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The differences between a proprietorship and a corporation is a corporation is its own separate and legal entity. Not only is it separate from the business owner, but it has its own tax requirements. A proprietorship on the other hand is an unincorporated business that remains legally attached to the business owner and business owners tax obligations. It is important to know these things, because not only are year end tax filings different for proprietors and corporations, but so are there accounting methods as well.
Tax filings for proprietorships are actually done in conjunction with the business ownerís personal tax returns. The reason for this, is because they are legally attached to each other, you must happen the same time. The personal tax return deadline in Canada is April 30, and owners of proprietorships will have until June 15 to file both their business and personal tax returns. Canada revenue agency gives an additional time allotment for these business owners to help make up for the additional time it takes to prepare business filing.
Outsourced accounting services says that entrepreneurs should be very aware that if they miss that June 15 deadline, they can be hit with a late filing charge, as well as additional interest that can end up adding up to a significant sum of money that might be difficult for a business owner to pay. It is extremely important that they ensure that they are meeting their deadline date. Business owners should keep in mind though that even though they have a June 15 deadline, Canada revenue agency starts charging interest on all taxes owed starting April 30. This is not the same thing as a penalty, and is just a 1% interest rate on the entire amount owed until they pay it.
It might be extremely beneficial for entrepreneurs to get advice from outsourced accounting services in order to find out if they are setting up their tax returns properly. While this is not necessary, it can help an entrepreneur minimize the risk to their business to have an accountant review their tax return before they sent it off. Accountant will be able to help an entrepreneur ensure that their expenses are properly classified, that they are not missing expenses, and that there return is going to fit CRAís parameters.
By getting all of the information on how to properly file tax returns for proprietorships, entrepreneurs can ensure that not only are they filing their taxes properly, there are minimizing errors, and avoiding late filing penalties
Regardless of what business structure an entrepreneur is operating, whether it is a proprietorship or corporation, business owners should understand what the accounting requirements are for their particular business structure, so that they can ensure accurate accounting in their business says outsourced accounting services. Many business owners operates there proprietorship until they reach a certain threshold in their business, and helping insurer entrepreneurs have the most accurate accounting records from proprietorship is extremely important when they grow their business and incorporated.
One of the first things that an entrepreneur should learn is that the type of accounting that is required for a proprietorship is very different than the accounting requirements for a corporation. Proprietorships need to do what is called single entry accounting, and that is basically keeping track of all of their revenue, expenses and costs of good in the spreadsheet. Outsourced accounting services says that this is a very simple type of accounting to learn, and does not require any specialized software like QuickBooks. However, single entry accounting is also a lot easier to make mistakes in.
Business owners should start with creating their own separate business bank account for their business, even as a proprietor. Outsourced accounting services says that this not only will provide an additional they are of assurance, because since single entry accounting is easier to make mistakes in, having a separate business bank account for all business transactions get tracked through can help entrepreneurs ensure the accuracy of their accounting. Outsourced accounting services says that the only way this truly works, is if entrepreneurs can ensure that they are keeping their personal expenses out of their business bank account. By using their bank statements as a double check system for their accounting spreadsheet, can help an entrepreneur ensure the accuracy of the information.
Another recommendation for entrepreneurs to ensure the accuracy of their accounting, is for business owners to set up appointment to see outsourced accounting services. You can find out what categories to track, what the most important totals for their business are, and figure out their revenue streams. They can also get a very high-level projections done, so that not only do business owners have a goal, but they can create a plan on how they are going to get there. This is extremely important to helping a business owner start doing their business accounting correctly, and that they have a plan in place on how they are going to grow their business.
by understanding how proprietorships and corporations are different, business owners can start to understand the accounting differences between the two, so that they can do their accounting properly, and as error-free as possible. When entrepreneurs do this, they can be empowered enough to understand the finances in their business, and what they need to do in order to ensure the accuracy of their information and use that to grow their business.
