Hi and welcome to another episode of always up to date. Uh, I’m Denise and this is YALI. Um, today we’re going to be talking about, um, what to claim on your personal taxes if you’re a proprietorship. Um, so as you know, we usually start our episodes with a quote and a statistic and a little story. Uh, so our cool today is, um, from Michael Gerber who is the author of the book the E myth. Um, and his quote is, what makes people work is an idea worth working for along with a clear understanding of what needs to be done. So the statistic that we have is from the Fraser Institute, um, and it says the average Canadian pays 43% of income and taxes. Uh, that’s the tax CPPI, GST, fuel tax, et cetera. And by comparison, on average, only 37% of the remaining income goes towards basic necessities such as shelter, food, and clothing to use Edmonton Bookkeeping.
Um, so we have clients that, um, received T fours T four A’s and uh, no, no tax has been deducted on them. Um, and so now you have to pay the tax in the full amount when you file your personal taxes. Um, so I’m just going to ask a few questions to y’all and, um, we’re going to try to answer them, uh, the best that we can. Um, so y’all, we who can be a proprietor. So, um, anyone really that has, um, any business income qualm, I don’t know if there’s a age restriction, probably over 18, but really if, if you have, uh, an income that’s not a regular employment, that would be your business income. Yeah. Right. Or, um, even that T for a by by default, you get, you become a proprietorship just because you have, now you have, um, professional fees or, uh, business income that you’ve provide, uh, that you’ve earned that first service that you’ve provided others with Edmonton Bookkeeping.
So I’m it just be careful when somebody issues you at T for eight, it’s not necessarily an employment income, it could be a business income and you can deduct somebody’s expenses out of it as well to kind of liberate them. Yeah, that’s right. And, and, um, a proprietor is somebody that’s not incorporated. Exactly. Yeah. So, um, that’s, uh, and, and so that brings me to my next question. What’s the difference between a proprietorship and a corporation? So a proprietorship is that an incorporated business? So it means that, so even if you registered your, um, your company, uh, are your, your or the name of the company with a registry doesn’t necessarily mean that you’re a corporation. Corporation would usually have, um, prefixes like limited or inc or enterprises. So the main difference between a proprietorship and a corporation proprietorship is part of your personal, um, business or a per your personal tax as opposed to a corporation when it’s an actual separate entity that could use Edmonton Bookkeeping.
So, and for income tax purposes, a corporation is a separate individual or a person. A corporation can be addressed as a person in, um, and in corporate, uh, income tax act. So those are the main things, uh, that you have for proprietorship in a corporation and a corporation. Um, some of your personal assets are not really at risk of being, um, let’s say tied to a loan that you took and, or a corporation. It gives you the, what we call a corporate fail that would give you, um, the limit of what they can claim. Um, especially if you’re not a director of the corporation. So I think those are don’t, uh, the common differences between a proprietorship and a corporation, right? Yeah. Yeah. And so what type of income do you need to have to be considered a per ridership, um, business income, professional income that’s not, um, the resulting from employment.
So I know some of, sometimes for cleaning business, like you would, uh, come in and somebody would, uh, give you, uh, an income or would pay you or hire you to do a service and it would provide you a tier four A’s. So by then you would have been any, an unincorporated business and you, um, you are a proprietorship. And this is the same with, uh, contractors for let’s say I’m a I dance studio. Then, uh, if you are not, uh, an employed by the corporation, you are technically a, um, you’re operating under a proprietorship. Yeah. And I think sometimes farms too, like if they have little hobby farms or something that yeah. You know, not big enough to incorporate, but just that little bit of income from, you know, maybe you sell eggs or something, you know, maybe. Um, yeah. So you want me, do you need to collect GST as a proprietor without Edmonton Bookkeeping?
Um, I believe you will have to collect GSE once you start earning $30,000 or more. So it is a, you have to registered for a GST number when you’re at that level of, um, of income or proprietor, uh, your proprietorship is earning that much, then you have to register for GSD, right? Yeah. Right. You can, you can register before 30,000 if you can, but you are required to at 30,000. Yes, absolutely. Yeah. Yeah. Um, so are the deadlines for filing your personal taxes when you’re a proprietorship? Yes. So normally if you’re in court, if you’re incorporated, you would have the six months after your fiscal year to do your taxes and three months to follow your GSD with personal tax, with your proprietorship, since your, um, uh, reporting your business activities under your personal tax, you have, um, until June 15th to file your core or your personal taxes with your business activities on it as well as your GSD with Edmonton Bookkeeping.
So you have six, you have six months and 15 days for you to file your taxes. But um, be aware that since you are a personal tax filer, your um, your personal income tax owing still has to be paid on April 30th. So even if you file on, um, on June 15th, you should’ve, you would’ve had to pay all of those on April 30th. So it’s very important that you do installments just to avoid any penalties or interest in that. Yeah. Yeah. And just, um, as an interesting note to your proprietor, um, your spouse or partner can also leave their taxes until the 15th of June. Yeah. They don’t have to file the April 30th deadline and you, you can file together in June. Yeah, absolutely. Yeah. Um, and be mindful of that too because now that you have the spells there is uh, there is a way that you can split income.
So if your spouse is helping you, um, inside, even if it’s just Edmonton Bookkeeping or the back end admin or anything like that, you can split this income specially if your spouse has, uh, is still under, uh, lower income tax bracket. So there is an opportunity to just split tax that way. Yeah. Great. Um, so what types of expenses can you claim as a proprietor? So as a proprietor, um, there is some, uh, expenses that you can claim that are a little bit limited depending on the business portions that you do normally for, uh, corporations. You can claim, uh, you rent your, um, your meals and entertainment, your travel, your entrust. Those can be deducted on a, a proprietorship as well. But there are some limitations. For example, uh, for travel, you have to meet sure that you’re only reporting the business portion of your travel to, um, to your business.