Many Canadians are paying extremely high tax rates says Edmonton bookkeeping. In fact, the average Canadian citizen pays 43% of their entire income on taxes. The remaining money they have left, 37% is spent on food clothing and shelter. However, what can help people save taxes personally, is being able to claim that they own a proprietorship. A proprietorship is an unincorporated business that is legally tied to the business owner and the business owners’ tax obligations, which means that a proprietorship completes their taxes at the same time that the business owner completes their personal taxes. By claiming that they own a proprietorship, can help people business expenses on their personal tax return, thereby saving them money.
Many people wonder how they can claim that they own a business if they do not, and in fact, many of them may also have a full-time job. However, Edmonton bookkeeping says that anyone who has earned money personally, can end up claiming that they own a proprietorship. There is no minimum amount that someone has to earn in order to be able to call themselves a proprietor, so virtually anyone that has made additional money can make this claim. It can include things like dance instructors, yoga instructors or music teachers, who are hired either by a studio to come in and teach, or who take private students in their home, and gets paid directly by the end-user, and do not pay taxes on that. This can also mean people who have driven friends to destinations for a few extra dollars, people who have cleaned houses for friends or neighbors, or done snow shoveling or moping for any amounts of cash. These can all be considered a threshold for someone to claim that they own a proprietorship.
Once a person has claimed that they own a proprietorship, they can then start filing their proprietor taxes alongside their personal taxes. Canada revenue agency says that since it is a much onerous tax preparation process, people with proprietorships can have an extended tax filing deadline of June 15 instead of the typical April 30 deadline. This is a benefit, because the additional time can help people prepare a better file, but more importantly, what people who own proprietorships can do, is allow their spouse to also claim as a proprietor. Not only does this mean that the spouses have the later filing date as well says Edmonton bookkeeping, but they can also utilize income splitting if they claim as a proprietor. What this does, is it helps the spouse that makes the least amount of money to be able to claim the income earned from the proprietorship. This helps the family pay the least amount in taxes on that income possible.
When people understand what a proprietorship is, and how will the threshold is for them being able to claim that they operate one, they can see significant benefits including income splitting and late filing abilities.
Edmonton Bookkeeping | Helping People Save Taxes By Filing As A Proprietor
When people would like to save money personally on their taxes, they can claim that they own a proprietorship, so that they claim business expenses on their personal taxes, and minimize the amount of taxes that they pay personally says Edmonton bookkeeping. If a person has earned any amounts of money outside their typical employment, and that money was not previously taxed with source deductions, then people can claim that they own a proprietorship.
Many people believe that if they claim that they own a proprietorship, they will need to start collecting GST which could complicate their tax returns. Edmonton bookkeeping says that it is only required for businesses to start collecting GST from clients and giving it to Canada revenue agency when they start earning thirty thousand dollars of income or more. If they are not earning thirty thousand dollars, then they do not need to worry about GST, so as long as they are not earning that income without it being taxed, people can claim that they are proprietorship, without having to complicate their tax return with collecting GST.
One of the benefits of being able to clean proprietorship says Edmonton bookkeeping, is being able to claim business expenses on their personal tax return. Any business travel that they did, or if they did a personal trip, but there is a business component, they could claim that on their personal tax return. Meals and entertainment, as long as those meals and entertainment were for business purposes, rent from their home office, and mileage. By claiming these expenses on their personal tax return, can help people pay fewer taxes which can help them avoid a hide tax rate.
In order for people to be able to claim the mileage on their personal tax return says Edmonton bookkeeping, that it is extremely important that they document everything. Canada revenue agency is known for asking for proof quite often on businesses that claim mileage. These are the things that people should be keeping track of meticulously when they are tracking their mileage and claiming it on their personal tax return: the date, where they were coming from, where they are going to, the total amount of kilometers traveled, and the purpose of that travel. It must be business-related, and it also cannot include nearly commuting to and from work, because those are the things that someone is going to have to do whether they own a business or not, they still have to get to and from work. However, it can include if they are going to meetings or errands to or from work. For example, someone can claim the mileage from home to an errand, and then the errand to work. This will count, to help maximize the amount of mileage that can be claimed on the personal return.
People can claim business expenses on their personal tax return, as long as they are able to prove that they are a proprietor because they have earned any amount of income outside their regular employment that was not already taxed.