How much record keeping is necessary for my business?
In business, you want to maintain an exact record of every cent you earn and spend. That includes maintaining careful records when it comes to employee payroll, accounts receivable, purchases, and other expenses. You will need all that information to determine how well your company is doing financially. You will also need receipts and bank statements to file your annual income taxes for your small business. That means a decent amount of record-keeping, which will only increase as your company grows over time.
When do I have to file my taxes?
Finally, a question with a definitive answer!
Personal taxes are to be filed by April 30 of the following year. Individuals reporting self-employed income from business, farming or commissions are allowed to file on or before June 15, however, CRA will impose interest on any taxes owing commencing May 1 up to the date of payment for all tax payers regardless of your filing deadline. For returns filed later than these deadlines, CRA imposes late filing penalties on the amount of tax owing in addition to any interest.
For limited companies, the filing deadline is either 2 or 3 months after the company year-end depending on if the company has taxable income exceeding $500,000 (2 months) for either the current or immediately prior year. After this date, CRA will impose interest. In addition, CRA will charge late filing penalties for returns filed later than 6 months past the company year-end.
What automobile expenses can I claim in my business?
One of the more common expenses claimed by taxpayers are automobile expenses.
In order to determine an eligible claim, you need to determine both the business use and personal use of the vehicle. Business use generally does not include driving from your home to your place of business and back. Once the total business and personal use are known, you can apply the business use percentage to your automobile expenses.
In order to support your claim should CRA request it, you should maintain automobile usage logs that document the date, the business kilometers driven and the business purpose of the trip. Remember, the onus is on the taxpayer to prove the expense to CRA if they enquire.
In some instances, you may claim either your actual automobile related expenses (business percentage) or to simplify things, a reasonable amount per kilometer driven for business (for 2019, CRA accepts $0.58/km for the first 5,000 km and $0.52/km thereafter).
Call us at 403-646-2851 to discuss your situation or book a meeting.
How do we get started as clients of Acuity?
The best place to start is to give us a call at 403-646-2851 or stop by our office and talk to one of our partners. We generally provide a free initial meeting to get to know one another and to assess your business, accounting and tax needs.
For most clients, we team you up with a Partner of the firm and at least one other contact person so that you can get in touch with us quickly regardless of who might be in the office each day. We strive to keep your needs in focus!
We look forward to starting a long-term, mutually beneficial business relationship!
How do I ensure my business taxes are properly executed?
There are common tax and accounting software packages available that can help you file business taxes. Unfortunately, while they may offer you accuracy checks and even sell audit insurance, programs don’t have the excellent eye for detail and ability to solve issues that an actual accountant does. If you want to ensure your business taxes are accurate and your tax burden is minimized, the best approach is to retain the services of a professional accountant or tax specialist.
Should I incorporate my business?
This question should eventually be asked by nearly all business men or women. The answer, unfortunately, cannot be boiled down to a simple yes or no without a thorough review of your specific situation. Understanding some of the pros and cons of a corporate entity may assist in determining if it is appropriate for you. Things to consider:
• Potential for lower tax rate on income that is not withdrawn from the business.
• Lower tax results in more after-tax dollars to reinvest in your business.
• Potential to minimize your personal liability in case of a lawsuit.
• Potential for significant tax savings when selling your business.
• May provide more flexibility in both the timing and manner in which you pay yourself.
• May be more expensive in terms of legal and accounting fees.
• May be more complicated to manage.
Call us at 403-646-2851 to discuss your situation or book a meeting.
How do I pay myself or family members from my company?
This is another question that we are asked frequently, but like most questions related to business and tax, the answer is usually – “It depends”!
It depends on your situation and what some of your overall objectives are. Consider the following:
• Do you wish to pay into the Canada Pension Plan?
• Do you wish to contribute to RRSP’s?
• How active are you or family members in the business?
• How taxable are both you and the business?
• Will you diligently make payroll deductions when required by CRA to avoid penalties?
• Do you incur childcare expenses?
Call us at 403-646-2851 to discuss your situation or book a meeting.
When are my workers employees or independent (self-employed) contractors and what is the difference?
This question is asked often and can have significant impact on your business if done incorrectly.
This is a matter of fact and can only be determined from reviewing the specific situation. The differences in how an employee or independent contractor are treated are as follows:
• An employee is subject to payroll deductions for income tax, CPP and EI.
• An employee requires the employer to remit an equal amount of CPP and 1.4 times the EI that the employee pays.
• An independent contractor may charge GST on his or her services.
• An independent contractor does not require tax, CPP or EI remittances.
CRA may determine that a worker is an employee, regardless of how the business has treated that worker. In this case, the business may be responsible for any CPP and EI that would have otherwise been reported by an employee and may be subject to interest and penalties.
We recommend a review of the following publications to assess your particular situation: https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4110/rc4110-18e.pdf
https://alis.alberta.ca/tools-and-resources/content/products/employee-or-contractor-know-the-difference/
Call us at 403-646-2851 to discuss your situation or book a meeting.
What are your fees?
Unfortunately, every client has their unique business, accounting and tax needs so it is hard to generalize what our fees might be.
Generally, our fees reflect the amount of time spent on your needs and the degree of difficulty in providing quality service and advice (was it a run of the mill solution to a simple problem or task, or a complex situation requiring research and the evaluation of many options?)
Generally, we do not bill for the occasional phone call or quick meeting throughout the year, provided the time spent is minimal. If the time required to address your issues are more significant, we will provide you with an estimate of our fees prior to commencing your work.
We strive to offer our services at competitive and reasonable prices. We know that happy clients are longtime clients!
When email isn’t sufficient, we use a secure method of transferring files and documents called e-Courier.
We can set you up free of charge with this service so that you don’t have to worry about your sensitive information being compromised. This security is simply a few clicks away!
Privacy and confidentiality are important to any accounting professional and we take it seriously!
