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If a person gets to the end of their year, to receive their T4 slips, says Edmonton bookkeeping, and they realize that a proper taxes were not deducted off of their income properly, this can have business owners faced with the reality of having to pay a years worth taxes in full on their tax return. Since the average Canadian pays 43% on taxes every year, this can be a significant and devastating bill to have to pay. However, there are options for people who find themselves in this situation.

One of the first things that people should consider if they find themselves in this situation, is that anyone who has income that is not regular, taxed income can be considered the proprietor of their own business. Someone who has not had the taxes taken off their paystub properly can end up automatically in this category.

The difference between a proprietorship and a corporation is as follows says Edmonton bookkeeping, a corporation is a business that is its entity and has its own tax rules. A proprietorship, on the other hand, is in an unincorporated business. It is part of the business owner’s personal property and remains a part of their tax obligation as well. The reason it is important to understand that is when people have earned untaxed income, they will be able to claim that they own an unincorporated business so that they can file business taxes.

Many people wonder what kind of income they need to reach per year to be considered a proprietorship. Edmonton bookkeeping says that there is not a minimum amount of money that they have to earn, people have claimed as little as fifty dollars and entire year to claim that they are a proprietorship, so this can be anything from unincorporated contractors to people with part-time businesses, or side jobs, two people who have accepted money on a casual basis to do odd jobs.

One concern that many have when they are considering filing their taxes as a proprietorship, is that they will have to start collecting GST and paying GST to the federal government when they start claiming business taxes. However, this is not true, people only have to start collecting and paying GST once they reached a threshold of thirty thousand dollars or more.

For a person to file their taxes properly if they are claiming that their proprietorship says Edmonton bookkeeping, is that they need to fill out a specific form and fill it out at the same time as their tax return. One important thing to remember is that proprietors have a different tax deadline than the typical April 30 reserved for personal taxes of Canadians. They thought forty-five extra days, allowing them to file their taxes as late as June 15. However, they should keep in mind that if they owe the government any money, they start incurring interest as of April 30.

Edmonton Bookkeeping | What To Do If Taxes Were Not Deducted Properly

A situation that some people can find themselves in, is that they have reached the end of their year, only to discover that they have not had the right source deductions taken off of their income says Edmonton bookkeeping. They can claim their taxes as a proprietor, to help minimize the amount of taxes that they pay personally. This can be a significant amount because the average Canadian pays 43% in a variety of taxes throughout the year, and the highest personal tax rate in Alberta is currently 48%.

One of the benefits that people can utilize if they are claiming taxes as a proprietor, is that their spouse can also claim as a proprietor, which will allow them to income split. It allows a person to be able to share the amount of money that they earned with their spouse on the taxes so that they can minimize the amount of taxes that they pay. For example, if their spouse is a stay-at-home parent, and have earned no income in that year, they may want to take all of the amounts that the business owner has earned tax-free so that the spouse can pay the minimum amount of taxes on that. Something that they should keep in mind is being mindful of the tax brackets, so once paying any more taxes than they have to.

Another benefit of claiming taxes as a proprietor is that it allows people to claim a variety of business and personal expenses on their taxes that they had previously been unable to. Examples of business expenses that can now we claimed to include the business portion of persons travel, business-related meals and entertainment, rent from their home office, well as mileage. Personal expenses that can be allocated to the proprietorship include home-office expenses like utility bills, phone, and Internet, property tax and condo fees.

For person to be able to track mileage to use on their tax filing, they need to be keeping extremely good record of the date that they have driven for business purposes, where they are coming from, as well as where they are going, the total distance that they have driven, as well as the purpose that they have traveled. Edmonton bookkeeping says that it needs to be extremely detailed and accurate because the Canada revenue agency is well-known for asking for proof of mileage regularly.

People to be able to claim personal expenses tax return, they need to be able to prove the amount of their home that they use for business. By measuring the square foot size of their home-office, and then figuring out what percentage of the house that is, they can take that same percentage From their utility bills, condo fees, property taxes, phone, and Internet as well as rent or mortgage. One thing that they need to keep in mind, however, is that to do this, the amount cannot create a loss in their proprietorship, they can only claim is much as they can earn, but claiming is much as they are allowed, can help minimize the amount of taxes that they pay.