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E-Myth – “Why most small businesses don’t work & what to do about it”

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Outsourced Accounting Services | Different Tax Requirements For Proprietors And Corporations

There are many benefits to incorporating a business says outsourced accounting services, in addition to getting significant tax savings, there are a number of secondary benefits including limiting the liability in their business, owning their tradename, obtaining a WCB number, and earning that amount of legitimacy in their business. However, and entrepreneur does not choose to incorporate their business for a variety of reasons. They may not be full-time in their business, and they do not want to go for the expense or the time required to incorporate their business until it is full-time, and they may be waiting for their tax threshold of earning fifty thousand dollars a year in their business in order to incorporate their business. Regardless of why, entrepreneurs should understand that there is a difference in business structure between corporations and proprietorships. Since there is difference, business owners also need to understand that the tax filing requirements and accounting requirements are very different for both as well. No matter what business structure they have, entrepreneurs need to ensure that they are aware of what the requirements are for either business.

One of the first things that entrepreneurs need to understand is the difference between corporations and proprietorships, is that an unincorporated business remains tied to the entrepreneur and the entrepreneurs personal tax requirements. On the other hand, a business that is incorporated has become its own separate entity for legal and tax purposes, and is completely separate from the requirements of the business owner. those to differences mean that corporations can choose their own corporate year end, meanwhile proprietorships have to ensure that their tax returns are filed at the same time as the entrepreneurs personal tax return. Outsourced accounting services and saying that when entrepreneurs are filing their personal tax return, that deadline is typically April 30 for all Canadians, however Canada revenue agency will allow an additional time. For proprietors to file their business and their personal tax returns.

Although entrepreneurs have until June 15 to file their business tax return and personal tax returns, if they owe any taxes to Canada revenue agency, they will start accruing interest on April 30. This is 1% interest, and should not be confused with a penalty. Penalties will start accruing if an entrepreneur does not complete their tax return by June 15. To ensure they are not paying more taxes then is absolutely necessary, entrepreneurs should ensure that they have their tax return done and sent in prior to that date.

When business owners are aware of the differences between proprietorships and corporations, they will be more prepared and what they have to do in order to file their taxes properly and effectively. Once they do that, they can minimize errors, and ensure that there competing their taxes correctly, and timely. When done properly, outsourced accounting services say that business owners can end up with valuable information on how they can grow their business.

Outsourced Accounting Services | Different Tax Requirements For Proprietors And Corporations

There are many differences that business owners should be aware about when they are operating a proprietorship versus a corporation says outsourced accounting services. While there may be many reasons why an entrepreneur would decide to operate a proprietorship instead of a corporation, ultimately those decisions are the business owners, the only thing that they need to be aware of, is that the accounting requirements are very different between both business structures.

Outsourced accounting services say that incorporated businesses have a much higher requirement for their accounting than proprietors. What the requirement is for corporations to do for their accounting, is called double entry accounting. They need accounting software like QuickBooks, Sage or zero, and they need to ensure that their books balance at the end of every month. This is a high level of accounting, that not only takes a significant amount of time to learn, it also requires purchasing the software. Although takes a lot of time, it ends up with the more accurate product. Proprietorships on the other hand do not need to utilize such strict accounting methods, the utilize what is called a single entry accounting system, which means they only need to keep track of the revenue, cost of goods sold, and expenses in their business. Outsourced accounting services says that while this is much easier form accounting to learn, and does not require any specialized software, just a spreadsheet program, this also is a form of accounting that is easier to make mistakes on as well.

When way that entrepreneurs can ensure the accuracy of the information that there entering into their spreadsheet, is to create a business bank account that they keep separate from any of their personal expenses. This way, the bank account can help an entrepreneur verify all of the revenue going into the business, and expenses and costs going out of their business. By comparing their spreadsheet against their bank statement, entrepreneurs can help ensure the accuracy of the spreadsheet, so that they can end up with the most accurate information as possible.

Outsourced accounting services say that it is extremely important that entrepreneurs to end up with the most accurate information as possible, so that they can increase their ability to succeed. 50% of all Canadian entrepreneurs fail in business within the first five years, and 29% of those failed entrepreneurs when interviewed said that the reason why their business failed was because they ran out of cash in their business. By ending up with as accurate accounting records as possible, can help business owners with good financial information in order to help them avoid cash flow problems, but also proactively grow their business.

There is many differences between proprietorships and corporations, when business owners are able to do their accounting properly, they can end up with the most accurate information possible, that can help them significantly avoid problems and grow their business, so that they can get to the point where they need to incorporate their business.