A business owner who is not aware of all of the ways that sales tax is complex may end up managing it just fine says Edmonton bookkeeping, but finds out that is not true at the end of the year. If an entrepreneur is making mistakes in collecting or remitting their GST, or have made mistakes on their return, CRA will not contact them to tell them that they are making errors. They will simply get an assessment at the end of the year if they have filed incorrectly, requiring them to pay penalties or interest.
There are many things that business owners may not know about managing and filing their sales tax that can have them make mistakes without even knowing about it. By learning what they can about sales tax can help them be prepared ahead of time so that they can avoid making mistakes. One of the first things that entrepreneurs should keep in mind, is that they can make payments of sales tax throughout the year, without actually filing throughout the year. The reason why business owners would want to do this is so that they can ensure that they are remitting all of the sales tax that they are collecting efficiently.
The longer an entrepreneur holds onto that sales tax, they agreed to a chance they could lose track of some of it. If they end up making mistakes on how much sales tax they remit to Canada revenue agency, it could be hit with penalties. The government does not go easy on entrepreneurs that are mishandling money that they have collected on behalf of the government. Therefore, by remitting it regularly can help ensure that an entrepreneur is paying the government what they are owed.
Many business owners would wonder why they would make payments in instalments if they are not filing at the same time. However, Edmonton bookkeeping says that there is no benefit to filing quarterly unless they are required to. Filing early takes time, and costs money. If an entrepreneur does not have to take the time or pay additional amounts, then they should not. Also, filing earlier and throughout the year does not guarantee that they will not make mistakes on their filing. The only way they can guarantee they will make mistakes is by waiting until they get their corporate year-end completes and then filing tax from there.
If an entrepreneur is going to file their sales tax at the same time as their corporate filing, business owners should keep in mind that is important that they are making installment payments in order to minimize the amount that they owe the government. Since filing at the same time as their corporate return considered late says Edmonton bookkeeping, all the outstanding tax that an entrepreneur owes will have interest added onto that. If entrepreneurs are paying in installments, at least get assessed much less interest.
Learning how to manage and file their sales tax can be extremely important and beneficial for business owners. They can ensure that they are avoiding making common mistakes that would cost them penalties. And it can help ensure that they are paying the minimum amount in interest. By creating an effective strategy, entrepreneurs can spend the rest of their time throughout the year on all of the activities they need to help their business to become successful.
Edmonton Bookkeeping | How To Manage GST Filing
Not only do business owners need to worry about managing their sales tax properly when they are corporation says Edmonton bookkeeping. But even proprietors, if they are making over the threshold have to collect and remit sales tax. Understanding how this process is the same and different for each entity can help ensure that the matter what kind of business an entrepreneur has, they are managing their sales tax properly.
One of the first things that business owners should understand, is when there GST is due depends on the type of business that they own. Proprietorships, for example, have a deadline to file on June 15, which happens to be the same date that their personal taxes are due. If a business owner owns a corporation on the other hand, there GST is due three months after their fiscal year-end, which is three months before their corporate year-end is due. However, if a corporation makes over $1.5 million in the year, they are required to file quarterly.
Many business owners that own proprietorships believe that they are not required to collect or submit sales tax. However, this would be incorrect says Edmonton bookkeeping. If the business is making over thirty thousand dollars per year, regardless of what their entity is, they need to collect and remit sales tax. If a business owner has a proprietorship, and they reach that point then they have to get a GST number to allow them to collect it on behalf of the government.
However, business owners also need to be aware that once their proprietorship starts to grow, if they decide to incorporate, that is considered a separate legal entity and they will need to get a new GST number. Not only do they have to get a new number, but they also have to ensure that they are closing the old number as well. If they do not, Edmonton bookkeeper says that Canada revenue agency will self assess that entrepreneur on the number they are no longer using and they will get hit with a tax bill. CRA will typically assess the business for a similar amount to their last filed year. In order to avoid this, business owners should close their GST numbers at the same time that they open anyone and start their corporation.
By being aware of how to manage sales tax as a proprietor and as a corporation can help entrepreneurs ensure that they are managing it properly. They have any questions, they can always contact their Edmonton bookkeeping company like always bookkeeping to help answer any questions they might have so that they can ensure that they are managing there GST properly