As a small business owner, we can often think that the odds are stacked against us when it comes to capital and finances. But it is important for small business owners to be informed that the Canadian tax system is set up to your advantage. You can build wealth within your company and for retirement.  As hard as it might be to believe, there are methods to create wealth right within the tax system that are encouraged by the government.

Firstly, it is important to understand that the Canadian tax system is broken up into two parts: personal and corporate tax. 

Personal Tax vs. Corporate Tax

Personal tax rates can be quite high. You may pay high personal tax rates and, in a way, this makes sense. The government wants you to pay its money before you go and spend it somewhere else. This is what GST (Goods and Service Tax) and HST (Harmonized Sales Tax) are all about. This tax (consumption tax) is a way of trying to prevent you from overspending.

On the other hand, we have corporate tax, small business tax rates are between 9% and 15% based on which province you live in. Although it might seem arbitrary, the corporate tax rate is much lower than the personal tax rate since the government wants you to contribute towards the economy.

Income Retention in Corporation

We all love paying the lowest amount possible in taxes which is why some entrepreneurs may potentially keep as much income earned and build a nest egg in your corporation. But, due to recent tax changes by the government, they have discouraged this and are trying to stop this from happening. The government still wants you to save capital for the future but just not this way, instead here are the recommended methods of doing so.

Method 1 – RRSPS

Instead, the government wants you to payout your salary, and use RRSPs. This method can be used for saving for the future, the government wants you to do so using that salary that you earn. You simply create a RRSP contribution room and retirement fund, and it grows quite quickly as taxes aren’t paid now but down the road in the future. Overall, you have a greater amount of money to start with which further grows and helps a lot as retirement reaches.

Method 2 – Lifetime Capital Gains Exemption

This method is quite valuable and can change the way you think about your business in a positive manner. This big tax incentive by the government is policy-based, basically what the government wants is for you to create a treasured business that you could potentially sell in the future and obtain tax-free money. The strategy to carry this out is through the lifetime capital gains exemption. This policy is a method and not a loophole, additionally it’s not going away any time soon. It’s very policy-based, simply put the government wants you to create a company that’s not going to croak when you die or retire. In return for this, the government is offering $900,000 of tax-free money for selling the shares of your small business corporation that qualifies.

This is such a treasured tool for retirement and creating wealth, yet it is often overlooked. The primary reason it is overlooked is that it is a lot of work to achieve this. Many things need to be resolved within the business to ensure that it is sellable. It can be quite complicated but with the help of professionals at H&T Accounting Services, you can achieve this.

Collectively, there are many ways you can set yourself up for success as a small business owner with the help of the government policies and rules. Understanding how the tax system works is crucial to avail these opportunities and retire with as much capital as you possibly can. It is important to understand that having an accountant or financial advisor that understands your goals can only help you achieve this. Book an appointment with us today to take your small business to the next level whilst setting yourself up for success.

Are you someone who is looking to claim personal tax? Have you thought about hiring an accounting service to help you file the claim? If you said yes to both these questions then keep scrolling down because we have got you covered.

Why Should You Claim A Personal Tax Return?

Home office expenses are usually claimed on a personal tax return. The deductions help in reducing the amount of your income that you pay on the tax. This means that your overall liability on income tax also gets reduced.

What Is The Temporary Flat Rate Method? How Is It Calculated Through Accounting Services?

A temporary flat rate method helps in simplifying your claim for a home office expense. This includes the home expenses, the office supply, and the phone expenses all at the same time. So, if you are someone who is still working half the time from home, you can easily claim $2 for every day you worked from home. The period of working from home should at least be four consecutive weeks after the pandemic hit the world. As an individual, you can claim $400 at maximum for working from home under the home office expenses for employees working through COVID-19. Just keep in mind that this method of calculating the claim would only work after 2020.

Here Is How You Can Easily Do Auditing Yourself And Calculate What You Should Add To This Claim:

• Do not calculate the area of your working space.
• Do not keep any supporting documents with you.

Here is how your employer can calculate the claim by not doing the following:

• They do not have to complete the form or sign up at T2200S or T2200 like employees.

Here are a few easy steps to help you find out if you are capable of filing for the claim or not:

1. Find Out If You Are Eligible

You can easily find out whether or not you are eligible to file for the claim.

2. Fill Out The Form

When you start filling out the form, you need to calculate the total number of days you worked from home in the year 2020 when the pandemic hit the world and then multiply the total number of days by $2. Remember that you can only go up to $400 for the claim you are seeking in return. So, the maximum number of days you worked from home can only be 200 days.

3. Determine An Appropriate Number Of Days You Worked From Home

The best way to calculate your total number of days is by using the temporary flat rate method. Just follow the process and then attach the form to your income tax return.

4. Claim The Deduction On Your Tax Return

In the form, you will see Line 9939, you should add the claim amount over there with your other home office expenses.

Did you find this article useful? Let us know in the comments below.

The Canada Child Benefit (CCB) is administered by the Canada Revenue Agency (CRA). It is a tax-free payment that’s provided on a monthly basis to eligible families who have children that are under 18. In addition, the Canada Child Benefits might also provide a child disability benefit, including other related territorial and provincial programs.

The Canada Child Benefit is paid to eligible families from July until June of the next year. This benefit is based on several factors. In order to qualify to receive this benefit, a family needs to meet these four important conditions:

1. You have a child who is still under 18.
2. You are the sole caretaker of this child and responsible for their upbringing.
3. You live in Canada and are a resident who is required to file tax returns.
4. You and/or your partner is a citizen of Canada, a protected person, a permanent resident, a temporary person (been in the country for the last eighteen months and has a valid permit for the nineteenth month), or is an indigenous person living under the Indian Act.

You will be considered as the primarily caretaker of the child if you are responsible for supervising the daily activities and other needs of the child, making sure that all of their medical needs are met, including arranging childcare when needed.

How much will a family receive?

The amount of money a family receives is based on a couple of things like:

• The number and ages of qualified children present in the family.
• The family’s net income for the last tax year.

Furthermore, you can also use a reliable online calculator in order to get an estimation of the amount of money you might receive. This is also going to calculate whether you qualify for the Child Disability Benefit or not. A lot of the community agencies can help you when it comes to finding information about family and child tax benefits, hence make sure to get in touch with them.

How can you apply for the Canada Child Benefit?

You can apply for the CCB by choosing one of the three different methods. The first method is by using you birth registration. This takes place when you are registering the birth of your child at the hospital. Also, there are certain provinces that allow online registration. You need to give your consent before sharing your Social Insurance Number (SIN) and give permission to the Vital Statistics Agency to share your birth registration number with the Canada Revenue Agency.

The second method involves logging into your CRA account. After you have logged in, go to the ‘Apply For Child Benefits’ section and fill in the required fields like your contact, citizenship, marital status, name of your child, gender, place and date of birth. After you have reviewed your application, submit it. You might have to provide additional documents to the CRA, if asked for it. You can do that by navigating to the ‘Submit Documents’ section in your CRA account.

The third method consists of mailing the application package. You would have to download form RC66 and fill it up. This is the Canada Child Benefits Application, and you have to attach other required documents too. Next, you would need to mail the entire package (make sure it is signed) to your tax centre.

In today’s business world, accounting is viewed as the most imperative language of business. It is an action whose vital role is to provide quantitative information mainly in financial nature regarding economic entities that are supposed to help make an economic decision. Having accounting in favour helps business stakeholders and other associated users make a knowledgeable judgment and evaluate better decisions through financial circumstances. 

Regarding cost, earnings, profit, loss, liabilities or assets, accounting provides vital information for decision making, planning and controlling processes within a business infrastructure. Accounting’s main objective is to record financial transactions and precisely identify, track, record, organise and communicate financial information. 

Why Do Small Business Owners Find Accounting Useful?

If you as a business owner have poor financial management, then not to mention, it is one of the most fundamental reasons for the failure, especially in between the first year of the business. Considering the limited budget and resources of small firms, that is the reason, accounting helps and plays a crucial role in the growth and development of businesses.

Highly-skilled business owners put financial information like records of business transactions, taxes, payrolls, projections, into one place and then spit it out to make it easy to understand the whole aspects about the financial state of their business.

Having an accounting process tells them whether or not their business is making any sort of immense profit, what’s their status of actual cash flow, value of their assets and liabilities, and which activity or event involves their business for making money.

We make unprepared financial information and accounting spit it out with ease for flesch, accurate and consistent financial reports.

Why is Accounting a Crucial Step for Small Business?

Pay attention to the following 4 major points

Cash Flow:

It keeps a record of the cash flow where the cash is moving because Cash flows represent the lifeline of any business and are also the survival. If not handled responsibly, cash flows can create a hectic challenge for you and your respective business. When you run into that dilemma, you aren’t able to pay your bills timely which increases the risk of decrease in its credit score or higher interest rates. You can prevent your business cash flow situation by implementing different policies for efficient record-keeping of financial statements.

Fixed Cost:

In order to understand the concepts of fixed costs, it is basically the amount set aside to cover a probable future expense and often can be used by the management in decision making regarding expansion, cost reduction and increasing credit lines. Your small business relies on cost accounting. This way your legal provision amounts are estimated, allocated and are necessary for certain company expenses and repayments in the future. Having a systematic allocation of your finances doesn’t make you end up losing money unnecessarily.

Well Being:

There should not be any doubt regarding accounting. Why? Because accounting always gives you a better grasp of the well-being of your business. If you’re a business owner who is excited about the new organisation and thinks can handle the business properly. Soon you’ll realize that this wasn’t your actual cup of tea and consulting the superior for guidance is vital in order to combat the fact. After the accounting has been done, you can review it by learning to read a freshly-made balance sheet, income statement, taxes, and cash flow statement so that you can come to your rescue.

Detect Frauds:

As a successful business owner, the key responsibility for growing your small business is to thoroughly review your financial statements regularly so that you can establish a detailed budget where your cash flow will move. However, doing this also allows you to discover operational inefficiencies and helps you detect and avoid frauds done by customers, employees and suppliers. When you understand this phase of business finance and dealings, you are better equipped with facing audits or scrutiny and also make you assured you are in the safest place without any flaws.

Why Hiring?

Hiring a professional accountant alongside your business can help you understand your real-time cash position, for viewing various accounting reports, creating expense claims, setting budgets and sending products invoices on the go. Benefits are many only if you think it would serve.

Dear Clients:

We hope you are in good health.

For business proprietors and partners and their spouses we do have some time before filing their returns.

For others we are running short of time; deadline to file this year is June 1st.

For many of such clients, we have already filed the returns.  But some clients have yet to provide us their documents (tax slips).  We do have your T4s and T5s if we prepared these slips for you.  But you need to provide us other slips you may have.

Tax Planning takes time but can save a lot of taxes, many times hundreds of dollars and sometimes thousands.  If you bring your documents close to the deadline, we will not have enough time to do proper planning.

To save you maximum taxes we request that you provide us your documents soon.  Send these electronically or drop these through our office door slot at any time of your convenience.  Alternatively send these in the mail.  These days we do not meet our client’s in-person for reasons known to you.

Teji Singh, Manager

H&T Accounting Service

T: 905-858-0775

F: 905-858-8645

Website: www.hAndT.ca

Certified professional accountants are individuals who help their clients in managing their yearly taxes. They can advise you on a long list of other services, which may include advice on your retirement, financial, estate accounting system, and tax planning system. Certified professional accountants are part of a business owner’s professional team along with a lawyer and a banker. Here are some essential points which will help you to choose the right one for you and your business

Interview CPAs
Ask how long they’ve been in business full time, and for references and what type of services they do for their clients. You also need to ask them about the benefits of choosing them over another CPA. Make sure that they must have a valid license.

Use the 60% rule
Select a CPA who has sixty percent of his or her business coming from business owners such as yourself. If your business is incorporated, make sure that the person you choose must be specialized in corporate accounting, including financial statements and audits.

Rates
You need to ask CPS about their rates and what those rates include. Also, ask what their hourly rate is and what the cost would be to answer questions during the year.

Ask about record keeping
Ask what computer program they prefer to use for your record keeping and why they prefer that program. Many times, if you use the program they suggest, it can save you some money because they can use your data files.

When do they work?
What are their hours of operation? Make sure that you can call them at hours that are convenient for you.

Corporation vs. individual
Are you interested in hiring a corporation of CPAs or a CPA that has his or her own business? If you go for the corporation then, find out you will be dealing with one particular person. It’s best to build a relationship with one person for making sure that your data is secured.

Making a decision
Interview at least three CPAs. Don’t rush this decision. Make sure you have the best CPA and bookkeeper for you and your business. Build long term relationships with both.

Want to get a high-quality of accounting service provider? Choose H &T Accounting Services. Boost your business profit and manage all data efficiently by hiring our expertise team members for getting accounting services. Our expertise team members are experienced in providing all type of accounting and bookkeeping services to our clients.

Managing accounts and tax is a business aspect that helps determine overall profitability of any firm. There would be high and low times out there when it would not be easy to go for you with all the accounting issues. The accounting professionals based on Milton, Oakville will help you find a complete solution to all the tax and accounting issues you are going through at every step of your business activity. If you seek the expertise help, it would certainly prove out to be fruitful at your part as your accounts will be managed well and solutions to all your problems will be provided at its best and earliest.

You need not worry anymore about your accounting and tax problems as H&T Accounting services cater to the following problematic areas:

• Arrange for business finances

If you look forward to launch your startup and have an innovative approach but are yet not done with the financial arrangement then H&T Accounting services can help you arrange business finances. Even if you want to expand your business we can help you provide a solution with the same. We follow a two step approach in the same. We would prepare a business plan and would also help you present this business plan to the lenders who can help you arrange finances.

• Plan taxes at its best

Tax Evasion is never considered as tax planning. All the tax related issues you face can be solved by our accounting experts who have been providing assistance in the same for years. We would help you minimize or cut down the errors in tax planning you have been committing for years and maximize the plans that would help you save considerably. There are different tax saving plans for all the places and we will help you achieve the same.

• Find the solution to all your tax return problems

There are numerous areas in business which generally people do not know about tax returns. We would help you identify those areas which include charity tax returns, estate planning and trust returns, investment income returns, IT professionals’ tax returns etc. Planning tax returns is never considered as tax evasion and we would make the best efforts to grant you with best benefits.

• Manage your accounts in an error free fashion

Bookkeeping is an important task that is done by every agency be it small or large. Managing different accounts of books is a tedious task and requires work of accuracy. We allow bookkeeping to our customers as per their convenience based upon the location and type of service they want. Our accounting professionals perform bookkeeping in such a way that tax saving becomes easier at later stages.

• Maximize the profit

Profit enhancement or earning maximum profit is what every organization aims at. Profit can be maximized only if the basis of accounting is strong in any organization. We are also glad to help you in developing a proper business plan as well as proper marketing strategies such that you can conveniently cut off the extra costs you have been investing and maximize your profits to every bit.

Any accounting problem that has been bothering you for a while can now be solved with our accounting experts.

Every country has tax as a source of revenue, which should be paid by every citizen so that the respective government can fulfill its duties and work accordingly. Every citizen pays tax according to his or her income source and amount. There are provisions out there issued by every government which leads to reduction of taxes in case of exceptional circumstances. But, still people all over the world have found out ways for tax avoidance, which is an unacceptable thing. Tax helps the true rights and benefits to reach the common mass; however avoiding tax payment is like making yourself devoid of all these benefits.

Avoiding paying the rightful tax is something that can cause you penalties. You would be more willing to pay the right amount of tax you owe to the government, if you go through following notable points:

• Paying tax is not a burden

Tax is not an external burden on you, but instead it is an obligation rather a duty that you must follow willingly. There have been cases out there when many richer and the bigger firms have avoided tax payment and all of this have come out in an adverse unexpected fashion. Ultimately, this not only led to heavy payment of penalties but also led to closing down of such firms, which led the owners to go into heavy losses. If you would take paying tax is a burden, you will always look for refuge which can take you into the darker zone.

• A duty to pay back

No matter if you run any organization at your town or a large scale business, you have some duty towards the country you reside in. You have a part devoted of your income to this country because you use the resources government provides you. In order to keep the healthy flow of your business going, you should not avoid paying taxes as it can turn your income into a total negative aspect. As you have duty towards your family, similarly paying tax is a duty towards your country.

• You drown yourself into bigger problems

Avoiding paying taxes can take you into a bigger penalty section which can even turn out that you have to pay additional costs in case the government finds out. This would not only cause a monetary difficult but can also defame you. If any certain issues arise in the courts you are also liable to pay for the lawyer as well as the overhead caused in all such cases. In spite of paying all these penalties, every citizen must consider this as his rightful duty to pay the entire valid tax amount within time.

Keeping in mind all the penalties or the adverse effects you can go through, one must never adopt for tax avoidance illegally as it would only worsen the situation and instead of saving your valuable resources, chances persist that you will drown all these resources forever. Paying taxes on time would also make your firm a recognized one in the area.