Why Your Start-Up Needs A Tax Accountant!
#1: All of the confusing accounting terms
There is over a 1,000 accounting terms and you as a start-up could use the tax accountant to help with this.
#2: Deadlines you may not even be aware of
Your business may have all sorts of deadlines, from HST and Payroll filing to submitting your corporate tax return and everything in between. A tax accountant can be of great help to organize these deadlines to avoid any tax penalties, or worse!
#3: Tax Planning and Taxation Accounting to avoid long term issues
Not only do CPA accountants do your taxes, they also help plan in advance to avoid long-term issues and to provide the most efficient and effective taxation accounting structure to promote your business’ bottom line.
#4: Handling the unique accounting rules your unique business may be required to follow
Every business is unique, and your start-up is no different! Every day new rules and regulations come into effect which could affect your business. Let the accountants manage your startup accounting and keep up with the changing rules while you focus on your business!
#5: Trusting non-certified individuals to deal with your sensitive information
You need someone you can trust to deal with your business’ information. CPAs or Certified Professional Accountants have spent years with education and training, including yearly education to keep them up to date with the ethics and morals that comes with the tax and business accounting fields. Your information is safe with professional taxation accountants!
Final:
When you look at the common denominator in the points we have listed, the answer is time management! We can save you the time and stress through our business tax services near Vaughan so that you can put your focus into your business! Think about it, are hours of stress and confusion worth it when you could hire an experienced tax accountant or business accountant to complete the task in fraction of the time?
What Type of Business do you have?
| # | Sole Proprietorship | Partnership | Corporation | Non-Profit |
|---|---|---|---|---|
| What is it? | Owned by one individual Owner bears all risk and reward | Owned by two or more individuals, who share risks and rewards (% and factors depend on partnership agreement) | Is a separate legal entity meaning it bears the risks and rewards separately from the owners | A corporation that does not perform services for financial gain. Does not issue shares |
| Business contract | No | Can be written or verbal | Set up a corporation by completing articles of incorporation (which will list things such as # of shareholders allowed, # of directors, etc.) | Must incorporate, and can do easily online Must have meeting with directors to create bylaws to follow within corporation |
| Tax return? | All assets and liabilities are included with your personal assets and liabilities thus you do one personal income tax return | Each partner includes their share of ownership in their own personal income tax return Will have to file form T5013 (Statement of Partnership Income) if Revenue is more than $2 million, or assets more than $5 million | Must file corporation income tax return, due six months after end of tax year | Generally do not have to file tax return, but when they do, must file corporation income tax return, due six months after end of tax year |
| Tax installments? | if tax owing is $3000 or more in the current year or the last two years If so, pay on a quarterly basis. | if tax owing is $3000 or more in the current year or the last two years. If so, pay on a quarterly basis. | No installments required until after the second year of operation. if tax owing is $3000 or more in the current year or the last two years. If this is the case, must pay by monthly or quarterly installments. | - |
| Register as business? | If name is different than owner’s legal name, register your business for any CRA programs, such as GST, payroll deductions, etc. | If name is different than owner’s legal name, register your business for any CRA programs, such as GST, payroll deductions, etc. Can be a general partnership (Form 1), limited partnership (fill in form for this), or limited liability | Can operate under a name other than legal name by filing Form 2 under the Business Names Act Submit a NUANS which ensures the name you have decided to the the incorporation is available. Will received OCN (ontario corporation number) after incorporation approved | - |
| HST? | When sales in taxable supplies over $30,000 | When sales in taxable supplies over $30,000 | When sales in taxable supplies over $30,000 | When sales in taxable supplies over $30,000 |
| Licenses? | Required only if change business name, or if occupation requires by law. Ex. Day cares must register as a business https://services.bizpal-perle.ca/ is good resource to find any licenses required by location and occupation If required, you must apply for Master Business Licence | Required only if change business name, or if occupation requires by law. Ex. Day cares must register as a business https://services.bizpal-perle.ca/ is good resource to find any licenses required by location and occupation | Must have a business license The Goods and Services Tax (GST) or Harmonized Sales Tax (HST) Payroll taxes, such as Canada Pension Plan contributions Corporate income tax Duties for the import or export of goods Registered charity work Excise duties Insurance premium tax Air travelers security charge | Is issuing donation slips, must register at a charity |
Is HST Mandatory for your Business?
The Harmonized Sales Tax, better known as HST, is a consumption tax that the Canadian government expects businesses to have on their products/services. HST is mandatory for specific businesses but not required for all. To determine if you must register for HST see below:
| Business Type | Mandatory? (Y/N) | Explanation |
|---|---|---|
| Small Regular Business ($30,000 revenue or lower in 4 consecutive calendar quarters) | No | Revenue is too low to mandate tax |
| Large Regular Business ($30,001 revenue or higher in 4 consecutive calendar quarters) | Yes | Revenue is high enough to mandate tax |
| Small Charities and Public Institutions (First fiscal year, or revenue is $250,000 or lower) | No | Revenue is too low to mandate tax |
| Large Charities and Public Institutions (Revenue is $250,001 or higher) | Yes | Revenue is high enough to mandate tax |
| Non-Residents | Yes | Must file for HST unless you do not carry on business in Canada |
| Taxi Operator or Commercial Ride-Sharing Driver | Yes | All commercial drivers must file for HST |
Apply Online or you can apply through mail/fax or telephone. You will need the following information to apply:
- Determine if you must register
- Know your fiscal year - this is almost always the same as your tax year
- Know your total annual revenue
- Have your personal information on hand - (Social Insurance Number, Date of Birth, Postal Code)
***If your business is selling services/products from Ontario to other provinces and the United States, HST becomes much more expensive and complex. To learn more contact us for a free consultation***