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about e-ccounting
e-ccounting is a monthly
newsletter focusing on accounting tips and solutions.
Our mission is to educate our clients, students and
readers by offering these resources in response to
your ongoing questions.
It is our objective to
gather information and provide easy access for your
current and future needs.
Back-issues are
available on the accountrain website.
These tips are not complete answers to complex
questions. We therefore recommend, when in doubt,
contact the professionals or government
agency.
about accountrain
accountrain simplifies the client /
accountant relationship.
accountrain offers a unique
combination of knowledge and people-skills to solve
all your accounting needs.
accountrain specializes in the how's
and why's of accounting.
Is accountrain the right accounting
team for you?
Find out
more....
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Sandy's Question Corner
Do you have an accounting question? Send it to us at
accountrain@magam.ca
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Business Scenario(s)
- It's Tax Time Again ! |
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I just started a business, when do I have to pay taxes?
My brother and I started a business together this
summer, how do we file our taxes?
I have a corporation who's year-end is March 31st,
when are the taxes due?
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| Answer(s) |
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Three different businesses, three different
business types, two different answers:
When you own a business on your own, it is
recognized as a sole proprietor
(business).
The taxes for a sole proprietor are done at the same
time as your personal taxes. Therefore you follow the
January to December calendar year, with taxes being
due on April 30th.
There is no special tax return, you merely file out a
T2120 (Statement of Business Activities) as part of
your normal T1 General return.
Also note, if you do not owe taxes, the tax return is due
on June 30th.
When you own a business with one or more
people, it is known as a partnership
(business).
The taxes for a partnership are also done at the same
time as your personal taxes. Therefore you follow the
January to December calendar year, with taxes being
due on April 30th.
There is no special tax return, you merely file out a
T2120 (Statement of Business Activities) as part of
your normal T1 General return. Unlike a
sole proprietor business, you only claim the
percentage of revenue and expenses that pertain to
your involvement in the company. (for example if you
own 70% and your partner owns 30%, you record 70%
of the revenues and 70% of the expenses on your
return, while your partner records the remaining 30%
of the revenues and expenses).
If you do not owe taxes, the tax return is due on June
30th. Also note, a partnership can have any number of
partners.
A corporation, on the other hand, is very different
because it is not attached to an owner, but recognized
as a separate entity.
What does that mean, well for tax purposes, it means
a separate return is completed just for the corporation.
This separate return is usually done by a professional
accountant and is due 6 months after the fiscal year
end. Unlike sole proprietorships and partnerships, a
corporation's year-end can be at any time.
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| Accounting Tip |
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Five key words that will keep you our of
trouble:
Setup: Create proper records right
away.
Organize: Take control of your
paperwork and keep it up.
Maintain: Enter your transactions
on a regular basis.
Understand: Feel in control by
learning how and why things need to be done.
Professionals: Don't be shy (or
cheap), get help to setup, organize, maintain and
understand all aspects of accounting that pertain to
your business.
This will eliminate year-end stresses and suprises,
as well as ensure you don't miss deadlines.
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| Did You Know ? |
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Once a business has been earning a
profit, it may be required to submit tax instalments
throughout the year, as opposed to paying the total
amount at tax
time. (your tax preparer will suggest the amount as
well as a payment schedule).
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For more Did You Knows? |
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| Definition |
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T2120 - The additional form needed when claiming a
business as part of your tax return, for sole proprietors
and partnerships.
Also known as Statement of Business Activities. This
form enables the CRA to determine the difference
between your gross and net profit by expanding on the
following:
Sales (including GST) & Expenses (excluding GST)
Capital Costs (big ticket purchases, ie, computer,
machinery, equipment, etc.)
Vehicle expenses (relating to business)
Home expenses (relating to business)
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For more definitions ... |
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| Sandy's Recommendations |
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Check with an expert from the get go, not at the end of
the year.
If you do your own taxes, have them checked by a
professional. Chances are the cost of this service,
will be covered by something they find or
recommend. And, it's a business expense!
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| Next Issue - Accounting Software Packages |
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What to consider when choosing software for your
accounting needs.
Why spreadsheets aren't enough!
Two very popular packages: Simply Accounting
versus Quickbooks, which is better for what?
Hints on professional training.
How to know if you need something more robust,
or industry specific?
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