It is very important that entrepreneurs learn how to manage their sales tax appropriately says Edmonton bookkeeping. Since half of all entrepreneurs end up failing within five years, and the second most common reason for that affects 29% of all failed entrepreneurs, whose that the reason they failed is that they ran out of money in their business. Since remaining cash flow positive is so important for entrepreneurs, you need to understand that they can be hit with penalties if they end up filing their sales tax incorrectly.
The most common way an entrepreneur would end up filing their GST incorrectly is by filing it on the deadline. The reason why filing it on time because mistakes, is because GST returns are due three months before a business is corporate year-end. This means, that an entrepreneur will have all the right information to put into their GST filing until it is three months late. Therefore Edmonton bookkeeping says that entrepreneurs will have a decision to make: do they file on time but and accurately, or late but correctly?
Edmonton bookkeeping says that entrepreneurs should keep in mind that penalties are usually more expensive than interest charges, tipping the balance towards filing late to put accurately. However, an entrepreneur is very competent and the accuracy of their financial statements may choose to avoid paying interest and take their chances with filing it on time.
If an entrepreneur has decided to file late, and take a chance of their interest charges, Edmonton bookkeeping says that they need to know how that interest is calculated and what they can do to minimize it. The amount of interest that they are going to get assessed by filing late is the entire amount that is left outstanding by the end of the year in sales tax from the day that they should have filed, until the day that they actually did. This means, that an entrepreneur is in full control of how much sales tax they pay throughout the year in order to minimize how much they will owe when they complete their filing.
If an entrepreneur has paid almost all of the sales tax in regular installments, then they may be hit with interest, but is such a low amount that it will affect business owner if at all. However, this strategy is going to require an entrepreneur planning this ahead of time, as well as making regular installments of sales tax without accidentally filing early.
The strategy on how they are going to manage sales tax ahead of time can help entrepreneurs ensure that they are minimizing how much they have to pay at the end of the year, especially if they file incorrectly. And they will be able to free up their mind from worrying about their business finances and sales-tax so that they have more time and attention to focus on the most important priorities of their business, which are accomplishing all of the tasks that they need in order to grow their business and be successful.
Edmonton Bookkeeping | How To File GST Accurately
There are many complex issues associated with sales-tax says Edmonton bookkeeping. Even though entrepreneurs are very familiar with paying a variety of taxes including income tax, CPP, EI and fuel tax. If entrepreneurs think that managing their sales-tax is going to be that easy, they could be setting themselves up before making mistakes. They need to ensure they are aware of the complexities early on and come up with a plan on how they are going to manage it in advance in order to minimize errors.
One of the first things that entrepreneurs need to know, is that whether they have a proprietorship or corporation, as long as their business is making over thirty thousand dollars in a year, they need to have a GST number and be collecting and remitting sales-tax says Edmonton bookkeeping.
The next thing an entrepreneur needs to understand is when there sales taxes do is different whether they own a proprietorship or corporation. Proprietorships have until June 15 every single year to file their sales tax, which is the exact same deadline as their personal tax return. Their corporation, on the other hand, has a completely different filing deadline. There sales tax filing is due three months after the fiscal year-end, which is three months before there fiscal year-end filing is due. Once they start making over $1.5 million however, an entrepreneur has to submit their sales-tax filing every quarter.
The next thing that entrepreneurs need to keep in mind, is that if they have a proprietorship, and they have grown it to need a GST number if they grow even larger than that they decide to incorporate, what happens to the GST number is important says Edmonton bookkeeping. Once they open a corporation, since it is a separate legal entity from an entrepreneur, they need to have a GST number that has never been personally associated with the entrepreneur. Therefore, entrepreneurs must get a new GST number, as well as shut down their previous number.
If entrepreneurs do not shut down their old GST number, CRA might assume they are still in operation, and simply have not submitted their taxes. If that is the case, Canada revenue agency will assess the business the same taxes that they submitted in the previous year, causing an entrepreneur to get a tax bill for taxes that they do not actually owe. Therefore, entrepreneurs need to be sure that they are closing their GST numbers quickly says Edmonton bookkeeping.
By understanding all of the complexities when it comes to sales-tax, and especially depending on the entity of the business whether it is a proprietorship or corporation, entrepreneurs can ensure that they are keeping their sales-tax organized and that they are ready to file it accurately. By having a plan already in place, entrepreneurs can turn their attention to some more of the important strategic goals of the business so that they can continue to grow it.