Well folks, another year has come and gone and we all know what that means;
TIME TO START GETTING READY TO FILE YOUR TAXES!!!!!
Here are 10 important points to keep in mind for the 2019 tax season:
It’s that time of the year again. You know, that time of year that scares many people... the dreaded YEAR-END! Any ideas on what you, as a business owner, should do in order to get ready for taxes? Don’t worry we have you covered, as always.
We’re not here to bore you, so let’s not waste time and get to it!
Here are some simple things you can do to get everything in order for your year-end for your bookkeeper/accountant:
• Organize your files, records and receipts to get ready for tax season. This would include counting your ending inventory, putting all your receipts for the year into separate month end based categories. A good rule of thumb for category base is to follow along with the T2125 (Business Activities form). We will attach a link below.
• Verify all bank reconciliations have been completed and any discrepancies that may have occurred have now been cleared up or at least flagged for your bookkeeper or accountant to review.
One of the many decisions early entrepreneurs in Canada will face is when to register for a GST/HST number. As a business owner, you should want to know if you have to register for GST/HST and, if so, at what point does it become mandatory.
The short answer is eventually you will probably have to, unless you provide only exempt supplies, then you will not have to register.
GST/HST registration becomes mandatory when both of the following arise:
1) You make taxable sales or other supplies in Canada
2) You are not a small supplier ( if you do not exceed 30,000.00 in sales in four consecutive calendar quarters then you are considered a small supplier)
However, you can register for GST/HST voluntarily as long as you make taxable sales or other supplies in Canada. If you choose to register earlier than needed, your effective date of registration becomes the date of your request to open your GST account. The first filing open date generally can be backdated up to 30 days prior your request...
So, this is a topic that almost always comes up during an initial consultation with a newly founded business; aside from our incorporated peeps out there! There are definite pros and cons to both sides of the coin.
You can run a sole proprietorship, or in some cases a partnership, with a personal bank account or elect to open a small business account. A business account will require you to have an active business number. Business numbers are most commonly secured when you register your business name with Registry of Joint Stocks (at least, that’s the way we do it in NS!).
People, AKA our kicka$$ entrepreneurs out there, have honed in on the fact that when you add business in front of ANYTHING, the price increases and banking fees are no exception. Banks today are in fact businesses and run as such, charging fees and interest for their services provided. Simply looking at pricing, no matter which Canadian bank you choose, a personal account will almost always be cheaper than a...
So… my kids have always heard me talk about money. While grocery shopping, I can usually be found talking out loud about prices & quantities to the girls. If we are out for the day, and I am asked to buy just one more treat, we start conversing over what I have already spent so far. If they get pushy with their endless ‘wants’, we’re having a conversation over how I work hard for my money. Therefore, I get to choose what I spend it on, which may not always add up to what they want. Bottom line is we’re talking about money in a relaxed way, sliding it into our daily routine without the little monsters even knowing!
I think it is so important to teach our kids about money from the get go. What use to be a taboo conversation in households, is now necessary in today’s society. With the world changing, for better or worse depending on your perspective, we need to arm our children with all the tools they need to succeed. Money, personal finances,...
Some people may wonder why should you pay your tax instalments and what’s the big deal if you don’t? The answer is simple; if you owe more than $3000 a year in income tax, instalments are mandated. As with anything else the CRA does, failure to do so equates to penalties and interest of course. We don’t know about you, but we think the CRA already gets enough of our hard earned dollars without us adding on the extras!
Let’s get serious though…
If the income you make doesn’t have income tax withheld at source, or if you have not paid enough tax based on your income, this is where the mandated tax instalment may come into play. This would happen, for example, in any of the following situations:
• If you have rental properties, which make a profit for you
• Investment income from your wisely invested money (hopefully lol)
• Self-employed income and c
• Certain types of taxable pensions
• If your employer has not taken enough tax...
For many of us tax preparers, tax season never really ends. It’s a year-round gig, that keeps our hamster wheels spinning! Have you ever wondered what happens on the CRA side of things when the magical filing date passes? The Canada Revenue Agency switches gears from processing, to auditing of course! There is even a special division in the CRA created just for this, known as the T1 Processing Review Centre. There are usually two different types of tax audits: pre-assessment and post-assessment.
During tax season, many lucky taxpayers will have been issued pre-assessment notifications upon filing their taxes. These will usually pop up upon netfiling their taxes for the year with a blurb stating a request will be issued for review of the income tax in the form of a letter. These pre-assessments can be for a number of things such as support payment or business income confirmation. Basically, anything that is usually self-reported, and the CRA is more or less looking for...
A couple of weeks ago, we took a few minutes to ramble on about the ins and outs of Canada Pension program, which is listed in the last few blog posts if you missed that one! Go ahead and read it first, we don’t mind waiting…
So, now that you went back and brushed up on the CPP as a whole, we want to add a quick supplemental on to what the Canada Pension looks like, or would look like, if you elect to draw it out as early as possible.
If you choose to collect it at the age of 60, rather than waiting longer, the main repercussion is the fact that your overall benefit will reduce by 36%, compared to what you would have received if you had waited until you were 65.
You can also elect to take your CPP at the age of 61, 62 or 63 and the 36% will reduce by 7.2% for every year you wait. You are basically penalized for taking it early. The CPP amount is reduced by .6% for each month you receive it prior to turning 65 (7.2% per year).
If you do decide to take the lower CPP...
The old saying “keep your friends close and your enemies closer” could not be truer, then when it comes to the Canada Revenue Agency. Whether you love them or hate them unfortunately is completely irrelevant, as this government body is not going anywhere. At least not any time soon. Taking a possibly volatile relationship, and smoothing the waters down to at least a lukewarm tolerance of one another, is a goal everyone should be striving to obtain.
The number one reason above all else, as to why you should learn the ins and outs of working with the system and maintaining compliance; is simply the fact that the CRA, unlike other debt collectors, has the ability to control your funds simply by seizing your bank account. That is right folks… the CRA has within their rights, the ability to notify you and immediately reach their hands into your bank account, to withdraw whatever funds are available to pay towards an outstanding debt. This debt could be personal income...
The Canada Pension Plan is a pension that provides Canadian citizens, who have contributed, and their families, with a partial replacement of their earnings upon retirement, death, or disability. The amounts paid into the plan are equal contributions based on earnings between an employee and his/her employer at a rate of 4.95%. Self-employed individuals contribute the full amount in themselves at a rate of 9%, which is added to their tax liability at the end of the year upon completing their income tax return.
The CPP retirement pension does not start automatically. You must apply for it and following conditions must be met for approval:
• You must be at least one month past your 59th birthday
• You must have worked in Canada and made at least one contribution into the plan
• You must want your monthly payments to begin within one year
Upon approval of the CPP, you will fall under one of the following categories:
• Retirement Pension-You can apply for your full CPP...
Everyone deserves to be kept up to date on changes to our tax system, financial instruments (RRSP, TFSA's etc), and common concerns in regards to your small business.
D&D Bookkeeping Inc. strives to keep everyone updated through our monthly newsletter and regular blog articles, as a way to help educate and improve financial literacy. We promise we keep it as light & fun as possible.
Go ahead and click below to signup today and immediately expand your knowledge with our Beginners Guide to Tax Time.