One situation that people have often found themselves in at their year-end, is they start receiving their T4 slips, and discover that they have not had the right source deductions being removed from their pay says Edmonton bookkeeping. Now, people are faced with the prospect of having to pay their taxes in full, on their personal tax return Since the typical Canadian is going to be paying an average of 43% on a variety of taxes throughout the year, and only 37% of the remaining amount on food clothing and shelter, taxes remain the highest expenses that Canadians will pay, even compared to their housing.
There are several things that they can do, to minimize the amount of taxes that they have to pay. If they consider themselves a proprietor of their own business, they may be able to change the way they file their taxes that can help minimize tax payments. The first thing that they need to do is understand what a proprietor is, and who can be a proprietor. Edmonton bookkeeping says that anyone at all who earns an income that is not taxed can be considered the proprietor of their own business. This can include unincorporated contractors, but also people who earn income out of their home from clients such as hairdressers, fitness instructors, or massage therapists. They get the money from their client, which is obviously not taxed. This can also include types of money that is earned through casual labor such as housecleaning, landscaping including snow shoveling and mowing, it can even include taking people to the airport, or doing odd jobs in exchange for low amounts of money. Edmonton bookkeeping says that there is no threshold that is too low for a person to be considered a proprietor. Therefore, and makes a very good option for an employee who has not have the right taxes being deducted from their paychecks, and needs to pay their taxes back at the end of the year.
One concern that a lot of people have as a part of this solution, is if they claim that they own a business to the federal government, that they need to start paying GST. Luckily, this is not the case, the requirement for collecting and then paying GST is making over thirty thousand dollars in their business in a single year. Therefore, as long as this is not the case, people do not need to worry about sending GST to the government.
When people have satisfied the requirements for becoming a proprietor, they need to ensure that they are filling out the right people’s work in order to file their proprietorship taxes properly. They need to fill out a form called a T2125 and prepare that along with their personal tax return, in order to file taxes as a proprietor. One benefit, is that as a proprietor, they do not have to meet the April 30 deadline that all filed by, they get an additional forty-five days which makes June 15 their filing date deadline.
Edmonton Bookkeeping | Minimizing Taxes By Claiming Taxes As A Proprietor
If employees have not been taxed properly, and end up with a significant amount of a taxed income at the end of their year, they should know that there are several things that they can do says Edmonton bookkeeping. By filing as a proprietor, can help them minimize the amount of taxes that they need to pay to the government.
One of the most significant ways that they can use this, to minimize the taxes that they pace Edmonton bookkeeping, is by utilizing income splitting. How they can do that, is it spouses of people who are proprietors can also claim their personal taxes as a proprietor as well. This allows an entrepreneur to do, is be able to utilize income splitting in their business. How this works, is by being able to share their untaxed income with their spouse on the tax return, can help minimize the amount of taxes that they pay. For example, if their spouse earned less income, or even earned no income because they are staying at home parent, they can take the entire untaxed amount, and because they are likely going to be under the threshold, though able to pay the minimum amount of taxes possible. By figuring out how to ensure that they are not pumping anybody up into the next tax brackets, and enabling them to minimize the amount of taxes they can pay, can significantly help a person avoid having to pay as much as they might if they simply file their tax return personally.
What this can also do, is allow people to claim the business or personal expenses on their proprietorship that they would not have been otherwise able to claim. Such as meals and entertainment, mileage, rent, and the business portion of their travel. They can also claim personal expenses says Edmonton bookkeeping such as cell phone and the Internet, utility bills, condo fees and property taxes.
How a person would track mileage properly, in order to satisfy CRAís requirements, is to keep track of the date that they drove, where they were coming from and going to, the total distance driven, and the reason why they were driving. It is important that they ensure that this is all business-related activities, but does not include commuting to and from work, because Canada revenue agency says that whether they are an entrepreneur or not they would incur that driving need. They can keep track of this information in a logbook, or even through an app for their smartphone, and there is a large number of apps that they can download.
By being smart about filing as a proprietor, and finding out what expenses they can claim as a proprietor, can help significantly minimize the amount of taxes they have to pay, which is especially beneficial if a business owner had assumed that they were paying the source deductions all along, and a copy of the surprise at the end of the year.