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Easy, breezy, beautiful CRA online payment option

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“How do I pay the CRA online?”

Even the Canada Revenue Agency (CRA) is in with the online!

Whether you have 2016 taxes owing or  you are a business owner who needs to settle a debt, handle it like a boss and pay the CRA to avoid late fees and any legal trouble.

Here are some ways you can pay the CRA, whether you are an individual or a business:

Online (Recommended)

The CRA prefers to receive electronic payments. It’s fast and easy! You can do it two ways:

  • Make a payment using your financial institution’s online banking services:

    • Sign in to your financial institution’s online banking service (RBC Royal BankTD Canada TrustVancity, etc). Bank with another financial institution? See the complete list of banks that can be used on the My Payment service here.
    • Under “Add a payee,” look for an option such as: CRA (revenue)-current year-tax return. CRA (revenue)-tax amount owing. CRA (revenue)-tax installment.
    • See other available options under “Add a payee” that are not listed above here.
    • Business: Specify payroll, GST, Corporate Tax
    • Account number for personal: SIN number
    • Account number for business: Business number
  • Pay via CRA’s My Payment service:

    •  The amount that you can pay will be restricted by your daily banking limit for online transactions
    • Click on “Start my Payment” here to make an electronic payment.

Offline payment methods:

  • In-person (at the bank): You cannot walk into the bank to pay without the remittance voucher. The CRA does not mail them our anymore to encourage people to take advantage of their speedy, secure online payment option.
    • We can provide all our existing clients with a remittance voucher  for their personal taxes which they need to take to their financial institution to pay.
  • Photocopy an old one that you have, or  call the CRA to request it mailed to you. The process takes more than 10 business days, and that might cause you incur late penalties.
  • Mail a personal cheque: In the memo, indicate account number (SIN for personal or business number for self-employed).  Attach a letter to let CRA know what you are paying.

For information about your account balance and payments, including installments, see My Business Account.

When completing your return, you may calculate a balance owing on line 485Your balance is due no later than April 30, 2017. When a due date falls on a Saturday, a Sunday, or a holiday recognized by the CRA, your payment will be considered on time if the CRA receives it or it is postmarked on the next business day.

Generally, if this amount is $2 or less for 2016, you do not have to make a payment.

If you owe tax for 2016, and you file your 2016 return after the filing due date, the CRA will charge a late-filing penalty.

They start charging compound daily interest on any outstanding balance for 2016 starting May 1, 2017, until you pay it in full.

If you can’t pay the full amount you owe, take action right away and call the CRA arrange a payment plan.

For a full list of payment options, go here.

Get in touch with us if you have any concerns here.

Incorporation Series: How do I pay myself if I’m incorporated?

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Balling! When your wallet fat from all that cheddar…..

 

You got 99 problems and your incorporated small business ain’t one? Great. Now it is time to pay yourself. Because you can.  Unlike sole proprietors, owners of a corporation no longer have to claim all of the income from the business as personal income.

“How do I pay myself if I’m incorporated”

You can pay yourself in a variety of ways.

1. Salary

You can add yourself to the company payroll and receive a T4.

This is a more expensive option as the company will have to pay all required payroll taxes on your behalf. Owners are exempt from EI but must pay CPP like other employees.

However, choosing this option will allow you to accumulate more room in your RRSP’s which you can utilize to save on personal taxes once you are making the big bucks.

Additionally if you are the lower income earner and need to deduct child care expenses from your taxable income you will need to be pay yourself with a salary.

2. Dividends

You can declare the money you have taken from the company as a dividend.

To do this you will need to get your bookkeeper or accountant to figure out how much money you took from the business throughout the financial  year and issue you with a T5 from the corporation.

Your personal tax rate will be lower than if you take a salary.

Important Note

As tempting as it may be to pay  yourself as a contractor WE DO NOT RECOMMEND THIS OPTION.

Anytime the CRA feels they are missing out on receiving taxes they feel they are entitled to ( which in this case would be payroll taxes)  they will, put quite simply, come after you!

For more information about the penalties for incorrect employee classification check out our blog post Employee VS Contractor – CRA Penalties for incorrect worker classification

In the end we recommend that you talk to your bookkeeper or accountant before you decide how you are going to pay yourself so that you can choose an option that is the most tax effective based on your income requirements.

If you are considering becoming incorporated and would like to discuss your options face-to-face with Teya our business consultant and tax expert you can make an appointment by calling us directly on  604-739-9536  or by requesting an appointment through our contact us page.

Incorporation Series: Should I Incorporate?

Vancouver Bookkeeper(s), Tax Return Service Vancouver, Small Business Bookkeepers in Vancouver, Small Business, Grumpy Cat, Quickbbooks, Incorporation, Small Business Incorporation

To incorporate or not to incorporate?

The answer is not so clear-cut. And the looming questions can buzz around your head like fruit flies at a gravesite of a discarded lollipop. It’s enough to turn even the jolliest person into Grumpy Cat.

There are several factors to consider, so before you turn into a furry creature cursed to look like the angry emoticon (>_<) for all eternity , let us provide you with the tools you need to weigh up the pro’s and con’s of incorporating. Let us answer that lurking question experienced by most successful business owners ‘should I incorporate?’ and help easify your life!

Positives of incorporating

Limiting Liability

When you are a trading as a sole-proprietor your personal assets can be seized to pay your business debts which is a scary thought that can place unwanted stress on you and your family.

If you incorporate your business it becomes it’s own separate entity in terms of liability and financial responsibility.

This means two very important things. Firstly, it means that although your business is still liable for any debts it incurs, as a shareholder you are not personally liable unless you have given a personal guarantee.

Secondly, it means that the business essentially has an unlimited lifespan. Unlike a sole proprietorship which begins and ends with the owner, corporations can continue to exist regardless of ownership changes.

Tax savings

Additionally businesses that trade as a corporation are taxed at a lower rate of only 13.5% which is a great incentive for sole proprietors that are earning between $60,000-$100,000 on their personal tax returns.

Negatives of incorporating

Although incorporating your business may seem very appealing thanks to the promise of lower tax rates and limited liability there are some downsides that need to be considered, which are::

More government reporting

Don’t think for a minute that you will get lower tax rates without having to pay the price with government paperwork.

Increased accounting costs and responsibilities

If you were concerned about the cost of managing your books and taxes as a sole proprietor chances are high that you will find the increase in cost quite shocking once you incorporate.

More tax returns.

Once you incorporate you will have to file a corporate tax return AS WELL AS a personal tax return

The cost of incorporating

If you have weighed up the positives and the negatives and decided that incorporating your business is the way forward then you will need to budget in the following costs.

Setting up the corporation

This will cost roughly $1000 through a lawyer, which is recommended if there are multiple shareholders or assets to transfer. Alternatively you can incorporate on your own through the BC Corporate Registry for $350 using their online facility.

Maintaining the books

Annual Accounting costs ranging from $2,000 for a simple corporation that experiences minimal activity to $5,000 for an average small incorporated business.

Although this may seem high you really shouldn’t underestimate the value of a good accounting team. This is one area of your business you need to make sure is solid.

We hope that this overview has given you a stronger understanding of why businesses incorporate. In the end we recommend seeking professional advice before taking the plunge and incorporating your business. It is in your best interest to make sure that you incorporate at the best time and set everything up correctly so that you avoid paying penalties or experiencing issues in the future.

Stay tuned

In our next post we will be discussing what happens after you incorporate your business and the steps you need to follow.

If you are considering becoming incorporated and would like to discuss your options face-to-face with Teya our business consultant and tax expert you can make an appointment by calling us directly on  604 739 9536  or by requesting an appointment through our contact us page.

Teya Mali talks books with Globe and Mail

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If your box of receipts is shapeshifting into a pot of paper flowers, exuding a musty book smell, this article is for you. Use the most cost-effective and fast categorizing approach so that you can account for every receipt when it matters the most, and save some dough for real flowers.

Paul Attfield’s article points out the key to winning your bookkeeper’s heart

“It’s actually faster to sort that way as opposed to trying to find the date on each receipt,” said Homeroom’s Lady in Charge Teya Mali in the recent Globe and Mail article on the importance of record-keeping in business. Teya was not talking about the throw-and-forget approach illustrated in the above left photo.

Find the best way to categorize receipts, why you should keep a mileage logbook, and more handy tips, to run a healthy business in the full article, “In record-keeping, consistency is king,” by Paul Attfield.

 

Avoid CRA penalties

Income Tax Filing Vancouver

Unleash your inner beach diva mid tax season, and rejoice!

Whether you’re ripping the waves in Tofino, or lounging at home with a bird’s nest do, file you e-return whenever, wherever.

Our quick and easy electronic tax filing option is a great alternative for anyone who prefers hassle-free, no appointment necessary service.

April 30th filing deadline is approaching as quick as the Easter bunny. Save time and paper, and avoid CRA penalties.

And don’t let taxes stop you from quality time on the beach.

Fill out the form below, and request an e-return today!

If you know someone who needs help with their taxes, please forward this post to them. We always appreciate your referrals. 🙂

Request an e-return

 

Tax time doesn’t have to be a pain in the back!

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Supercharge your health this tax season, and beyond! Homeroom Bookkeeping‘s got it going on: stand-up desks,  fruit and nuts, and now….delicious, daily stretches. Because tax season doesn’t have to be a pain in the back! By Anja Konjicanin aka Office Gal

It’s 11 am. The phone alarm gently shakes the front desk with a soft vibrate accompanied with lively beats of Sencha sound. The Homeroom team makes subtle eye contact. It’s time. The daily grind comes to a halt, receipts drop, bookkeeping calls are left unattended. This is the time to get up and stretch. Yes, a full-on body stretch with the fellow work mates!

“I really needed this,” says The Lone Wolf, Kevin as he stands up in slow-mo, visibly enjoying every step of the getting-up process.

He turns to The Number Cruncher, Allysia who is already on her feet, rolling her neck, eyes closed, in what can best be described as pure bliss.

While financial fitness is important, (remember to get those books in tiptop shape to meet tax deadlines!), it’s even more important to stay physically healthy so you can enjoy a long, happy, pain-free life. You might even dream about tackling those pesky tasks with a fresh boost of energy and vigor… and smiles.

The team shakes out of zombie mode and proceeds to the centre of the room where we face each other for a regular game of “Who’s Going to Laugh First?” Then, it begins. We start with juicy neck rolls.

Chin up, we turn our necks side to side. Pause and hold each side. With our chin pointed down toward our chest, Office Gal notices a forgotten paper clip begging to be saved from the carpet’s furry grip. We continue to roll our chins from shoulder to shoulder in a gentle half-circle.

It’s another day at Homeroom. Following the successful completion of our consistency challenge (and stellar cash prizes!), we vowed to commit to daily stretches. Every day, every two hours. Office Gal programmed her giant iPhone to ring at 11, 1 and 3 so we never forget. Ever. Get up every two hours to stretch, reflect, re-energize.

“Sitting is worse than smoking” said a certain health advocate when he exposed the secret to zero back pain during a brief visit to us: a list of seven short steps to breaking the spell of chronic sitting, which a gazillion studies have found directly impacts cardiovascular and metabolic function. Healthy people disintegrate behind the desk.

Dude, stretching is easy and feels so good. A reason to stop working, if only for four- and-a-half minutes. Two minutes if you power through it like Office Gal usually does.

The Lady in Charge, Teya quickly finishes up the email she’s working on. She guiltily runs to join the circle. Teya’s late but she knows the routine: neck mobilization, shoulder and upper back opener, wrist and hand stretch, Good Morning Twists, YTUW Back, glutes and hamstring hinge action, split stance tilt, ankle circles…

As we lean back, in a split stance tilt, forming a natural stride while keeping our heels pushed to the ground and hips forward, we check in on how the day is going.

“How you doin’?”

“Doing good. You?”

Two people at the office across from us casually walk by, do a double take along with a curious “What the–?” expression before slowly walking away as if they saw nothing. One of our clients walks in on us and joins the fun.

“This is great!” she says, flopping into position.

The Office Gal giddily laughs at the thought of another stretch and prepares for her favourite move: the ankle and wrist rolls AKA The Bollywood.

“We should add a bounce”, she suggests, looking for a sign of affirmation from the team. She lets out a hearty chuckle at her own idea. The Number Cruncher smiles with her.

“I have your back.”

Communications Guru, Yvonne quickly moves to another part of the room. The eye contact with the coworkers along with the inevitable laugh factor proves to be too much.

It’s time for Good Morning Twists. As we do the prayer mode stretch with arms crossed against our chest followed by a bow to get the blood flowing and hips moving, sticking our bums out with a slight bend, we breathe in and out.We gracefully extend our legs and neck looking at the ceiling. The radio provides a suitable backdrop of rhythm that seems to fit with every move.

Can staying healthy be almost as much fun as sifting through people’s gloriously overflowing shoe-boxes of scented receipts and random, unique objects that live among them? Yes, yes it can!

Give your body special treatment (it’s almost Valentine’s Day!) with these quick and easy exercises. Pitch the idea to your bosses and family and friends. Tell them Homeroom made you do it. Don’t be afraid to give them our number.

Stay tuned for next week’s post of all our moves, so you can get in on the action!

 

Canadian Tax Return Series: What Can Actors Claim?

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Vancouver has a very successful entertainment industry and as a result is the home of many actors and actresses. For a lot of people in the acting community what you can and cannot claim as a tax deduction can be very confusing as urban legends about possible expenses tend to run rampant throughout the city.

We spoke with a local actor, David, who was audited by the CRA in 2001. A lot of the expenses he believed he could claim were rejected by the CRA because they were deemed as personal expenses.

We hope that this post will help you improve your understanding of what you can claim and the penalties that you may face if you claim expenses that are denied.

Did you think you had anything to worry about when you found out you were being audited?

Not really, I had been given a rough guide to follow by my accountant that listed items that were considered fair deductions. After referring to the guide I thought all of my claims were rather conservative.

What expenses did you claim that were denied?

The cost of my headshots, clothes that I had purchased specifically for auditions, movie tickets that I had purchased to study my craft and the cost of my acting classes were all deemed as personal expenses, not business expenses.

Additionally my car expenses were denied (which was surprising) after the CRA deemed traveling to and from auditions as a personal expense.

Were you penalized?

YES!! I ended up owing around 30K in tax and penalties after the audit.

What did you learn from this experience?

Be really conservative with what you claim. Also if you are in doubt check with a recommended tax consultant who regularly deals with actors tax returns.

Also make sure you communicate with the CRA if you owe money. They are fair and will devise a payment plan for you so long as you talk to them. If you ignore them they will just continue to punish you.

 

Homeroom Small Business Solutions has a lot of experience filing tax returns for actors if you would like us to help you complete you 2013 tax return please contact us to make an appointment.