here to simplify the process for you.
Every business owner (whether a Sole Proprietorship or a Corporation) is requirment by law to file and paying taxes on time. That being said the processing taxes 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 knowing about marketing 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 filing your taxes and making regular payments held before submitting 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
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