Small Business Accounting
RRSP investing tricks
One of the limitations on making deductible contributions to RRSP is your “earned income” for the preceding taxation year. The calculation of your contribution limit for the current year begins with the lesser of the a fixed amount per CRA for the year and 18% of your earned income for the preceding calendar year. Unused RRSP room from previous years
Sole proprietor tax return tax return tips and deadline
You don’t need a separate or different tax return to report your business income; you report your worldwide total income on the T1 general income tax return.So if you have several different businesses, or employment income as well as business income, or investment or pension income for that matter, it all gets reported on the same tax return. Business losses
Claim all eligible medical expenses
Missed medical expenses are one of the most overlooked and forgotten tax breaks by individuals.Many people don’t add up their expenses because of the income-related requirement: only expenses that exceed the lesser of $2,171 or three percent of net income can be claimed.But what many don’t realize is that there’s a long list of expenses that qualify, so it may
If you’re emigrating from Canada, don’t collapse your RRSP too early
If you leave Canada and become a non-resident for tax purposes, it could benefit you to wait until you’re a non-resident before you collapse your RRSP and move the proceeds to wherever you’re moving. Canada puts a withholding tax of just 25 per cent on the proceeds of an RRSP for non-residents. But if you want to wind up your
Be sure to report all T-slips
Let’s say you file your return and later discover that you’ve failed to include a T-slip reporting income or a dividend payment. No problem, you think, because you know the slip’s issuer also sends the same information to the Canada Revenue Agency. You think it’s not necessary to give in the late slip to the Tax department, assuming that the
How to Avoid Audit Red Flags?
How to Avoid Audit Red Flags? There are many deductible expenses available to small-business owners, ranging from business-operating expenses to home-based business write-offs and automobile expenses. The capital asset deductions for assets belonging to the business, such as computers, automobiles, and furniture, may be depreciated at varying allowable rates. The bottom line is, you have to handle all deductions accurately
Be weary if a CRA auditor insists you to sign a waiver
Be weary if a CRA auditor insists you to sign a waiver Under normal circumstances ,given there is no fraudulent activity involved, the tax department has three years to carry out a reassessment of your tax return. If time is running out on the 36-month deadline, a CRA auditor will ask you to sign a waiver allowing the agency to
Should you still file taxes, even if you are not working?
Should you still file taxes, even if you are not working? Some low- or zero-income earners still think there’s no need to file a return. This misconception can cost thousands in lost benefits and credits like the GST/HST credit and the Canada Child Tax Benefit. More and more benefits are being distributed through the tax system these days. So, if
Keeping Your Financial Records Organized
Keeping Your Financial Records Organized Every accountant can tell a terrible tale of businesses that were not strict about record keeping for proper expenses, such as websites or cloud services, or claiming undocumented expenses. It is best to be careful. If this sounds like something you may be doing, tax auditors can add fines to your unpaid taxes, and the
Uses of a Holding Company to Own Real Property / Fixed Assets
Uses of a Holding Company to Own Real Property / Fixed Assets If your small-business owns real property and other fixed assets, you can creditor-proof the operation by creating a separate company to own the real property and fixed assets. If the operating company fails, your assets in the holding company will be safe. You may also move funds out
Advantages of Salary vs Dividends
Advantages of Salary vs Dividends We recommend incorporated small-business owners look at the advantages of salary v.s. dividends. Based on our experience, many shareholders of small-businesses do not think to take part of their pay in dividends to take advantage of their lower tax rates. Depending on where they live, they can earn somewhere between $30 000 – $40 000 in net dividend income
Managing Personal vs Business Expenses
Managing Personal vs Business Expenses Wherever possible, attempt to separate personal items from business items, such as bank accounts or credit cards, for ease of administration, and to take advantage of different rules. For example, credit card interest accrued for business purposes is tax-deductible, whereas interest on personal items is not. Having separate cards would eliminate any confusion. Individuals may deduct
Can I Claim Home Offices Expenses for my Small Business
Can I Claim Home Offices Expenses for my Small Business Tracking accurate home expenses also requires good judgement. Entrepreneurs who run businesses out of their home need to pay particular attention to their deductions. You may be able to claim a proportion of expenses like utilities, insurance, rent or property taxes, amongst others, if you run a business exclusively out of your home.
What are Some Important Filling Deadlines for Small Businesses?
What are Some Important Filling Deadlines for Small Businesses? Missed deadlines are particularly harmful to small-businesses; for example, when owners of a private incorporated business learn that they have six months after their corporate year-end to file their return, they sometimes fail to realize that any tax owing still has to be paid within 90 days following the year-end. As a result,
Should I Incorporate My Small Business?
Should I Incorporate My Small Business? There are two common setups for small-businesses: Sole Proprietorship A sole proprietorship is an individual operating business without incorporation. The main advantages include a simple and cost-effective setup and the utilization of losses in the business with other income of the proprietor. Disadvantages include virtually unlimited liability, higher taxes in the case of a
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