Tips to Compute Your Taxes for The First Time

If you are self-employed and are giving it a thought to opening your account of doing your taxes, there are some tools to work out the outstanding amount of money in the form of CRA taxes. Here are the best Canadian tips for the calculation of taxes.

Your Best Bet to Estimate Your Taxes

Regardless of whether you own a small business or are self-employed, there is good news for you. Now, you can minimize the outstanding taxes towards the conclusion of a year by filing a claim for the expenses.

Proper planning will help you streamline the process. Note down your yearly expenses on a spreadsheet and keep it handy so you can use it whenever the need arises.

If you work in an office, your expenses may include advertising expenses, inventory and supplies. In the event of working from home, you need to deduct a percentage of your utility bills and rent.

Having a system in place to monitor your invoices can be of profound importance. If you wish to record the information in a spreadsheet, you can use popular options like Quickbooks and Freshbooks.

After adding up the amounts in the last year, deduct both your expenses and RRSP contributions prior to March 1 of the same tax year. By following this process, you will be able to work out your net income based on which, you can calculate your taxes.

You can further ease your tax burden by claiming certain other deductions. However, the deduction of your expenses plus RRSP contributions will keep you posted with the actual balance you owe to the CRA.

How You Can Calculate Your Taxes

Though the internet abounds with tax calculators, the catch is that they calculate the taxes in the same way as it is done in case of a salaried employee. If you are self-employed, chances are you might not like it to be calculated that way.

Do not forget to take your previous year’s income into account while getting the estimate of your CRA taxes.

If you wish to figure out the taxes without using a tool, bear the following things in mind:
a> Taxes are calculated only on the amount of money which exceeds $11,635 from the earnings of the previous year
b>Federal taxes are charged at 15% on $46,605 of your income
c>For income generated up to $55,900, self-employed Canadian individuals are required to contribute 9.99% to Canada Pension Plan. For the residents of Quebec, it is 8% on earnings up to $55,900

For queries on the ins and outs of CRA taxes, get in touch with our business advisors in North York Ontario.

5 Reasons Why Business Registration is Necessary

The idea of starting a business can come into your mind at random. All you need to do to operate a business is provide products or services to people. While it is not always necessary to register your business with the government, it can be beneficial for several reasons. IKt is also a requirement if you are charging sales tax (HST/GST/RST etc. You aree required to get a tax number if your annual revenue exceeds $30,000.

Creation of Business Accounts

One of the main benefits of having a business bank account is the ease of separating your business expenses from your personal expenses. To open a business bank account in North York, Ontario, you have to provide proof of registration of a business with a state. Having a business account also allows you to make business transactions without using your full name. Itr also allows you to segregate your personal property from your business property, thereby protecting your family’s assets such as inheritance, kids’ college funds etc.

Obtaining Loans

Before applying for a loan, it is necessary to prove the authenticity of a business. In most cases, investors or lenders demand documents related to business registration, such as a business number, before investing or loaning money. The same holds true when a business applies for a credit card.

Professional Image

The reputation of a company is extremely important, especially to new clients. When a company is not registered, a client may feel that it is less professional or reputable. Clients are generally more at ease doing business with companies that they trust, and having a business registration in place not only promotes trust but also builds confidence among customers.

Supplier Arrangements

You usually need a company name both for arrangements with suppliers on where to deliver goods and services as well as for potential clients to find you,

Recruiting Employees

After registering a business, you receive an identification number that allows you to route taxes on behalf of employees.  Because of this, most business owners should consider registering their business before starting to hire employees.

If you have questions about the benefits of business registration or want detailed information about registering your business, speak to our business advisors in North York, Ontario now!