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Entrepreneurs should understand that every time they take money out of their corporation, that money is kept track of in a running balance. This running balance is kept track of since they very beginning of the corporation. Edmonton bookkeeper says that every dollar that the business owner takes out of the company, is kept track of and has to be paid to that corporation. Business owners also need to understand that every time they put money back into the company, that money is also kept track of, and the two balances can cancel each other out. The business owner needs to understand is the amount that they owe the corporation for taking money out to either be paid back to the corporation within two years, or be cleared. Since business owner is not planning on getting the corporation back the money that they’ve taken out in order to live off of it, they will have to clear it. How a business owner is going to clear their shareholders loan, is my telling the government that they’ve taken that money out in salary or personal dividends. The reason it’s important for business owners to tell CRA that they have taken that money, is because they actually owe personal taxes on their salary or dividends. Every business owner takes salary or dividends out will pay personal taxes on it. If the business does not clear there shareholders loan, CRA can assess the business owner at any time without warning, forcing the business owner to pay that tax bill at any given time.
It’s very important that business owners are able to keep great track of shareholder loans that they take of their company, in Edmonton bookkeeper recommends that business owners create a bank account devoted simply to taking out shareholders amounts. The business owner should only be taking out money once a month to live off of, or maybe personal taxes and nothing else. By only having two amounts coming out of the account each month, can make it very easy for a business owner to see all the money that is coming out, and help their accountant track what money is being taken out and for what reason.
By understanding how shareholder loans work in their business, Edmonton bookkeeper says entrepreneurs can avoid paying more in taxes, but also help them plan how to take money out of their company efficiently while minimizing the taxes that they pay.
Many business owners believe that when they own the company, they will be able to take out all of the money that they want at any given time says Edmonton bookkeeper. Unfortunately this is not true, business owners need to be careful of how they take money out of their bank, and how they declare that money to the government in order to avoid paying higher taxes, and even getting assessed with additional taxes owing. There are several things that business owners can understand it comes to shareholder loans to help them maximize the benefits and minimize the taxes.
The first thing that business owners should understand when it comes to taking money out of their corporation, is that they should take money out of their corporation as salary or personal dividends. They should not take a pay check says Edmonton bookkeeper. And every dollar that they take out of their corporation, they actually owe the company back as a running total. If a business owner contributes money to their business, that money that the corporation owes them is also kept as a running total.
Business owner needs to either pay that money back to the corporation, or clear it says Edmonton bookkeeper. Since the business owner isn’t going to pay back the money that they’ve taken out in order to live, they need to clear that loan. The way they do that, is by declaring to CRA how much money they have taken out of the company to live off. The reason it’s important to declare that money, is so that they can pay personal taxes on it. Every business owner who takes many of their company, will pay personal tax on it says Edmonton bookkeeper. By understanding shareholder loans, and that business owners need to either pay the corporation back, or need to tell the government how much money they took out of their account in order for them to live, they can pay taxes properly and of time, and avoid getting assessed at a future date.
One of the easiest ways for business owners to keep track of how much money they have taken out of their corporation in a year, is by creating a shareholders account, that all of the money that they will take of their company, is taken out that one account, which can help them keep track because it’s limiting the amount of transactions in that account. Edmonton bookkeeper recommends that business owners take one single draw every month for their salary, or a second one for personal tax and then nothing else. Simply by having only two transactions that come out of that account every month, can help not only put the business owner see how much money they are taking out, but will help the accountant determine what money is taken out and for what purpose.
By understanding these things about shareholder loans, can help business owners avoid paying higher taxes and learn how to take money out of their account. We hope to hear from you soon.
