Average Canadians are paying significant amounts of taxes personally says Edmonton bookkeeping. The average amount spent on taxes, is 43% across Canada, while the highest personal tax rate in Alberta is currently 48%. Many people wonder how they can save as much as they can on their personal tax returns. One way that many people can save taxes, is by claiming that they are a proprietor on their personal tax return. Not only can that change the way they file their taxes, but it also can help them save taxes in a variety of different ways.
There are many things that people should consider when they are thinking of claiming that they are proprietors on their personal tax returns. The first question is who can be a proprietor? Edmonton bookkeeping says that anyone that has an income that is not taxed, and is not part of their regular income. A good indication of someone who could be considered a proprietor is if they get their T4 a form, and discover that they have not paid taxes on that amount that they earned. It essentially can mean any non-taxed income that a person is generated in the previous year.
The next question people have when it comes to filing as a proprietor, is what is the difference between a corporation and a proprietorship? The corporation is its own legal entity, that has its own tax rules that it must follow. A proprietorship on the other hand, is an unincorporated business that is not its own entity, and not only is tied to the business owner but is also tied to the business owners’ tax obligations as well.
Many people wonder what type of untaxed income they need to be earning in order to consider themselves a proprietor, and what is the minimum amounts they need to earn in a year in order to do this. Edmonton bookkeeping says that any type of income can qualify, from more structured businesses like fitness instructors, music teachers, or massage therapists. This can also be used by people who are earning money through less structured methods such as shoveling snow for friends and family or cleaning peopleís houses occasionally. If they earn money, and that money is not taxed, it counts. And it does not matter how much these people are earning in a year, there is literally no minimum amount that business owners are required to make in order to be considered a proprietorship, people are claiming as low as fifty-two hundred dollars in an entire year.
Another question that a lot of people have, is do they need to be sending GST to CRA if they start filing as a proprietor. Edmonton bookkeeping says this is not necessary, because there is a threshold on that, a person has to be earning thirty thousand dollars or more before they are required by Canada revenue agency to start collecting and paying GST.
In order to help people save significant amounts of taxes, they can claim that they are a proprietor, and have a different filing deadline, and be able to save taxes on a variety of expenses that they may incur.
Edmonton Bookkeeping | The Benefits Of Filing Taxes As Proprietors
Many people wish to save a significant amount on taxes says Edmonton bookkeeping, because the average Canadian pays almost half of their income on a variety of taxes. People may want to consider becoming a proprietor in order to feel is to take advantage of the tax benefits and the savings that they can get. However, there is many questions that people often have when they are considering claiming proprietorship on their personal taxes.
People often ask are the deadlines the same for personal taxes for proprietors as they are for non-proprietors? Edmonton bookkeeping says that while most Canadians must file their personal taxes by April 30, people that are claiming that they are proprietorships on their personal taxes have until June 15 to claim both. Canada revenue agency recognizes that preparing additional information to follow along with their personal taxes can be time-consuming, which is why they have in additional forty-five days to file their taxes. Not only do people have to file their personal taxes, but they also have to file an additional form called a T2125. One thing for people to keep in mind, however, is even though they have a later filing deadline, if they owe any taxes to the government, they start incurring interest on April 30. It is not a significant amount of money, 1% on the entire amount owed, but if people are trying to minimize all payments, they may want to consider making installment payments so that they are not hit with interest at an earlier date.
Another benefit to filing personal taxes as a proprietorship says Edmonton bookkeeping, as they can also have their spouse file as a proprietor, which is a benefit if a business owner wants to utilize income splitting in order to save taxes. How that would work, is that the spouse makes the least amount of income, would claim all of the proprietorship income, so that they can pay minimal amounts of taxes possible. This also can save the proprietor from being bumped up into a higher tax bracket, where they would be paying more taxes.
Many people are curious as to what types of expenses they can claim if they file as a proprietor. Edmonton bookkeeping says that they can claim everything from rent for their home office, mileage, meals and entertainment as well as the business portion of their travel.
In order to help entrepreneurs save a significant amount of taxes, they can claim that they are proprietor so that they can benefit from tax savings, income splitting, and be able to claim expenses on their personal tax return. Edmonton bookkeeping says this is significant and can be a great benefit to people who qualify as a proprietor on their tax return.