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

incorporating small business, incorporation, Vancouver Bookkeeper(s), Tax Return Service Vancouver, Small Business Bookkeepers in Vancouver, Quickbooks, CRA

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.

Teya Mali talks books with Globe and Mail

small business vancouver, slamm business, bookkeeping, Quickbooks, income tax return, taxes, efile, business, sole proprietorship, corporation, books

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.


You get a raise! BC’s minimum wage jumps to $11.25 by 2017

Raise Vancouver
While the petition to raise the minimum wage in British Columbia to $15 still seems to be an active fight for change, BC’s minimum wage is climbing out of the chart dumps. Dubbed, ‘Lowest in Canada,’ the 80 per cent increase will place our beautiful BC in the whopping seventh place, with an additional small-business tax rate reduction of 40 per cent in 2017-2018.

Nice, eh!

What does this mean for you?

The increase will come in two stages:

  1.  The current minimum wage in BC of $10.45 per hour will go up by 40 cents to $10.85 in September 15, 2016
  2. Then it will raise to $11.25 in September 15, 2017

Liquor servers (who get  $9.20 per hour ) will get the same wage increases on the same dates.

Though the wage hike is not being celebrated by everyone, it’s a definite step up!


Raise the roof to that!



Tax tip: Claiming childcare expenses

Ryan Gossling, income tax, childcare expenses, child care expenses

A lot of new mamas (and dadas) come to Homeroom unsure about what childcare expenses they can and can’t claim come tax time. 

Below, we look at eligible childcare costs, the amount you can deduct and which parent claims the costs. 

So, what constitutes a childcare expense?

Childcare expenses are amounts you or another person paid to have someone look after an eligible child so that you or the other person could:

  • carry on a business either alone or as an active partner
  • earn income from employment
  • attend school under the conditions identified under Educational program
  • carry on research or similar work, for which you or the other person received a grant

The child must have lived with you or the other person at the time the transaction incurred for the expense to qualify. Usually, you can only deduct payments for services provided in Canada by a Canadian resident. See other situations for exceptions.

What are eligible childcare expenses?

  • Daycare/ day nursery schools or caregivers providing childcare services. An official childcare expense receipt must be provided.
  • If you employ a nanny, those costs are deductible. Contact us if you need help with payroll source deductions here.
  • Boarding school or overnight sports schools/ camps where lodging is involved (see note in Part A of Form T778)
  • Day camp/ sports school expenses where the primary goal of the camp is to care for childrenNote: An institution offering a sports study program is not a sports school.

Children’s sports and arts credits:

Any program that runs for minimum six consecutive weeks would apply. The maximum amount is $1,000 for sports and $500 for arts (eg. swimming lessons, soccer, dance, hockey, theatre, music and art classes.)

Good to know:

  • The child must have been under 16 years of age (or under 18 years of age if eligible for the disability tax credit) at the beginning of the year in which the eligible expenses were paid.
  • You can claim an additional amount of $500 for each eligible child who qualifies for the disability amount and for whom you paid a minimum of $100 in registration or membership fees.
  • Two parents can claim eligible fees for the same child, as long as they do not claim the same fees and the combined amount is not more than $500

Note: Save your receipts, and dig up more info on the children’s arts tax credit here, and for the children’s fitness tax credit here.

Is your child eligible?

An eligible child is a child of you or your spouse or common-law partner, or a child who was dependent on you or your spouse or common-law partner. Net income in the year was less than or equal to the federal basic personal amount ($11,138 in 2014, $11,327 in 2015).  The child must have been under 16 years of age at the beginning of the year, unless the child was mentally or physically disabled.

Who claims the childcare costs?

When the child lives with both parents, the parent with the lower net income (or zero net income) must claim the expense deduction. The supporting parent with the higher income may claim a deduction only during the period in which the lower income spouse or common-law partner is mentally or physically infirm, confined to a bed or a wheelchair, attending full- time at a secondary school or a designated educational institution or incarcerated in a correctional facility.

The amount that can be claimed for childcare is subject to special rules when the lower income spouse or common- law partner is in part-time attendance at a designated educational institution. Special rules also apply for single parents and those who have separated during the year or are divorced.

How much can you deduct?

You can deduct up to $8,000 annually for each child who is aged six or under at the end of the year, and up to $5,000 for each child aged seven to 15 at any time in the year.

This limit goes up to $11,000 annually for each child who is eligible for the disability tax credit (see topic 80). Also, the total deduction can’t exceed two-thirds of the salary or business income of the parent who is required to claim the deduction. However, it’s limited by the actual amounts paid in the year for childcare.

Still have questions? Comment below for a quick response, or call us at 604-739-9536.

Stretch your tax worries away

Feel the burn? Power through tax season like a champ with these sassy moves.  Stretch your tax worries away. By Anja Konjicanin

“Close your eyes.”

We did.

The Homeroom team was told to hold open our hands. 
A small, metallic object grazed our skin: a golden key. And then we felt up an old record. It was the intro to the importance of consistency.
On a name tag, we jotted down reasons for wanting to keep up with personal goals. Our ‘why’. Then we keyed the crap out of the disc. One scratch at a time, like squirrelly kids colouring, we repeated the seesaw movement, up and down, until any lingering hope of listening to the record died. Our ‘why’, though, lived on….and this stare…err album, would serve as the perfect reminder.

Peter Frampton gem
Shout out to the curly-haired legend, Peter Frampton….

Ever since we keyed mint vintage vinyls, a harbour for consistency meant to remind us of the importance of remaining faithful to our goals (and that we slayed fine records), we’ve stuck to our office challenge: stretch every day. That is, get up every two hours for a break from the chair.

Great warm-up for tax season, no?

These movements may not be much. The consistency with which they are repeated makes all the difference toward a long healthy life. Because a little bit goes a long way with these office-friendly stretches that keep on giving!

I’m doing it for the forever healthy, happy, energetic body. What’s your WHY?

Sit Less, move more, do more, feel great:

1. Neck mobilization (6-8 reps): Keeping your chin up turn your neck side to side with a pause and hold on each side. With your chin pointed down toward your chest roll your chin from shoulder to shoulder in gentle half-circle.

2. Shoulder and upper back openers (6-8 reps): Arms are in front of your with forearms and palms together. Separate your arms keeping them at a 90 degree angle push back until you feel your upper back squeeze together. Keep your back squeezed raise your arms over head. Return to the first position and repeat.

3. Wrist and hand stretch and mobility (6-8 reps): Arms are extended straight in front of your body. Flex or roll wrists and hands as demonstrated.

4. Good morning twists (6-8 reps): Arms are crossed against your chest. Keeping your head up and back straight hinge at the hips moving your chest toward the ground until you feel a stretch up the back of your leg (hamstrings). Hinge up to standing erect pressing your hips forward until you feel your bottom (glutes) flex tight. Then standing straight and tall twist to the right, return to the middle and twist left. Start at the first position and repeat as directed.

5. YTUW Back, Glutes, and Hamstrings Hinge (3 reps): Standing straight and tall push your glutes out (stick your bottom out). Raise your hands above head then move your arms down into a “Y” position, then “T”, “U”, “W”. Return to hands above head. Hinge forward keeping your head up and back straight until your hands come to rest on your desk or other flat surface. Slide your fingers forward on your desk feeling a stretch down the back of your body. Return to standing and repeat as directed.

6. Split Stance Tilt for calves and hip flexors (2 reps pers leg): Part 1 – Standing tall with feet shoulder width apart. Step forward into what would be a natural stride keeping your back heel pushed down to the ground. Push your hips forward toward the front foot keeping your chest high and your head up. Part 2 – In the same stance look up and fully arch your back and tilt your hips up and away from your back leg. Return to standing shoulder width and repeat with the other leg.

7. Ankle circles (2 reps per side): With your toe pressed into the ground make small circles rolling your ankle in one direction and then the other.