Typical Canadians are paying upwards of 43% on personal taxes says Edmonton bookkeeping, making taxes the number one payment that Canadians were to make in their lifetime, eclipsing even their house. One situation that people sometimes find themselves in, is that they receive their T4ís at the end of the year, and discover that their company has not been deducting the correct tax off of their pay, or not deducting any taxes at all. Now, they are faced with a situation of having to pay all of their taxes in the full amount on their personal tax return. If this is a situation, there are several things that people can do in order to help minimize the amount of taxes that they will have to pay at the end of the year.
When the most helpful situations that people can do, consider themselves a proprietor. Anyone who has any income that is not taxed, can claim that they are the proprietor. This allows them to file their taxes as a proprietorship, which can help them save taxes at the end of the year. Since there is literally no minimum threshold needed for people to claim that they own a proprietorship, therefore this is a great option for anyone who has earned any additional income in their business that was not previously taxed says Edmonton bookkeeping.
One common worry, when presented with this solution, says Edmonton bookkeeping, is that people worry that they have to collect GST, or at least pay GST on their earned income to Canada revenue agency. Luckily, this is not the case, and there is only one situation that necessitates people to start collecting GST need to send to the government, and that is if they are earning more than thirty thousand dollars in their business or more. Until a person reaches that threshold, they should not worry about collecting GST or paying that the government.
When a person is ready to file their year-end taxes, in order to file as a proprietor, all they have to do is fill out an additional form called a T2125. They file this at the same time as their personal tax forms, and that is all the requirement is. Instead of the typical April 30 deadline, owners of proprietorships will have an additional forty-five days to get prepared, making June 15 the deadline they need to worry about.
One benefit to filing this way, is that it will allow a person to be able to utilize income splitting. Proprietors will be allowed to have their spouse file as a proprietor as well, which can help a person minimize the taxes that they have to pay all of their untaxed earnings. By sharing the amount of money that they earned, on the tax return, can help a business owner minimize the taxes that they have to pay on that. For example, if the spouse earns less than they proprietor, or even earns nothing because their estate home parents, this can significantly help a proprietor avoid paying taxes on the amounts that were not taxed.
Edmonton Bookkeeping | How To Claim Proprietorship On Personal Taxes
When a person is able to claim that they are proprietors, they will be able to claim business and personal expenses that rent possible to claim before says Edmonton bookkeeping. This can help minimize the taxes that a person has to pay, which is especially beneficial if they have noticed at the end of the year, that income that they thought was being taxed actually was not being taxed properly, and now they are facing a situation of having to pay back all that tax at the end of the year. With the average Canadian spending 43% of their income on taxes, this can end up being quite difficult situation, that requires care to address.
There is a variety of business expenses that proprietors are able to claim on their personal taxes at the end of the year. These amounts can help minimize the taxes that they owe. Examples of expenses that can be claimed include the business portion of any travelling that they have done in the past year, meals and entertainment, rent from their home office, as well as mileage. However, it is extremely important that people have been keeping very good track not only of their receipts but of their mileage because Canada revenue agency has a tendency of asking for proof especially when it comes to mileage that is tracked.
In order to properly track mileage, Edmonton bookkeeping says that there are some important points that need to be covered including the date of travel, where they were coming from as well as where they were going, the total distance traveled, and the purpose of travel. It is important that they do not include commutes to and from work, and all travel must be business-related. However, people are able to include errands and meetings on their way to work or from work the claim is mileage.
There is also a number of personal expenses that people can allocate to their proprietorship, including home-office expenses like utility bills, phone and Internet, property taxes and mortgage. How this can work is a person has to calculate the square-foot space that their home-office takes up, and what percentage of the house that is. That percentage is the amount that they can claim of all of the aforementioned bills. On the most important things to remember about this however is claiming this cannot create a loss in the proprietorship, they can only claim is much as they earned.
Something else that proprietors are able to claim, is the capital cost allowance. If they are using a vehicle for business purposes, or if they have equipment that they own for business reasons, that can count towards the capital cost allowance as well.
Edmonton bookkeeping says that there is many things that people can keep in mind when they are filing as a proprietorship, in order to help minimize the taxes that they have to pay the government at the end of the year.