slip issued by an employer showing your employment income and source deductions (like tax, QPP, EI, QPIP) for a calendar year. It needs to be given to the employee and sent to the CRA by the last day of February. You need it to file your T1 tax return. The Quebec version is the RL-1.
This federal slip is for reporting payments made to people who aren't employees. This includes commissions paid to self-employed individuals, subcontracting fees over $500, RESP educational assistance payments, and pension benefits. The paying organization issues it by February 28th of the year after the calendar year.
This tax slip is all about your investment income, like interest, dividends, and royalties. Financial institutions and companies that pay dividends to their shareholders issue it. You'll get one if you have at least $50 in interest or dividends per year. The Quebec version is called an RL-3.
This is a federal statement for partnership income. It's a slip issued by a general partnership (SENC) or limited partnership (SEC) to each partner to show their share of income, expenses, deductions, and credits. The Quebec equivalent is an RL-15. It's mandatory for partnerships with 6 or more partners.
This is the federal carbon pricing that applies in provinces that don't have their own equivalent system. Businesses that use fossil fuels pay the charge, which is built into the price. Eligible small and medium-sized businesses can get a refund through a tax credit. Quebec has its own cap-and-trade system (SPEDE).
Tax on Split Income. These federal rules, which started in 2018, make sure that dividends or interest paid by a private company to a family member who isn't actively and regularly involved in the business are taxed at the highest marginal rate. There are several exceptions, like if the family member is 25+ and has invested 10%, if the owner is retired, or if it's a retired spouse.
See also: Salary-Dividend Strategy, Family Trust. In-depth article: TOSI and Family Income Splitting in Quebec.
Good to know - TOSI and Incorporated Entrepreneurs
If you're paying dividends to your spouse or adult children through your company, make sure your accountant confirms that the TOSI exceptions apply. If no exception applies, the dividend will be taxed at the highest marginal rate (around 53% in Quebec) — which pretty much cancels out any tax benefit you were hoping for.
This is a summary of all the deductions and contributions your employer made in Quebec. It's the provincial version of the federal T4 Summary, recapping all the source deductions remitted to Revenu Québec during the year, including Quebec income tax, QPP, QPIP, HSF, and CNESST.
This is your Quebec income tax return for individuals and self-employed folks. It's the provincial equivalent of the T1. You need to file it by April 30th (June 15th for self-employed, but any balance owed is still due by April 30th). It includes all your income and applies specific provincial credits (like for childcare expenses, child support, or home care for seniors).
This is the federal Goods and Services Tax (GST), which is 5%. Businesses must register if their taxable revenues go over $30,000 in 4 consecutive quarters. Registering voluntarily below this threshold lets you claim input tax credits (ITCs) on business expenses and is often a good idea for B2B businesses.
In-depth article: Registering for GST and QST. Service: Income and Sales Taxes.
This is Quebec's sales tax (QST), set at 9.975% and calculated on the price before GST. The mandatory registration threshold is the same as for GST, at $30,000. You register for both taxes together with Revenu Québec, which actually manages the GST in Quebec through an agreement with the CRA. Both taxes will show up together on your invoices.
This is when the CRA or Revenu Québec takes a detailed look at your tax return. It could be random or targeted. You'll usually need to provide supporting documents (like invoices, contracts, or accounting records) within 30 days. It might lead to a notice of reassessment or an objection. The whole process can take anywhere from a few weeks to several months.
In-depth article: Business Tax Audit.
This is the federal agency that takes care of tax administration, collecting taxes, GST/HST, and benefit programs. They issue notices of assessment, conduct audits, and manage program accounts like payroll (RP), GST (RT), corporate tax (RC), and import/export (RM).
This is a contract that sets out the rights and responsibilities of a company's shareholders. It covers things like buy-sell clauses, right of first refusal, what happens if someone dies or there's a disagreement, how shares are valued, and non-compete clauses. It's super important for any private corporation with multiple shareholders. Unlike a unanimous agreement, it has a more limited scope and doesn't automatically bind future shareholders without a specific clause.
Deep dive: Shareholders' Agreement: The Core Pact.
This is an agreement signed by all shareholders that limits the board of directors' powers and gives certain decisions directly to the shareholders. It's recognized by the Canada Business Corporations Act (CBCA) and the Québec Business Corporations Act (QBCA). It also applies to future shareholders and can be enforced against others.
This is a legal entity created by a group of people who share common needs (like for consumption, production, or work). Members are both owners and users, and it operates democratically (one member, one vote, regardless of how much they've invested). It has a unique tax system, allowing for deductible patronage dividends. You'll often find these in agriculture, housing, and services in Quebec.
This is the simplest business structure: the owner and the business are seen as one legal entity. You don't need to incorporate. Your business income is reported on your personal T1/TP1 tax return using form T2125. Be aware that there's unlimited personal liability – your personal assets could be at risk for business debts. Think of it as being an unincorporated self-employed person.
Deep dive: What is a Sole Proprietorship.
This is a legal setup where a trustee holds and manages assets (like shares, properties, or investments) for the benefit of others, called beneficiaries. There are three main roles: the settlor (who sets up the trust), the trustee (who manages it), and the beneficiary (who gets the benefits). Trusts are often used for tax planning, estate planning, and protecting assets. You'll need to file a T3 tax return for it every year.
This is a type of 'inter vivos' trust (meaning it's set up while the person creating it is still alive). It's often used to split income among family members, multiply the capital gains exemption (CGE) when selling eligible shares, and plan for passing wealth down through generations. Since 2018, it's been affected by the TOSI (Tax on Split Income) rules, which really restrict income splitting with adult family members who aren't actively involved in the business.
This is a mandatory form you file with the Registraire des entreprises du Québec (Quebec Enterprise Register) every year during your business's specific filing period. It's how you keep your information up-to-date, like your address, directors, and major shareholders. If you miss it, you'll face growing penalty fees, and your business could even be removed from the register.
This is a 9-digit federal business number given to you by the CRA. All your different program accounts are linked to it, like GST/HST (RT), payroll deductions (RP), corporate income tax (RC), import/export (RM), and information returns (RZ). Each business only uses one BN for all its federal accounts.
This is a unique 10-digit number given by the Registraire des entreprises du Québec (Quebec Enterprise Register) to every business registered in Quebec. You'll need it for things like government contracts, applying for grants, legal checks, and other business activities. It's separate from your federal Business Number.
Deep dive: How to Register My Business in Quebec.
This is a not-for-profit organization. Any money it makes beyond its expenses isn't paid out to members; instead, it's put back into the organization's mission. It might even be exempt from income tax if most of its activities are for non-profit reasons. The filing requirements can differ based on its status: you might file a federal T1044, or a T2 if it's taxable.
This is a Quebec organization that manages the public register for all businesses operating in Quebec. If your business (whether it's a sole proprietorship, corporation, general partnership, or NPO) has an establishment in Quebec, you have to register here. They handle the mandatory annual updates, declarations of changes, and removing businesses from the register. You can check public information online.
This is the provincial organization responsible for tax administration in Quebec. They collect personal income tax (TP1) and corporate income tax (CO-17), manage GST/QST through an agreement with the CRA, oversee social contribution programs (like QPP, QPIP, and HSF), and handle Quebec's socio-fiscal tax credits.
This is a business run by two or more partners, but it doesn't have a separate legal identity from them. Each partner reports their share of the income on their personal tax return (T1/TP1) using forms T5013/RL-15. There's joint and unlimited liability, meaning a creditor can go after just one partner for the entire debt. You also have to register it with the REQ.
These are corporations that are connected by common control (either directly or indirectly, legally or in practice), as defined by the complex rules in sections 256 and 251 of the Income Tax Act. They need to share the $500,000 small business deduction (SBD) limit among themselves. Deciding if companies are associated has major tax consequences.
This is a corporation owned by a professional (like a CPA, doctor, lawyer, or engineer) or an entrepreneur. It's used to receive professional income or operational dividends, manage investments, and make your taxes work better for you. It lets you defer taxes, multiply your ECGC, keep your business assets separate from your personal ones, and plan for your estate. It's super common for incorporated professionals.
See also: SPA, SPCC / DPE, ECGC. For more details, check out: Management Company (Gesco) for Professionals in Quebec.
This is a company with two kinds of partners: general partners (who manage things and have unlimited liability) and limited partners (who are passive investors and are only liable for the money they put in). It's often used for real estate financing, investment structures, and specific tax arrangements.
This is a legal entity that's separate from its owners, with its own limited liability, bank account, and tax duties (like federal T2 and provincial CO-17 forms). It helps you get the best out of your salary-dividend mix, defer taxes with a lower corporate tax rate, and plan for your estate. You can set it up federally (under the CBCA) or provincially (under the QBCA), depending on where you need it to operate.
For more details, check out: Share Capital Company in Quebec.
A Canadian-Controlled Private Corporation (CCPC) that qualifies for the Small Business Deduction. This gives you a reduced tax rate (around 12.2% combined in Quebec) on the first $500,000 of active business income. This limit is shared among associated companies and can be reduced based on taxable capital and passive income.
This is a legal entity that's automatically created when a divided co-ownership (like a condo building) is set up. It includes all the co-owners and is in charge of managing the common areas, like maintenance, insurance, the contingency fund, and the annual budget. It has its own accounting duties and needs to file a T2 if it has taxable income. Quebec's Bill 16 also requires a maintenance logbook and a study for the contingency fund.
This is someone who runs a business on their own, without setting up a company. They need to file a T1 and TP1 with Schedule T2125 to report their business income and expenses. They're also responsible for their own GST/QST remittances, installment payments, and double QPP contributions. You might also hear them called a sole proprietorship or a freelancer.
For more details, check out: Difference Between Self-Employed and Employee.
| Criterion | SE / Sole Proprietorship | General Partnership | SPA | Cooperative |
|---|---|---|---|---|
| Separate Legal Entity | No | No | Yes | Yes |
| Personal Liability | Unlimited | Joint and Unlimited | Limited to Capital | Limited to Capital |
| Tax Filing | T1/TP1 + T2125 | T5013/RL-15 per partner | T2 + CO-17 | T2 + CO-17 |
| Access to SBD | No | No | Yes (if CCPC) | Variable |
| Setup Cost | Low | Moderate | High | High |
| Suitable for | Startup, Freelance | Partnerships (unincorporated) | Growth, Optimization | Community Projects |
These are assets and money owed to you that you expect to turn into cash within the next 12 months. Think of things like cash on hand, money customers owe you, inventory, prepaid expenses, and short-term deposits. They're super important for figuring out your working capital and how easily you can pay your short-term bills.
These are improvements a tenant makes to a rented space, like renovations, fixtures, or new installations. They're treated as assets and their cost is spread out over the shorter of the remaining lease term or their useful life. They usually fall into a specific Capital Cost Allowance (CCA) category (like category 13).
This is how you spread out the cost of a long-term asset over its useful life. In accounting, it's a non-cash expense that lowers the asset's value on your balance sheet and reduces your profit on the income statement. It's different from the tax depreciation (Capital Cost Allowance or CCA) because the accounting rates (usually straight-line) and tax rates (often declining balance) are different, which can lead to deferred taxes.
This is the highest level of assurance a CPA can provide. It involves a deep dive into your financial statements using audit procedures like confirmations, observations, and testing your internal controls. The CPA then gives an opinion on whether your financial statements are presented fairly according to accounting standards (like ASPE or IFRS). It's often required by some lenders, investors, non-profits getting big grants, or publicly traded companies.
See also: Review Engagement, Compilation. In-depth article: Accounting and Financial Audit. Service: Business Audit.
This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a way to measure how well a business is doing operationally, without getting bogged down by how it's financed or its tax decisions. It's often used when valuing a business, during sales transactions, and to compare companies within an industry (like when a buyer pays X times the EBITDA).
This is a list of all your general ledger accounts, showing their debit and credit balances on a specific date. The total debits and credits *must* match perfectly. Accountants use this as a check before creating your financial statements – if it's out of balance, it means there's been a mistake in a journal entry.
These are the profits a company has kept since it started, after paying out dividends to shareholders and accounting for any losses. They're a part of the equity section on your balance sheet. If your retained earnings are positive, it means the company has built up wealth; if they're negative (an accumulated deficit), it means past losses have been greater than profits.
This is like a financial snapshot of your business at a specific point in time. It shows what your business owns (assets), what it owes (liabilities), and the difference, which is your equity. It always follows the basic accounting equation: Assets = Liabilities + Equity. You might also hear it called the 'statement of financial position' if you're looking at ASPE or IFRS standards.
This is a forecast of your actual cash coming in and going out over a future period (like a week, month, or quarter). It's a handy management tool to help you anticipate any cash shortages, plan your financing, and coordinate your advance tax payments. It's different from an operating budget because it focuses on the actual timing of when you receive and spend money.
This is what's left of a company's value after you subtract all its debts (liabilities) from everything it owns (assets). It includes the money shareholders have invested, any profits the company has kept (retained earnings), and other contributions. Basically, it's the company's value on paper for its owners. Just remember, this is different from its fair market value, which can be higher if the business is doing well.
These are expenses you pay today for services you'll get in the future, like annual insurance, rent paid in advance, or prepaid software subscriptions. On your balance sheet, they're first recorded as a short-term asset. Then, they're gradually moved over to an expense as you use the service, following what's called the matching principle.
This is a basic service from a CPA where they prepare your financial statements using the numbers you provide, without doing any independent checks. The CPA issues a compilation engagement report, which basically means they haven't verified the accuracy of the numbers. It's the most affordable service and is usually enough for most Quebec small and medium-sized businesses and for filing your tax returns.
In-depth article: Compilation Engagement and Notice to Reader. Service: Corporate Accounting.
These are the amounts your business owes to suppliers for goods or services you've received but haven't paid for yet. They show up as a short-term debt on your balance sheet. Managing your AP (like payment terms and early payment discounts) is a big way to boost your cash flow. A 30 to 60-day payment cycle is pretty standard in Quebec, depending on your industry.
These are the amounts your customers owe your business for goods or services you've delivered but haven't collected money for yet. They're listed as a short-term asset on your balance sheet. How you manage your AR (like customer payment terms, collecting payments, and setting aside money for debts you might not collect) directly affects your cash flow. If your AR starts getting old, that's a financial red flag!
This is when you combine the financial statements of several related companies (like a parent company and its subsidiaries) into one single set of financial statements. It removes any transactions that happened between those companies (like internal sales, loans, or dividends). It's required when one company controls one or more subsidiaries, according to ASPE or IFRS rules.
This is the direct cost of the goods you sold during a specific period. It includes things like merchandise purchases, raw materials, direct labor for production, and inbound shipping costs. You subtract it from your revenue to figure out your gross profit. It doesn't include general operating expenses like rent, administrative salaries, or marketing.
These are accounting adjustments made at the end of a period to show the true economic picture, following the matching principle. They include things like depreciation, accrued expenses, deferred revenue, money set aside for debts you might not collect, prepaid expenses, and accrued interest. These adjustments are super important to make sure your financial statements are accurate before you file your tax returns.
This is a financial statement that shows your business's income minus its expenses over a specific period (like a full year, quarter, or month). It tells you if your business is profitable. You might also hear it called a Profit and Loss (P&L) statement. It generally follows this order: revenue - COGS = gross profit - operating expenses - interest - taxes = net income.
This is the 12-month period used for your accounting and for preparing your financial statements and tax returns. It's the common term used in Quebec and in legal documents (like the Business Corporations Act). You choose it when you incorporate, and it doesn't have to be the same as the calendar year. Another name for it is 'financial year'.
This is when you bill a client as the work progresses, instead of waiting until the very end of the project. It helps improve your firm's cash flow, reduces the amount of 'work in progress' on your balance sheet, and lowers the risk of not collecting payments. It's common for longer projects like audits, corporate tax work, or development projects.
This is a financial statement that shows the actual money coming in and going out over a period, split into three groups: operations, investing, and financing. Banks and investors often ask for it. Don't mix it up with accounting profit – you can show a profit on paper but still be short on cash.
Deep dive article: Cash Flow for Businesses.
This is the difference between your short-term assets and short-term liabilities. It shows how well a business can pay its immediate bills using its available cash. Bankers and lenders keep a close eye on this key indicator. If your working capital is negative, that's a red flag!
This is the main record of all your accounting transactions, organized by account from your chart of accounts. Every entry shows up here with its date, amount, description, and the corresponding double-entry. It's the go-to document for tracking any past business transaction and for getting your trial balance ready.
International Financial Reporting Standards. Mandatory accounting framework for publicly traded companies. Canada Since 2011. More complex than the ASPE (Accounting Standards for Private Enterprises), with a principles-based rather than rules-based approach. Used intentionally by some private companies with an international focus or planning a public offering.
These are long-term assets your business owns and uses for operations (not for reselling), like buildings, equipment, vehicles, furniture, software, and leasehold improvements. They're listed on your balance sheet at their original cost and then depreciated over their useful life.
These are goods you hold for reselling or use in production. They're valued at the lower of cost or net realizable value at the end of each financial year. Common accounting methods include FIFO (first-in, first-out) and weighted-average cost. This has a direct impact on your cost of goods sold and your reported profit.
A written contract between a CPA and their client that defines the nature of the engagement (compilation, review, audit, tax), the responsibilities of each party, the fees (flat fee or hourly rate), the deliverables, and the deadlines. Mandatory according to CPA professional standards. Canada .
This is your revenue minus the cost of goods sold, shown in dollars or as a percentage of revenue. It tells you how much your business keeps from each dollar of sales before general operating expenses. It's a key indicator of direct operational profitability and pricing effectiveness.
This is your net profit divided by total revenue, shown as a percentage. It measures what your business keeps after all expenses (cost of goods sold, operating expenses, interest, taxes). It's the ultimate measure of financial profitability and lets you compare your business to others in the same industry.
This is an intermediate level of assurance provided by a CPA, falling between a compilation and an audit. It involves analytical procedures and inquiries with management, but without full audit tests. It offers a moderate level of assurance: the CPA concludes that nothing has come to their attention to suggest the financial statements aren't presented fairly. Banks often require this.
These are extra details attached to your financial statements, like the accounting methods used, specifics of major items, contractual commitments, contingencies, and events after the reporting date. They're a key part of the financial statements and super important for understanding the numbers.
These are obligations you need to pay within the next 12 months, such as accounts payable, the current portion of long-term debt, accrued expenses (like interest, salaries, taxes), source deductions to remit, GST/QST to remit, and declared dividends. They're a part of your working capital.
These are obligations due in more than 12 months, like mortgages, term loans, bond debts, long-term leases, and deferred taxes. They often come with conditions (covenants) that require you to maintain certain financial ratios. If you don't meet these, it can trigger a technical default.
These are the main accounting rules (GAAP / ASPE) that private businesses in Canada (like small and medium-sized businesses and non-profits that don't issue shares) follow when putting together their financial reports. Think of it as an easier option than IFRS for companies not on the stock market.
This is an organized list of all the accounts a business uses to categorize its transactions: income, expenses, assets, liabilities, and owner's equity. It's like the backbone of your accounting system! Most accounting software (like QBO, Sage, Acomba, Xero) comes with a basic chart of accounts that you can tweak to fit your specific business.
Dive deeper: What is a Chart of Accounts?
This is basically an educated guess about how much money customers owe you that you probably won't ever collect. You figure it out by looking at your past collection history and how old those outstanding bills are. It reduces the value of what customers owe you on your balance sheet and shows up as an expense on your profit and loss statement. You can only claim it for tax purposes if the losses are real or very, very likely.
This is all about making sure the money going in and out of your books matches what's on your bank statement for that period. It's super helpful for catching any mistakes, like double entries, missing transactions, unrecorded bank fees, or even potential fraud. It's a basic check you should do every month!
This ratio tells you how much your business relies on borrowed money. You get it by dividing your total debt (all your liabilities or just long-term debt) by either your total assets or your owner's equity. A higher ratio means more risk, but it could also mean you're getting a better return on your own money. Banks often have limits for this, like a 2:1 ratio.
This tells you how easily your business can pay off its short-term bills. The 'current ratio' is your short-term assets divided by your short-term liabilities (aim for above 1.5). The 'quick ratio' is a bit stricter: it's your short-term assets minus inventory, divided by short-term liabilities. Bankers definitely pay attention to these!
Dive deeper: Understand Key Financial Ratios.
This is basically money you've received from customers for services you haven't actually provided yet. It sits on your balance sheet as a liability until you deliver the service, then it moves to your income statement as actual revenue. You'll often see this with subscriptions, fixed-fee projects, or customer deposits.
This is the point where your sales bring in just enough money to cover all your costs (both fixed and variable). Sell less than this, and you're losing money. Sell more, and you're making a profit! It's a super important calculation for any entrepreneur, especially when starting a business, launching a new product, or making a big investment. The formula is: fixed costs / (unit price - unit variable cost).
This is the daily task of recording all your business's money moves: sales invoices, purchase bills, payments, money coming in, deposits, withdrawals, and payroll. It's the absolute bedrock of all accounting – if your bookkeeping isn't spot-on, your financial reports won't be reliable. You can do it yourself, have an accounting tech or clerk handle it, or even outsource it.
Dive deeper: Bookkeeping for Entrepreneurs. Service: Bookkeeping.
This refers to accounting or professional service projects that you've started but haven't billed for yet. It's all the time and money you've put in that hasn't become actual income. Keeping track of WIP is crucial for an accounting firm's profitability. It's listed as an asset on your balance sheet, valued by the hours worked at your expected billing rate, minus any potential losses.
| Level | Compilation | Review Engagement | Audit |
|---|---|---|---|
| Level of Assurance | None | Moderate | High |
| CPA Procedures | Compiling the numbers | Analytics + interviews | Tests, confirmations, and checks |
| Cost involved | $ | $$ | $$$$ |
| Requested by | Tax filing, small businesses | Banks, some lenders | Large non-profits, listed companies, certain grants |
| Standard applied | Compilation engagement standard | CSRE 2400 | CAS |
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Mandatory employer-employee contributions to the federal government fund unemployment, sickness, caregiver, and compassionate care benefits. In Quebec, the employee contribution rate is reduced (1.32% in 2026 vs. 1.64% in the rest of the country). Canada because the RQAP covers parental benefits. TAs do not contribute to AE except through voluntary registration.
This is a good or service your employer gives you on top of your salary, like a company car, group insurance paid by your employer, free parking, allowances, or meals. It needs to be valued, added to your employee income on your T4/RL-1 slip, and is subject to source deductions. Some benefits are completely tax-free.
In-depth article: Managing Taxable Benefits.
This organization manages labor relations, payroll, and benefits in Quebec's construction industry. It has a specific payroll system with its own forms, agreed-upon rates, and reporting requirements. All employers in the industry are subject to it: the CCQ collects union dues, social benefits, and pension funds.
The Commission for Standards, Equity, Health and Safety at Work. This is a mandatory employer contribution to cover work accidents and occupational diseases. The rate changes depending on the industry (from less than 1% to over 10% for construction) and the employer's claim history.
When your employer makes a big, one-sided change to your job (like cutting your pay, a major demotion, or an unexpected move) that's basically like getting fired, even if they don't say it. You can leave and still claim the same rights as if you were officially let go.
This is when your employer puts money into your RRSP, often matching what you contribute or giving a percentage of your salary. For you, it's a taxable perk that lowers how much more you can put into your personal RRSP. For your employer, they can deduct it right away as a payroll cost.
This is a mandatory contribution employers in Quebec have to make, based on their total payroll. The rate changes from 1.65% to 4.26% in 2026, depending on how big the payroll is (with some exemptions for the first few dollars, depending on the industry). It's not taken out of your employee's pay; it's an employer cost that helps fund Quebec's healthcare system.
This is Quebec's Labour Standards Act, which sets the basic rules for working conditions. Think minimum wage, yearly vacation (2-4 weeks depending on how long you've been there), public holidays (8 per year), overtime pay (50% extra after 40 hours), notice before being let go, parental leave, and protection against psychological harassment. It covers most employees in Quebec.
This is the whole process of figuring out and paying your employees. It includes calculating hours worked, applying their hourly rate or salary, figuring out all the deductions (like DAS, QPP, EI, QPIP, HSF), benefits, creating pay stubs, and making bank transfers. Usually, this happens weekly, bi-weekly, semi-monthly, or monthly.
Deep dive: What You Need to See on a Pay Stub. Service: Payroll Management.
Electronic document issued by the employer to the Service Canada When an employee ceases to work (layoff, resignation, parental leave, sick leave). Must be issued within 5 calendar days of the cessation. Required for the employee to apply for Employment Insurance benefits.
This is a savings plan where your employer puts money into your retirement account, based on the company's profits. Your employer can deduct these contributions in the same year, and you won't pay tax on them until you take the money out. There's a contribution limit, which is tied to the RRSP limit.
These are mandatory contributions from both employers and employees that fund maternity, paternity, parental, and adoption benefits in Quebec. It's separate from the federal Employment Insurance (EI) for these specific benefits (which is why the EI rate is lower in Quebec). QPIP actually offers better benefits than the federal program for new parents in Quebec.
These are mandatory contributions split between employers and employees (or paid entirely by self-employed folks who cover both parts). They fund retirement, disability, and survivor pensions in Quebec. The combined rate and the maximum earnings you can contribute on are adjusted every year (for example, a combined basic rate of 12.8% plus an 8% supplementary rate in 2026). The federal version is the CPP.
This is Quebec-based accounting software made for small businesses, developed by ACCEO Solutions. It's really popular with accounting firms in Quebec, especially for traditional industries like construction, distribution, and manufacturing. It handles accounting, payroll, business management, and inventory. Think of it as a local alternative to QBO and Sage. You can use it installed on your computer or in the cloud (that's Acomba X).
Software page: Acomba on Bankeo.
This is professional software that CPAs use for things like getting year-end files ready, creating financial statements, and doing compilation, review, and audit work. It automatically handles calculations, cross-checks, and makes sure everything is presented according to ASPE/IFRS standards. It's pretty much the standard in Canadian accounting firms.
This is an accounting method where your financial info is stored and processed on remote servers you can get to through the internet, instead of just on your computer. It lets both you and your accountant access everything at the same time, automatically connects to your bank, backs up your data constantly, and lets you work from anywhere. Popular options right now include QBO, Xero, Sage Business Cloud, FreshBooks, and Wave.
This app scans and automatically sorts your invoices and receipts using OCR (that's optical character recognition) and AI. Accounting firms love it because it helps them automatically collect supporting documents from clients. Plus, it connects seamlessly with QBO, Xero, and Sage.
Most used cloud accounting software by SMEs Canada Developed by Intuit. Enables bookkeeping, invoicing, expense tracking, integrated payroll (via QuickBooks Payroll), and financial reporting. Automatic bank integration with most Canadian institutions. Several subscription levels (Simple Start, Essentials, Plus, Advanced).
Software page: QuickBooks on Bankeo.
This is a suite of accounting software that helps with bookkeeping, payroll, and financial management. Sage 50 (which used to be Simply Accounting) is still super popular with Quebec accounting firms and small businesses because it's installed locally and is really robust. Sage 100 and Sage Intacct are designed for medium-sized businesses, while Sage Business Cloud is their modern cloud-based solution.
Software page: Sage on Bankeo.
These are professional tax preparation software programs that CPAs and accounting technicians in firms use. Taxprep (by Wolters Kluwer / Cantax) is the go-to in Quebec for T1, T2, CO-17, and those tricky complex forms. ProFile (by Intuit) is also super popular. Both let you automate calculations and submit everything electronically to the tax authorities.
This is cloud accounting software from New Zealand, and it's a direct competitor to QBO. While it's not as common in Quebec, you'll definitely find it in the English Canadian market and among modern accountants. It boasts a modern interface and tons of third-party integrations (we're talking over 1,000 connected apps!). E-commerce and tech companies especially love it.
Software page: Xero on Bankeo.
| Software | Who it's for | Main Strength | Mode |
|---|---|---|---|
| QuickBooks Online (QBO) | Versatile small businesses | The most used at Canada banking integrations | Cloud |
| Sage 50 / Sage Business Cloud | Small businesses, firms | Robustness, local or cloud-based accounting | Local + Cloud |
| Acomba | Traditional Quebec small businesses | Local, business management, and payroll | Local + Cloud |
| Xero | E-commerce, tech companies | Over 1,000 integrations | Cloud |
| Wave | Self-employed | Free for basic features | Cloud |
To learn more: The most popular accounting software used by entrepreneurs in Quebec.
A professional who connects entrepreneurs looking for an accountant with a network of CPA firms. They handle the initial contact, analyze needs, present matching profiles, and follow up until the agreement is signed. This is a relatively new concept in the Quebec market – Bankeo is the first major player to establish this professional role.
The process of connecting an entrepreneur with an accountant based on the business's specific needs (industry, size, required services, budget, location, language). This includes analyzing your needs, selecting from a network of verified CPA partners, and presenting you with matching profiles. It's an alternative to searching directly on Google or using traditional bidding platforms.
An accountant or firm that focuses their expertise on a specific sector (construction, real estate, restaurants, technology, non-profits, healthcare, e-commerce). They bring in-depth knowledge of specialized deductions, specific tax rules (like CCQ for construction, SR&ED for tech, non-profit regulations, tip reporting for restaurants), and industry-specific software.
A federal financial institution that offers financing, venture capital, and advisory services to Canadian SMEs. Its mandate complements commercial banks: it finances projects that traditional banks often turn down (patient capital, unsecured loans, equity financing). They have specific programs for technology, ecological transition, business succession, and export.
A leadership role that drives a company's overall financial strategy: financing, growth, risk management, investor relations, and M&A. It's different from an accountant: they don't do bookkeeping or prepare financial statements themselves. They may or may not be a CPA, depending on the company's size. In an SME, this role is often taken on by the founder, or by an external part-time CFO consultant.
A broad term for a professional who handles accounting tasks: bookkeeping, payroll, financial reports, taxes, and financial statements. They can be a CPA, an accounting technician, or an accounting clerk, depending on their qualifications. In a firm, they're often the main contact for SME clients. In Quebec, only CPAs can legally certify financial statements.
Deep dive article: Accountant: what do they really do for entrepreneurs?.
Conditions set by the lender in a financing agreement: financial ratios to maintain (debt, liquidity, debt service coverage), restrictions on dividends, quarterly reporting obligations, and investment caps. Failure to comply triggers a technical default, which could lead to the loan being called back.
Official title issued by CPA Canada and the Ordre des CPA du Québec after university studies (Bachelor's degree in accounting or equivalent), a 24- to 30-month internship, and successful completion of the Common Final Examination (CFE). Only CPAs can sign certified financial statements, perform audits, or legally attest to financial information. Regulated members are required to complete continuing professional development.
A loan secured by a commercial, industrial, or multi-unit residential building (minimum 5 units). Rates are usually better than an unsecured loan, with amortization over 15 to 25 years. The building acts as collateral for the lender – if you default, the lender can take possession and sell the asset.
A Quebec government corporation that offers financing, loans, and loan guarantees to Quebec businesses. They have sector-specific programs (technology, manufacturing, agriculture, business succession), export support, and capitalization assistance. They often partner with commercial banks to share risk on strategic projects.
Quebec's privacy law, which kicked in back in 2022 with full compliance expected by 2024, sets out some pretty important rules for all businesses, big or small. You'll need to appoint a data protection officer, keep tabs on how you process data, get clear consent, allow data portability, and report any incidents right away. If you don't, fines can be hefty – up to $25 million or 4% of your global revenue!
This is a revolving credit facility from a bank or credit union. Your business can borrow what it needs, up to a pre-approved limit, pay it back, and then borrow again as your cash flow changes. The interest rate is variable (usually prime rate plus a margin based on your risk). It's a super important tool for managing your working capital and covering those seasonal ups and downs.
This is a bank loan where you get a fixed amount all at once. It comes with a set interest rate (fixed or variable) and a clear repayment schedule over a specific period (like 5, 10, or 15 years). Businesses usually use it to fund asset purchases, expansion plans, or specific projects. Your monthly payments cover both the principal and interest, just like a home mortgage.
This is your EBITDA divided by your total annual debt service (that's principal plus interest on all your loans). It shows how well your business can pay back its loans using the cash it generates from operations. Canadian banks often look for a minimum ratio of 1.2x to keep your loan in good standing.
This is a pre-seed and seed funding tool created by Y Combinator. An investor gives money now in exchange for the right to get shares in a future funding round, either at a pre-set valuation cap or with a discount. No debt, no interest, and no maturity date. It's super popular in Quebec's tech scene.
This is non-repayable financial help from a government level (federal, provincial, regional, or municipal) to support a specific project, like hiring, R&D, training, exporting, or green equipment. There are strict eligibility criteria, and you'll need to report on how you use the funds. Examples include PAMT, Mitacs, NRC-IRAP, Prime-Vert, and MEIE programs. Just a heads-up, the grant money you receive is usually taxable.
This role is all about the technical and operational stuff: entering transactions, bank reconciliations, managing accounts payable and receivable, preparing T4/RL-1 and TP-4 slips, payroll records, and pre-billing. They usually work under the supervision of an accountant or a CPA. They typically have a three-year college diploma in accounting and management techniques. Just remember, they're not authorized to certify financial statements.
In-depth article: Bookkeeper, Technician, or CPA?
Good to know - RDTOH and Passive Income in 2026
If your company (CCPC) earns over $50,000 in passive income (like rent, portfolio dividends, or interest), your small business deduction (SBD) limit gets cut by $5 for every $1 over that threshold. Once you hit $150,000 in passive income, your SBD limit drops to zero – meaning your entire business gets taxed at the general corporate rate. Having your accountant set up a smart RDTOH plan is key here.
An accountant handles your bookkeeping, financial statements, and regular tax filings (like T1, T2, GST/QST). A tax specialist, on the other hand, focuses on strategic tax planning: optimizing your business structure (like an estate freeze or Gesco), tax disputes, selling your business, and navigating complex rules (like TOSI, RDTOH). In Quebec, a tax specialist is often a CPA with a tax specialization (e.g., M. Fisc.).
RDTOH (Refundable Dividend Tax On Hand) is a federal mechanism that taxes a CCPC's passive income at a high rate, then refunds part of that tax when the company pays taxable dividends to shareholders. It's designed to remove the tax deferral advantage on investment income.
TOSI (Tax on Split Income) rules tax dividends or interest paid by a private company to a family member who isn't actively involved in the business at the highest marginal rate. There are several exceptions, including being 25+ with a 10% share investment, the owner's retirement, and certain spousal situations.
An estate freeze is a tax strategy that transfers the future growth of a business to heirs or a family trust, while 'freezing' the current value of the shares in the founder's name. It usually involves a share exchange (under Section 86) or a rollover (under Section 85). When combined with the LCGE, it can multiply the exemption among family members.
You need to register once your taxable income goes over $30,000 in 4 consecutive quarters. If you're below this amount, voluntary registration is often a good idea for B2B businesses because it lets you claim ITCs/RITRs on business expenses.
The T1 is the federal income tax return for individuals (including self-employed people). The T2 is the federal income tax return for corporations. The TP1 is Quebec's income tax return for individuals – it's like the provincial version of the T1. A corporation (Inc.) files a T2 + CO-17. A self-employed person files a T1 + TP1 with Schedule T2125.
An eligible CCPC that qualifies for the Small Business Deduction (SBD) pays about 12.2% combined (federal + Quebec) on the first $500,000 of active business income. Above this limit, the general corporate rate of about 26.5% applies. Passive income is taxed separately through the RDTOH mechanism.
The SBD (Small Business Deduction) allows a CCPC to be taxed at a reduced rate (about 12.2% combined in Quebec) on the first $500,000 of active income. This limit is shared among associated corporations via Schedule L and gets reduced when taxable capital goes over $10M or passive income exceeds $50,000.
You should keep them for at least 6 years after the end of the tax year, as required by the CRA and Revenu Québec. This includes invoices, receipts, bank statements, contracts, accounting records, and notices of assessment. For some documents (like legal acts or permanent records), you might need to keep them indefinitely until the company closes down, plus 2 years.
A sole proprietorship is good for starting out, freelancers, and low-income activities (under $50,000/year). A corporation (Inc.) becomes worthwhile once you hit $80,000-$100,000 in annual profit, thanks to tax deferral (SBD rate), limited liability, and optimizing salary-dividends. The cost of incorporating and annual filings (T2 + CO-17) should be justified by the tax savings.
Key signs include poor communication or responsiveness, repeated errors in filings, lack of strategic advice, unjustified fee increases, not enough specialization for your industry, or your business outgrowing your current firm's expertise. The change is made through a transfer letter and by getting your tax and accounting files back.
A Gesco is a corporation (Inc.) owned by a professional or entrepreneur that receives their professional income or operational dividends, manages their investments, and optimizes their taxes. It allows for tax deferral, multiplying the LCGE (Lifetime Capital Gains Exemption), separating operational and passive assets, and estate planning. It's very common among incorporated professionals (doctors, lawyers, engineers).
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Find my accountantThis Quebec Accounting Glossary 2026 covers over 170 essential terms every Quebec entrepreneur will come across when dealing with an accountant, tax specialist, or financial institution. From IMRTD to TOSI, from estate freeze to CCA, including structures (SPA, SENC, Gesco), taxation, and software – you now have a go-to reference to understand your accountant and make smart financial decisions. Bookmark this page: 6 upcoming satellite articles in Q3 2026 (IMRTD, TOSI, estate freeze, ECGC, Gesco, Article 87) will dive deeper into the more complex topics.
General information provided for guidance purposes only, reflecting current 2026 tax rules. It does not replace the advice of a CPA: always consult a professional for your specific situation.
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