Hands on Accounting is here to simplify the process for you.
Every business owner (whether a Sole Proprietorship or a Corporation) is required by law to file and pay taxes on time. That being said the process can be incredibly overwhelming, especially if you are behind on bookkeeping.
When I started my business, I knew I was going to be a Sole Proprietorship, and that I would need someone to help market my business because that is not my area of expertise.
Think of Hands on Accounting as your tax filing expert. We help business owners avoid these 5 major pitfalls when it comes to paying taxes on time.
- Registering as a Corporation too early in the game
- Failing to pay or filing sales tax returns
- Not reporting Corporation tax, delaying it by more than 6 months
- Registering for GST/HST to soon, or not registering as a sole proprietorship and
- Failing to take responsibility for debts, not paying suppliers.
The type of business you run (Sole Proprietorship or Corporation) determines the way your taxes are filed and whether regular payments are required to be submitted to the government.
I often see clients who have been told to register as a Corporation, this is fine if your business is actually at a stage where filing as a Corporation is beneficial.
In many cases where business owners fall behind on filing and reporting sales tax returns as a result of incorporating too early.
If you are in the beginning stages of your business and are in the process of deciding whether to incorporate for tax purposes here are some things to consider.
What is Sole Proprietorship?
Sole proprietorship is the simplest and easiest business to start-up and run if you are a solopreneur. After you pay all of the expenses involved in running your business – the NET PROFIT is the yours to keep (there is no pay check).
Should your business require it, you can still hire employees or contract workers and register numbers for Payroll, GST/HST and WCB as a Sole Proprietorship. In this case, the owner is responsible for the day to day operations including tracking the financial transactions of business.
What is Incorporating?
Think of incorporating as the way to protect income within the Corporation from your vendors and/or personal assets. The income of the Corporation is considered separate from the owner’s personal assets in the case of a business loss. Corporations are required to file a separate tax return from the owner who is considered an employee of the Corporation (the Corporation pays the owner a salary or pay cheque).
There is a lot more paperwork involved in owning a corporation including regular payments to the government. It can be overwhelming but it does not change the fact that it needs to be done. It is important to ask whether you need to incorporate at this stage of your business. Is your business making a profit of over $200,000? Are you hiring multiple employees? Are you selling a product or service? Do you have assets to protect?
Asking these questions will help you determine whether incorporation is necessary and beneficial and can save you from the costs associated with incorporating too early.
Why register for Sale Tax?
If you are self-employed and running your own business, you are also required to register for GST/HST Sales Tax in the month or quarter you start making $30,000 in Gross Sales, failing to do so with result in fines and penalties. Once you have registered for GST/HST Sales Tax your need to file the reports on time and make the payment by the deadline.
If you do not understand how to report and/or pay your Sales Taxes for provincially and/or federally. Here are a few tips
- Gathering all the paperwork into a pile for each year, such as deposits, invoices, purchases and expenses
When you have them ready bring this to us at Hands On Accounting.
If you have not filed your returns, now the time to hire the RIGHT bookkeeper to complete the bookkeeping for your business. If you are running the Corporation, we will take the time to look at the profits, so that you can stop struggling in paying the bills.
“TAX AVOIDANCE IS NOT NEGOTIABLE” -and is one of the major reasons businesses fail.
Let’s get your taxes back on track. Learn more about our bookkeeping services contact (604) 314-8395.