Are you stressed and overwhelmed by complex sales tax calculations? Hands on Accounting is your tax filing expert helping small business owners to avoid major pitfalls.
Every business owner – whether you’re a small sole proprietor or incorporated – is legally required to file and pay taxes on time. Often the issue is not the payment, but working out what is due. You have the totals but not base prices! Does this item have GST, HST, or PST? Or all three!
Avoid these 5 major pitfalls
- Registering as a Corporation too early
- 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
- Failing to take responsibility for debts (not paying suppliers)
About incorporation
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.
Many clients are advised to register as a Corporation on their first day of business. In many cases where business owners fall behind on filing and reporting sales tax returns as a result of incorporating too early, when they were still in the planning stage.
Incorporation in Canada can be done online. If your business decisions are made, and paperwork is pre-prepared, it’s a fast process.
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.
The owner is responsible for the day to day operations including tracking the financial transactions of business. 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).
As a sole proprietor, you can still
- hire employees or contract workers
- register for payroll,
- register for GST/HST and WCB
So why incorporate?
There is a lot more paperwork involved in owning a corporation including regular payments to the government. So what is the benefit?
Incorporating protects earnings within the corporation from your vendors (suppliers) and/or personal assets. If your business suffers a setback or loss, the income of the corporation is considered to be separate from the owner’s personal assets.
Corporations are required to file a tax return that is separate from the owner or owners. The owner is considered an employee of the corporation, and the corporation pays the owner a salary or pay cheque.
It is important to ask whether you need to incorporate at this stage of your business.
- Is your business making a sizable profit – over $200,000 is a good indicator
- Are you hiring multiple employees?
- Are you selling a product or service that bears risk?
- Do you have assets to protect?
- Do you have complex personal taxes with income from investments or other countries?
HandsOnAccounting will help you determine whether incorporation is necessary and has a benefit. We save you the time, stress and costs associated with incorporating too early.
If you have not filed your small business returns, book a free consultation with an expert. We will take the time to talk you through your options, so that you can stop struggling in paying the bills.
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 register will result in fines and penalties.
Once you have registered for GST/HST Sales Tax your need to file your GST reports on time and make the payment by the deadline.
If you do not understand how to report and/or pay your Provincial or Federal Sales Taxes book a free consultation with us today, and we will help you identify what you need, and how to organise it.
It’s time to get your taxes back on track!
Click on the SIDE BUTTON for a free consultation.
