There are many ways that people do in order to save the amount of personal taxes that they are paying says Edmonton bookkeeping. One way that they can do this, is by filing their personal taxes as a proprietor. A proprietorship is an unincorporated business, that is not its own separate entity. Because of this, it shares the same filing requirements as the business owner and can allow people to file their personal taxes as a business owner.
The benefit to this, is that anyone can be considered a proprietor. If they are able to file taxes and have earned any amount of income in the past year that was not taxed, that automatically makes them proprietors. Often, people receive their T4 a at the end of the year only to discover that no tax has been deducted from the amount that they earned. In the situation, these employees could be considered proprietors. Edmonton bookkeeping says that any time someone has earned income that was not previously taxed can count towards income earned towards a proprietorship. This can include unincorporated contractors, but also can include much more informal forms of income, such as occasional housecleaners, or people who shovel snow or mow the lawn for friends or neighbors for a minor amount of money occasionally. Since there is no minimum threshold, any amount earned can allow people to follow taxes as a proprietor.
One concern many people have, and frequently ask when they are debating if they should file as a proprietor, is do they need to start collecting GST if they file taxes as a proprietorship? The good news is they do not say Edmonton bookkeeping, because the only time a business owner is required to start collecting GST from customers and then paying GST back to Canada revenue agency, is when their business reaches a point where it is earning thirty thousand dollars or more per year. So not having to pay GST should not impede people from wanting to file as a proprietor and save money on their personal taxes.
When someone decides to file as a proprietor, they need to ensure that they are completing the proprietorship tax form, as well as their personal taxes. Edmonton bookkeeping says they need to submit these to CRA together. However, they do not have to meet the April 30 deadline that is the deadline for all other Canadians. They have an additional forty-five days, in order to help prepare all of the information that is required to file as a proprietor. One thing that people should keep in mind when doing this, is that their spouse is also eligible to claim as a proprietor. This can allow people to utilize income splitting in order to further minimize the amount of taxes that they have to pay.
When people make the decision to file their personal taxes as a proprietor, they should ensure that they have a plan for how they are going to utilize the income splitting and ensure that they have the right forms filled out so that they can ensure a seamless filing experience.
Edmonton Bookkeeping | How To Save Taxes By Filing As A Proprietor
Typical Canadians across the country are paying almost half of their entire income on taxes says Edmonton bookkeeping. 43% is what the average Canadian pays, while the highest personal tax rate in Alberta currently is at 48%. That is a significant amount of money that people have to pay on taxes. In order to help avoid paying almost half of their entire income on taxes, some people explore the benefits of filing as a proprietor on their personal tax return, not only to help minimize the amount of taxes that they have to pay but so that they can claim certain business and personal expenses on their personal taxes as well.
One of the most significant things that people can do once they have decided to file their personal taxes as a proprietor, is being able to claim certain business expenses on their personal tax return. This includes mileage, the business portion of their travel, rent from their home office, as well as meals and entertainment. People should ensure that they are collecting all receipts whenever possible, and making detailed notes about who they were meeting with, and what they were talking about so that they can keep as accurate records as possible for when they file.
Mileage tracking is one Significant Way that people can save on their personal taxes. However, Edmonton bookkeeping says that they need to ensure that there tracking their mileage accurately, and consistently in order to satisfy CRA requirements. One reason why this is so important is that Canada revenue agency is very well known for requiring proof and details. People can easily get a mileage log, and there is also many great apps that they can download in their phone for this purpose. The important information they need to keep track of is the date, where they are coming from, where there going, the total number of kilometers traveled and the purpose of the travel. Another important thing for people to note, is this does not include commuting to and from work, however it can include going to meetings or errands from home or to home.
Another benefit people have when they claim their personal taxes as a proprietor, is that they can claim capital cost allowance. If they are using their vehicle for business purposes, the percentage that they use it for business purposes are able to be claimed. If people also have equipment that they utilize to earn money, they can claim that as well.
When people are able to claim a proprietorship on their personal taxes, not only will they have some tax savings, but they will also be able to claim certain expenses, track mileage and claim capital cost allowance, which can continue to help lower their tax bill in that year.