the average Canadian is paying a significant amount of their income in taxes says Edmonton bookkeeping. The Canadians across Canada are paying up to 43% of their entire income on a variety of taxes including income tax, CPP EI, GST, and fuel tax just to name a few. The highest personal tax rate in Alberta currently is 48%. Canadians all over are looking for ways to help reduce their personal taxes that they pay. One way that they can do that, is by claiming their taxes as a proprietor.
There are many things that people should take into consideration if they want to file as a proprietor. The first question is who can be a proprietor? Edmonton bookkeeping says any person who has earned an income that is separate from their employment income, that has not already been taxed. One way that people find out that they have earned nontext income, is when they get therefore HA, and find that taxes have not been deducted. This would qualify people to file their personal taxes as a proprietor.
The biggest difference between proprietorships and corporations is a corporation is a separate legal entity, that has its own tax rules. A proprietorship, on the other hand, says Edmonton bookkeeping is an unincorporated business that remains legally attached to the business owner and the business owners and tax obligations.
Another question that people have when it comes to being proprietor, is what is the minimum income that they need in order to be considered a proprietor? Edmonton bookkeeping says that there is literally no minimum threshold, and if an entrepreneur has earned twenty-five or fifty dollars in one year, that can technically qualify them to file their personal income taxes as a proprietor. People can do a variety things in order to build a claim income this way, everything from a massage therapist working out of their home, to someone who works as an independent contractor out of a larger business, but does not have taxes removed from their checks that they get, two people who are doing occasional work or odd jobs for friends or family for cash including housekeeping, snow shoveling or lawnmowing.
When major questions that a lot of people have when they are considering filing their personal taxes as a proprietor, is do they need to start collecting GST if they file as a proprietor? The answer to this question is no, the only time someone has to start collecting GST from their clients and then paying it to Canada revenue agency is when they start earning more than thirty thousand dollars per year. While people can apply for their GST number before that, they are not required to collect GST until they reach that threshold.
There are many things for people to consider when they are thinking about filing their personal taxes as a proprietor, this can help them reduce the taxes that they are paying, and does not need to take a lot of time or energy to qualify for. When people do this, they can benefit greatly.
Edmonton Bookkeeping | How To File Personal Taxes As Proprietors
In an effort to reduce the taxes that they pay on their personal tax returns, Edmonton bookkeeping says people often consider claiming that they are proprietors on their personal taxes, in order to receive tax benefits. A proprietorship is an unincorporated business, that is legally tied to the business owner, as well as their tax obligations. There are many things that people should think about when they are considering doing this on their personal taxes.
The first question that people often have is how does this affect the personal taxes that they file. Edmonton bookkeeping says that while they have to file their proprietorship paperwork along with their personal tax paperwork, they have an extended period of time that they have to file. Instead of needing to file by April 30, which is the typical deadline for most Canadians, proprietors have until June 15. Not only does this give them additional time to complete the additional paperwork that is needed, but it also changes the way people can file, because spouses of proprietors can also file their taxes as a proprietor. How this is beneficial says Edmonton bookkeeping, is that they can utilize income splitting, in order to save money. How this works, is that the spouse that has earned the least amount of money out of the two will claim the proprietorship income. This will help minimize the taxes that would have to be paid if the higher income spouse claimed the income, as well as can help the proprietor avoid being bumped into a new tax bracket and paying even higher taxes.
Another benefit to filing personal taxes as a proprietor is the ability to claim business expenses on their personal tax return. Edmonton bookkeeping says examples of expenses that can be claimed include meals and entertainment, the business portion of their travel, mileage, as well as rent from their home office. All of these things can be claimed, but the most important thing for people to remember is that they have to be keeping immaculate records, not just keeping receipts, but making notes of who the meetings were with, and the places and times of their travels. When they do this, they will be able to use that information to file their taxes. Another word of advice is that people keep this information, or at least copies of this information digitally for seven years, in case CRA does an audit of their business, and they will need to provide copies of everything.
When people are deciding to file their personal taxes as a proprietorship, there are certain things that they need to keep in mind that can help keep them organized, and allow them to seamlessly file their proper paperwork, and claim business expenses on their tax return, helping them save even more money on their personal taxes.