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When a business owners have decided to operate their business as a proprietorship they need to keep several things in mind to ensure that they are not only filing taxes properly and efficiently, but keeping track of all of their expenses and revenue properly as well. One of the first things that business owners who are proprietors need to understand, is that the tax filing deadline is different not only for their business, but for them personally as well says outsourced accounting services. The tax filings for entrepreneurs with proprietors is June 15 instead of April 30, which is what it is for all other private citizens of Canada. Business owners who own proprietors can prepare their business taxes with a different form called a T2125. They can file their personal taxes alongside their business taxes, which means an entrepreneur can file their personal taxes June 15 as well. That additional forty-five days can help proprietors prepare their taxes. One thing that it is important for entrepreneurs to note however, is if they owe money in their corporation, Canada revenue agency starts calculating interest at April 30. This is not the same as a penalty, this interest is merely 1% of the entire amount every single month. However, proprietors should also understand that if they file past June 15 and they all money, they will be hit with penalties.
The next thing that entrepreneurs should understand is that it is an extremely good idea to have a separate bank accounts as a proprietor. Outsourced accounting services says that many entrepreneurs think that they can run their business from their personal bank account and credit cards, although that is not a very good idea. Not only does having a separate bank account provided additional layer of assurance that entrepreneurs are going to maintain separate expenses from their personal account. But it is also going to make doing the accounting much more easy when they can just go into the business account to look at all of the various transactions and revenue they have earned in that month. This is extremely beneficial if entrepreneurs ever get audited as a proprietor, they are going to want to have extremely good records of everything. For this level of assurance, business owners should definitely endeavour to have two different accounts and two different credit cards. For the additional fifteen or twenty dollars every month it is going to cost them, it is worth it.
Business owners should understand the differences between proprietorships and corporations so that they can be prepared when they are doing the accounting of their business says outsourced accounting services. Not only is the filing deadline different, and the form they use different, but entrepreneurs have different accounting requirements as well. Understanding these different requirements is very important in order for entrepreneurs to be able to account properly in their business.
Businesses with proprietorships need to do is called a single entry accounting. This basically means that they only need to be taking into consideration all of the revenue that they bring in and all of the expenses that they pay out of their business. This is an extremely easy form accounting that does not require any accounting software like QuickBooks or Sage. That can save an entrepreneur lots of time in not having to learn a software that they do not need and save money on not having to buy a software that they do not need. However, entrepreneurs should keep in mind that even though single entry accounting is less work, it is also riskier because of how easy it is to make mistakes.
The difference between single entry accounting and double entry accounting, is that double entry accounting is where an entrepreneur needs to ensure that everything balances at the beginning of the month and at the end of the month. For every debit there is a credit somewhere else. This can be more difficult and time-consuming to achieve and requires accounting software like QuickBooks. However it is easier to get correctly, because if things do not balance at the end of the month, that means it is wrong. Regardless of which way an entrepreneur decides to account in their proprietorship, they need to ensure their doing it properly.
What can significantly help entrepreneurs do their accounting properly is to visit an accountant says outsourced accounting services. The reason for this is because accountants can also help entrepreneurs identify what expense categories they need to be tracking, what expense categories are not necessary and how to properly track their revenue. Business owners can also ask questions like what the categories mean, and it can help an accountant figure out high-level projections for the proprietor. Just because an entrepreneur is not operating a corporation, does not mean they do not care if they can grow their business.
Even if a business owner does the accounting for their proprietorship themselves says outsourced accounting services, and accountant can still provide a great touchstone for entrepreneurs to ensure they are setting things up properly, and it can also help them at the end of the year do their proprietorship tax return. It may not be necessary, but it can help an entrepreneur understand if their expenses are reasonable, if they fit into the parameters set out by Canada revenue agency and to ensure that there is nothing missing like important expenses. For example an entrepreneur who puts all auto expenses into the travel category. This can ensure that while an entrepreneur has done everything that they can to minimize the risk in their proprietorship, having an accountant finish the job can help ensure that they are minimizing the risk as much as possible
