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Many Canadians often wonder what they can do on their personal tax return in order to save taxes says Edmonton bookkeeping. The average Canadian pays 43% of their entire income on taxes including fuel tax, GST, as well as source deductions from their income. The highest personal tax rate in Alberta is 48%, so many Canadians are paying almost half of their entire income to taxes. In order to minimize the taxes that they pay, people may want to consider classifying themselves as a proprietor so that they can change the way they file their taxes.

A proprietorship is an unincorporated business tied to the business owner, and therefore the business owners and tax obligations. In order for someone to be able to consider themselves a proprietor, is if they have earned any income in the previous year that was not a direct result of employment and did not have any source deductions removed from it. This can include house cleaners and massage therapists that work from home, but it can also include anyone who has ever shoveled some snow, or mowed the lawn for a neighbor and received the money in return. The threshold for what can be considered a proprietorship is low because there is no minimum amount. Therefore, just put anyone can most likely consider themselves a proprietor.

once a person is able to consider themselves a proprietor, they can file their proprietor taxes alongside their personal taxes. Edmonton bookkeeping says one of the first things that changes, is that the have a leader filing deadline. While most Canadians have until April 30, proprietors and their spouses can file forty-five days later, on June 15. One of the benefits of allowing a spouse to file as a proprietor as well will give a person the ability to utilize income splitting in order to minimize taxes that they pay. By allowing the lower-income spouse to claim the income, can help a person minimize the amount of taxes they have to pay.

One concern that people have, is that they have to start collecting and paying CRA GST when they claim as a business. However, Edmonton bookkeeping says that this is not true, the amount they have to be making in order to be required to pay GST is thirty thousand dollars. Until they are making that much in their proprietorship, they should not worry about GST.

Once a person has decided to claim their tases as a proprietor, they will be able to claim business expenses, track mileage, claim personal expenses and capital cost allowance on their personal tax return. Not only can this help people save a significant amount of taxes personally, that can help them change the way they file taxes, save money, and split their income. Doing this, people can start paying a small amount of taxes, which can leave them with more money personally, that they can use for anything they want, including saving for their future says Edmonton bookkeeping.

Edmonton bookkeeping | what are proprietorships

People who have discovered that they did not get tax deducted from some of the income that they earned, can face a decision says Edmonton bookkeeping. They can either disclose that, on their personal tax return, and pay up to 48% tax on it, or they can choose to claim that they are proprietor, and file their taxes as a business owner, and save the amount of money that they have to pay in taxes.

There are many questions that people have when learning how to do this for themselves, but once they know how to claim as a proprietor, can significantly save themselves money. The first question many people have is who can be a proprietor? Ten bookkeeping says anyone with an income that is not regularly taxed. One way for people to be able to find out if this applies to them is if they get an T4 a and there are no taxes deducted, that essentially makes them proprietors, because they have received income that was not taxed.

Many people are sure what the difference is between proprietorships and corporations. A proprietorship is an unincorporated business. It is not a separate entity, and it is tied not only to the business owner but the business owners tax requirements. A corporation on the other hand, is a separate entity from the business owner and is taxed differently.

The third question that many people have when it comes to considering to call themselves a proprietor says Edmonton bookkeeping is what income does a person need to earn in order to be called a proprietor? There is no minimum threshold, and so any amount of income that a person generates for themselves that is not a result of their employment. Some examples of what a proprietorship can include could be dance instructors, or fitness instructors that are instructing out of a dance studio or Jim, and receive payment, but it has no source deductions taken from it because they are an independent contractor. That can also include music teachers or massage therapists for example who also work out of their home, but it can also include people who occasionally do house cleaning, snow shoveling, lawn mowing or even driving friends and neighbors to the airport and receiving a modest amount for. All of these are examples of what can be considered a proprietorship, and allow people to give the start filing their taxes differently.

Another question that many people have about claiming their taxes as a proprietor, is if they need to start collecting GST. Edmonton bookkeeping says that this is not necessary, businesses have to be earning a minimum of thirty thousand dollars before they are required to start collecting and paying GST to Canada revenue agency.

By understanding all of the facts about owning a proprietorship, people can get the correct information, and significantly impact the taxes that they have to pay, can help them save significant amounts of money says Edmonton bookkeeping.