Free consult & free copy of book

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

Contact Us


Most 5 star CPA Google reviews in Canada

Read Reviews

Chartered Professional Accountants E Myth

1 Fixed Monthly Fee - Planning | Accounting | Taxes | Consulting

Helping Canadian businesses beat the odds!

Outsourced Accounting Services | What Are The Tax Requirements For Proprietors

There are several things that entrepreneurs should keep in mind if they have decided not to incorporate their business says outsourced accounting services. Incorporating business is not always the correct decision for every single entrepreneur, however if business owners have decided that proprietorship is right for them, they should find out as much as they can about what the tax requirements are, filing deadlines, and how they can do their own accounting so that they can ensure that they are keeping proper track of everything in their business properly.

One of the first things that entrepreneurs who own proprietorships should do, is open up a separate bank account. Entrepreneurs often run proprietorships as a side business, and therefore run it out of their own bank account. While this is not wrong or illegal, outsourced accounting services says that this is also a very dangerous practice to get into for a lot of reasons. Not only is it much harder for entrepreneurs to keep track of business expenses versus personal expenses, it is also hard for businesses to keep track of revenue that comes in, and if they get audited by Canada revenue agency, it can end up being extremely difficult for entrepreneurs to prove different transactions. Not only is it easier to do the accounting if they have separate bank accounts, it is also safer if they get audited, and it is only going to cost them an additional twenty dollars a month at the maximum amount.

The next thing that entrepreneurs should keep in mind when they are owning a proprietorship, is understanding that the tax deadlines are different. Personal tax deadlines for everybody in Canada is April 30 unless they or their spouse owns a proprietorship. These business owners get an extra forty-five days to file their taxes, and that is not just for their business taxes that is for personal taxes as well. So entrepreneurs can ensure that they are making use of that time by preparing their tax return appropriately. Not only does this mean they have to use a form called the T2125, but they should ensure that they have their taxes filed by the deadline because if not they will start paying penalties. Another thing for entrepreneurs to keep in mind if they are proprietor, that even though there filing deadline is June 15, entrepreneurs who owe money to Canada revenue agency will start getting interest on April 30. This is a small amount, 1% every month.

There can be a lot of things for an entrepreneur to have to remember, knowing how to file taxes when they are proprietor is extremely important. By understanding the filing deadline requirements, as well as how to keep track of their expenses properly can help business owners to be organized, and follow taxes appropriately as a proprietor. Doing this can help them ensure that they have all of the appropriate information in their business to be operating it as efficiently as possible says outsourced accounting services.

Outsourced Accounting Services | What Are The Tax Requirements For Proprietors

Regardless of what benefits there are to incorporating a business, the right decision for many entrepreneurs is to own a proprietorship says outsourced accounting services. However, entrepreneurs should keep several things in mind when they operate a proprietorship because there are very different than corporations. By understanding the differences, they can be prepared to operate their proprietorship business properly and with as much integrity as possible.

One of the most important things for entrepreneurs to keep in mind as they run their proprietorship, is that the accounting requirements are extremely different from entrepreneurship to corporation. Proprietors only need to worry about what is called single entry accounting while corporations have to do double entry accounting. Double entry accounting is much more difficult and requires accounting software like QuickBooks, zero or Sage. However once done correctly, it has a higher chance of being accurate. Single entry accounting on the other hand says outsourced accounting services, is when an entrepreneur just keeps track of all of their expenses going out of the business, and all of the revenue coming into the business. They do not need any fancy accounting software, they can use a spreadsheet program to keep track of all the money out in all of the money in, and they do not even need to software. As long as there keeping good track they can do so on paper in a ledger book even.The only thing that entrepreneurs should keep in mind is that single entry accounting is much harder to ensure accuracy of. Since it is just a list of money out and money in, there is a higher degree of probability that mistakes can be made, and once these mistakes are made it is harder to fix. However, it is easier process to learn how to do and faster as well.

Another thing that business owners should keep in mind as they are operating a proprietorship, is that even though they are taking care of their accounting, they can still visit an accountant. Outsourced accounting services says that an accountant can even take care of their accounting for them, but even if they decide to do it themselves a cursory appointment with an accountant to help them figure out what categories they should track initially, and how to do so in an efficient manner. Accountants might be able to give business owners high-level projections of what they can expect to make in their business, and is a good opportunity for entrepreneurs to get all of the questions that they may have asked and answered.

Finally, when an entrepreneur is filing their tax return, they may ask their accountant to file it on their behalf as well. This is to help an entrepreneur understand if the expenses they have are reasonable, to ensure they are not missing important information, and can help business owners significantly minimize their risk by giving their finances a review to verify the accuracy of.