Small Business Accounting: Calgary and Surrounding Areas, Including: Airdrie; Chestermere; Cochrane; Okotoks.
Full Service Accounting For Small Businesses
Finances are an integral part of your business and you must work with a reliable accounting firm. One that you can truly trust. If you are looking for a way to save money on your taxes whilst being worry free, then you can count on Small Business Tax Accountants. We can prove our experience in working with different companies and businesses seeking tax assistance. Our experts are in accordance with the latest tax laws in your business field, and they can give you the best assistance in that matter. We intend to reduce your losses and improve your profits at their best, while you move on with your daily activities related to your business. Our final goal is to help you make the most efficient financial choices. We have all the reasons to be your friend, not your enemy. The tax season is upon us and you need a trustworthy accounting firm to help you during this stressful period. Imagine this; someone else does all the work and you can focus on the more important issue at hand, your business. We can ensure that your taxes will be registered correctly and your report will be completed quickly and accurately.
Call our Calgary accounting firm today for more information.
Think about the fact that since you own or manage your own business or a company in a certain field, you may be eligible for tax cuts or incentives that you might not even know about. There are many tax incentives that are only available to your industry. And we are aware of the fact that accounting issues differ from a doctor's office to a hospital, for instance. On the other hand, nightclubs and restaurants account for complex and varied tax rules applied to food and drinks. Our Calgary staff takes care of your financial statements, but we may also help you with your financial strategy - developing financial controls in order to supervise overhead and provide management reports and operational policy reviews. When it comes to taxes, you should look for the best option for your business. Small Business Tax Accountants has done this job for many small business owners. Keep in mind that as an owner, you must pay attention to the law and you must always seek for solutions to save money. Small Business Tax Accountants is a well-versed Calgary accounting firm with a good reputation in terms of tax accounting and reporting. We are a reliable accounting firm and all you have to do, is give us a try and you will see just how much money you could be saving!
Frequently Asked Questions:
When should I apply for a GST / HST account?
If you will have sales of $30,000 in fiscal year, you must obtain a GST number. If you exceed sales, but fail to obtain a GST number, CRA will create and backdate your GST owed to the date 60 days after your $30,000 was exceeded.
Is there any advantage to applying for a GST account early??
No. It's just more paperwork. The exception is if you will be purchasing many items in advance of your first sale - where this will allow you to recover the GST on items purchased (called ITC's) as Input Tax Credits.
I already have a GST account. Do I need another one?
Chances are that you received a GST number operating personally (as Sole-Proprietor or Partnership). If you start a separate business or start an Incorporated company, you’ll need to apply for a NEW GST number. Each business (exceeding $30,000 in sales/revenue) must each have a GST number. This is due to the income of your new company being distinct in its recording of ssIf you will have sales of $30,000 in fiscal year, you must obtain a GST number. As part of our services, we review your businesses for correctness and will contact CRA for you to correct so you stay in compliance.
Beware of the “tax preparer”
Many people post signs up claiming that they can prepare and file your taxes – for a fee. What is their experience in this field? Do they feel that because they’ve done their own taxes for the past 10 years that they are now experts? Our office routinely sees past tax returns which were filed having errors and missed opportunities. This usually accounts for a few thousand dollars of tax paid unnecessarily; and in one case we were able to recover a $24,000 error for a client. I cannot stress the importance of getting the right accounting support for your business.
I have a corporation – should I declare Dividends (T5) or take a Salary (T4)?
My view centered around this topic is what is important to you. Are you in favor of topping up your RRSP, maximizing your CPP, or do you have child daycare expenses? – If yes, then take a monthly salary or end-of-year management fee. You’ll need a T4 to show the business expense and there will be a source deduction remittance required by CRA payable to your Payroll Account (RP Account) within 15 days of payment to yourself. I usually prefer Dividends as this is a “sharing” of business profits, after tax, which in a corporate setting (in Alberta) is currently taxed at 14% (3% Provincial and 11% Federal) below $500,000. This also allows dividend “sprinkling” amongst shareholders, such as a husband and wife (as long as the correct corporate structuring has occurred).
I pay a lot of tax every year – what can I do?
Our view is that it is imperative that we review both the business operations as well as your personal tax situation simultaneously to properly balance the amount of tax you pay in both areas with the focus on… Never Pay Tax Unnecessarily. Some of the options we may explore are paying your spouse and paying your kids. Often times they provide infrequent support to your business with no compensation. They should be paid for their “part-time” assistance, and if their tax base is low – they may get all their tax back and if under age 16, they won’t pay CPP.
Now that I’ve started a business, I don’t have any medical/dental benefit coverage.
This doesn’t have to be expensive – in fact, as a corporation – it’s an advantage. This opens the door for you to setup a PHSP (Personal Health Spending Account) which will allow you to deduct 100% of the medical/dental/vision expenses allowed by the Tax Act as a business expense. This means that you are not out-of-pocket (after tax dollars) and can recoup these costs. Although you cannot pay the expense directly to your provider with company funds, through a provider it will only cost (your business) 5 or 10% in admin fees to process…and that’s a good thing.
Should I remain a Sole-Proprietor? Or should I Incorporate?
There are two reasons to incorporate. One is liability – the other is tax advantage. Regarding liability, if your business puts you at risk that your actions may cause damage to property or injury to a person – then there may be a chance that you could be sued for damages; and as a sole-proprietor your personal assets, cash, home and vehicle would be at risk. With respect to tax advantage, if your business is achieving sales/revenues above $50,000 yearly then, our view is that you’re no longer operating a “casual” or “hobby” business and need to elevate your business posture. For example, in Alberta, you would only be taxed on the corporate business’ gross profits at the 14% tax rate (which is far better than being taxed at the personal tax rate of 15% or 22%)..
I buy the “Tax-in-a Box” package and do my taxes every year. Is this okay?
We can appreciate the convenience factor that these packages present – but your business deserves a higher respect. Although many of these wizards prompt you – there is no connection between what you do in your business and what you have happening in your personal life. These two areas NEED to be connected and assessed so that you NEVER PAY TAX UNNECESSARILY. In our approach to our clients taxes, we leverage our tax experts’ knowledge to ensure that our approach assesses the many variables that can play a factor in reducing your taxes.
I have Incorporated my business. Do I need a business bank account?
This is a must. Any income NOT deposited to your business bank account could be perceived as your personal income and would then be taxed at your personal tax rate. A business bank account and its fees are an expense to your business and can be deducted within your business taxes.
I just received more Tax slips and my taxes have already been filed. What should I do?
The onus is on you, the taxpayer, to submit a T1-Adjustment to CRA and notify them of the missed Slip and they will re-assess your tax year. The danger here is that if you don’t report the late slip and CRA catches the Slip not reported on your taxes – they readily assume that you, the taxpayer, have tried to mislead them by NOT reporting this income and may impose a penalty of 50% of the tax due by this omission. This could be huge and a major slam to your bank account. One client this happened to was fined $4500 as the T4 issued from BC did not arrive at their home in Alberta. CRA view is that they knew of the income they received in BC and therefore had an obligation to report it (or at least an estimate of what was earned).
Should I pay my children? Probably
Most business owners involve their children to help with different tasks that promote their business and don’t think to compensate them. It may be stuffing envelopes for marketing, routine shredding of documents, cleaning and dusting of office space, filing, running errands for business. The payment should equate to the activities performed. A teenager who can now effectively contribute in computer skills and other tasks could receive a more substantive hourly/monthly compensation. The importance here is that it is an expense to your business and is much better means to compensate your children for their efforts. The alternative would be to continue to give them your hard-earned after tax dollars as an allowance – and there’s no deduction for that.
What is the minimum age to work in Alberta? 12 with permission
Alberta Employment Standards Code allows the employment of children 12 to 14 years of age provided they have the written consent of one parent or guardian and must also complete a safety checklist. Hiring children under 12 years of age is prohibited.
How many hours, and when, can my child work in Alberta? 2 to 8 Hours a Day
Children may work:
• Two hours on a school day
• Eight hours on a non-school day
• Between 6:00 a.m. and 9:00 p.m.
I have sub-contractors. What Slips do I need to prepare?
If you operate in the Construction Industry, the CRA form T5018 Statement of Contract Payments, is required to be completed showing the monies disbursed to each contractor. If they are a business, the slip will need to reflect the business name, mailing address and business number. If you’ve paid an individual, then the slip will need to reflect their full name, mailing address and Social Insurance Number. If you operate outside of the construction industry, then the same information applies and needs to be reported on a T4A Slip.
I have casual employees who wish to be paid cash under-the-table. How should I deal with this?
All income you receive, less expenses are taxable profits. In order to show the cash paid as expenses, the amounts paid to others must be supported by a T4, T4A or T5018 Slip. If none of these is used –then you are responsible for paying the tax. If someone wishes to receive $15/hour and insists on Cash – then I may be inclined to pay them $12/hour as I would then be responsible for the tax; but will never agree to the full rate they demand – unless I can claim the deduction and move the payment into their hands. NOTE: If you pay the same person under $500 in that year – no slip is required.
I have $100,000 worth of equipment. Do I have to depreciate it?
Yes. The amount of depreciation depends on the type of equipment, and their CRA assigned depreciation rate.
Can I borrow money from my corporation?
Yes, under the following conditions:
1) Loan needs to be interest-bearing because it's at a non-arms length. At present CRA's prescribed interest rate on shareholder loans is 1% per annum.
2) Shareholder loan needs to be repaid within 12 months from date of borrowing (this can be stretched to be interpreted as, 'needs to be repaid before the end of next fiscal year' so that the loan doesn't appear on two balance sheets). Shareholder's loan remaining unpaid after that time will result in CRA reassessing the shareholder's personal tax return in the year when the loan was borrowed to include the unpaid loan as income, with no offsetting deduction to the corporation. In such case, the shareholder can claim an offsetting deduction in the year when such loan is repaid.
3) In the form of a mortgage for your home if the mortgage is at fair market value, carries interest, you put a lien on your home that has the terms of repayment, just as any other mortgage would have. Fair market value is what the corporation would charge an outside person (a) based on its policies if it was in mortgage business or (b) based on market practices, if it's not in the mortgage business.