Entrepreneurship & Small Business

Taxation - answering any questions here

  • Last Updated:
  • Nov 20th, 2018 9:51 am
Newbie
Sep 15, 2018
9 posts
Hi, Thank you in advanced for help.
Intro:
I have a small corporation in Alberta, and I'm using Quick Book to do my book keeping and taxtron software to file my income tax.
Our fiscal year ends on March 31 every year, and this is year 3 for me in business, I file the corporate tax every year in September.
I have 2 questions:
1) Recoding the Federal and Provincial tax paid.
How I should record the taxes paid in QB?
What I did the following:
I created a chart account: Canada Revenue Federal Tax – Type: Expenses
So I did the following JE for 2015 year in September 2016
Dr: Canada Revenue Federal Tax
Cr: Bank

The amount showed in my Income statement for the year 2016 tax, and the Tax account said, this should not show in the Income Statement, as this already been calculated for that year in TaxTron, and I need to recorded correctly for that year not after April 1, 2016. Is that true?
I read this post: corporate-tax-question-does-payment-goe ... n-1135648/

And they advised as:
Dr. Income tax expense
Cr. Tax payable.
But in my case I have paid the amount so there is no paypal as its already paid.?
How I should record this amount, under what account? And for what year.

2) In QB all my remaining amounts are in the Bank account, I have ZERO balance in my Retained Earning. Do I need to move what money left in the corporate to this account after filing the tax?
Thank you again,
Jr. Member
May 24, 2006
162 posts
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PhilipK796978 wrote:
Sep 6th, 2018 10:33 pm
on Line 101, you report all the sales, charge/not charge HST, the sales reported need to match the total income you report in your income statement
match the total income you report in your income statement? if I choose quick method for GST, line101 will be income+gst, it will still match income statement?
Last edited by Redmask on Oct 1st, 2018 9:36 am, edited 1 time in total.
Reason: Removed link
[OP]
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Oct 30, 2017
47 posts
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Ottawa, Ontario
Hey, loudyca

in your case, because you didn't record the tax payable in 2015, therefore, you didn't set up the payable, and you can't do "debit tax payable, and credit cash", you will need to record "debit tax expense and credit cash."
it will happen to you every year if you don't record the tax payable before you close your book. therefore, I suggest don't close your book yet until you file your tax return and know how much the tax is.

i don't understand your part 2, need you to be more detail of what you mean
Last edited by Redmask on Oct 1st, 2018 9:36 am, edited 1 time in total.
Reason: Removed link
thank you very much
Philip Kwok, CPA, CGA
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mcron wrote:
Sep 17th, 2018 9:17 am
match the total income you report in your income statement? if I choose quick method for GST, line101 will be income+gst, it will still match income statement?
if you are using Quick Method, reported 101, and revenue from Financial will have a different, and the different is the amount you need to remit.
thank you very much
Philip Kwok, CPA, CGA
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depending on how often you trade, the gain/loss from the warrants sales can either be capital/business gain/loss.

if you convert to shares and sell the shares, gain/loss also, and the cost is price of warrant, .15 + exercise $1.25.

let's say at conversion time the shares are trading at $5.00 and the warrants are trading at $3.75. Now if I sell the warrants (instead of converting them), do I have a capital gains of $3.75 - $0.15 = $3.60 for each warrant? - Yes

you don't have any gain/loss until you trade it.
Last edited by Redmask on Oct 1st, 2018 9:36 am, edited 1 time in total.
Reason: Removed link
thank you very much
Philip Kwok, CPA, CGA
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Mar 5, 2018
47 posts
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Hi Philip,

First, thank you very much for your help for RFD'ers.

I have a question about GST/HST charge, it's a little bit confused please help me if you know that.

I have an sole proprietorship enterprise registered in Quebec with GST/HST/QST numbers. I have put some software for sell on my website. There is a Canadian company (Ontario), they want to make a purchase for their client in USA.
The real client (End User) is in USA so I suppose do not have to charge them any taxes. However, the Canadian company asks me to put their name and address as BILLING ADDRESS. In this case, can I put on the invoice the CLIENT as the real one in USA and the Billing address is the company from Ontario and do not charge taxes? Or what is the way that I have to do.

I have found a reference on Canada.ca website about exportation and intangible fourniture but I'm not sure:
https://www.canada.ca/en/revenue-agency ... rce-2.html

The reason for the Canadian intermediary company in Ontario asking for that is they provide also their software to that US Client (a School), and that US Client can only deal with providers in registered their government BID system or something like that.
So the Canadian company write in their contract that the solution (their software) requires 3rd party software (mine). They will acquire (make the payment) the license for that American company and will bill that amount in their contract. Their purpose is not to make money from my software as it's cheap.

Sorry for my bad English, hope you can understand :-)

Thank you in advance for your help
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Oct 30, 2017
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Ottawa, Ontario
TomShopper wrote:
Sep 21st, 2018 2:58 pm
Hi Philip,

First, thank you very much for your help for RFD'ers.

I have a question about GST/HST charge, it's a little bit confused please help me if you know that.

I have an sole proprietorship enterprise registered in Quebec with GST/HST/QST numbers. I have put some software for sell on my website. There is a Canadian company (Ontario), they want to make a purchase for their client in USA.
The real client (End User) is in USA so I suppose do not have to charge them any taxes. However, the Canadian company asks me to put their name and address as BILLING ADDRESS. In this case, can I put on the invoice the CLIENT as the real one in USA and the Billing address is the company from Ontario and do not charge taxes? Or what is the way that I have to do.

I have found a reference on Canada.ca website about exportation and intangible fourniture but I'm not sure:
https://www.canada.ca/en/revenue-agency ... rce-2.html

The reason for the Canadian intermediary company in Ontario asking for that is they provide also their software to that US Client (a School), and that US Client can only deal with providers in registered their government BID system or something like that.
So the Canadian company write in their contract that the solution (their software) requires 3rd party software (mine). They will acquire (make the payment) the license for that American company and will bill that amount in their contract. Their purpose is not to make money from my software as it's cheap.

Sorry for my bad English, hope you can understand :-)

Thank you in advance for your help
Hey Tom, if you sell to a Canadian company, then Yes. If you sell directly to the US company, then No. In this case, it looks like you are selling to the Ontario company, then I will say you should charge. then when they sell to the US company, they won't charge.

thanks
thank you very much
Philip Kwok, CPA, CGA
Deal Addict
Sep 23, 2007
4433 posts
781 upvotes
PhilipK796978 wrote:
Sep 17th, 2018 1:54 pm
if you are using Quick Method, reported 101, and revenue from Financial will have a different, and the different is the amount you need to remit.
I'm a bit behind on the bookkeeping but try to make sure I make the quarterly HST remittance to avoid penalties. For sales, I have the sales machine but there are always differences vs what's actually deposited. Sometimes the staff made mistake in the machine or need some cash to buy some small supplies(usually items with HST like stationary). Basically sales in POS never matches bank deposits especially if we consider coin exchange in addition to what I just wrote. I didn't keep all the receipts of the small purchases but the amounts are not massive. It's a hassle to record all these small things paid via sales cash into QuickBooks. For ITCs, a lot of my expenses have no HST so I just take the few big items that do have HST. So basically when I remit HST I am paying my actual sales deposits as per bank statement, and minus the ITCs which are based on those few big items with ITCs also visible on bank statement. Do you see any issues with what I am doing? I always seem to fall behind on bookkeeping...

In my mind there may be small differences of the correct HST I should remit but in my mind I have substantially remitted what I should have.

No I don't qualify for the quick method if I understand the rules correctly.
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Oct 30, 2017
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Ottawa, Ontario
BananaHunter wrote:
Sep 28th, 2018 1:16 pm
I'm a bit behind on the bookkeeping but try to make sure I make the quarterly HST remittance to avoid penalties. For sales, I have the sales machine but there are always differences vs what's actually deposited. Sometimes the staff made mistake in the machine or need some cash to buy some small supplies(usually items with HST like stationary). Basically sales in POS never matches bank deposits especially if we consider coin exchange in addition to what I just wrote. I didn't keep all the receipts of the small purchases but the amounts are not massive. It's a hassle to record all these small things paid via sales cash into QuickBooks. For ITCs, a lot of my expenses have no HST so I just take the few big items that do have HST. So basically when I remit HST I am paying my actual sales deposits as per bank statement, and minus the ITCs which are based on those few big items with ITCs also visible on bank statement. Do you see any issues with what I am doing? I always seem to fall behind on bookkeeping...

In my mind there may be small differences of the correct HST I should remit but in my mind I have substantially remitted what I should have.

No I don't qualify for the quick method if I understand the rules correctly.
Hi, this is pkprofessionalaccounting here, well, if the differences are small, then I guess it is ok. remember, try the best to keep as detail record as you can. if CRA audit you, you will need to show them also. if CRA audit, your recorded revenue must equal to your reported revenue, if there is a different, you will need to explain to them. same for the ITC.

if you need more detail, please PM message me. thanks
thank you very much
Philip Kwok, CPA, CGA
Member
Apr 18, 2008
295 posts
74 upvotes
In the past years, my accountant helped me prepared the T4 for my employees. This year we are having quite a few employee and turn around. Does the QB payroll help preparing for T4? I am looking for a cheaper way to do it. Thanks.
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Oct 30, 2017
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Smither wrote:
Sep 29th, 2018 11:01 am
In the past years, my accountant helped me prepared the T4 for my employees. This year we are having quite a few employee and turn around. Does the QB payroll help preparing for T4? I am looking for a cheaper way to do it. Thanks.
I believe so, Quickbook can preparing T4s, all you need is the amount of paid, remittances during the years. if you are still not sure, I can help. I charge $30 per T4s. if you have alot, I can provide you a discount on top also. let me know.
thanks
thank you very much
Philip Kwok, CPA, CGA
Jr. Member
Jan 8, 2015
120 posts
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York, ON
If you create a corporation setting your principal residence as the main address. Does this remove the capital gains tax shelter on your principal home ? (i.e. creating a small home office in my principal residence and incorporating)
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nourel wrote:
Sep 29th, 2018 4:59 pm
If you create a corporation setting your principal residence as the main address. Does this remove the capital gains tax shelter on your principal home ? (i.e. creating a small home office in my principal residence and incorporating)
No, because the corporation is only renting a small portion of your home for work. it won't affect your principal residence status.

Philip Kwok, CPA, Ottawa Ontario
thank you very much
Philip Kwok, CPA, CGA
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Oct 6, 2015
101 posts
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Toronto, ON
Hi Philip,

I started a small business on the side, and i am estimating my gross income will be around $6000 this year. I have been good with keeping track of records and stuff, but when it comes to filing taxes I am not so confident.

At what point is it worth getting someone (like an accountant) to file taxes on my behalf? I guess it depends on cost, if they are gonna charge $3000 then obviously it is not really worth it. I guess what I really want to ask if what kind of cost am I looking at for this type of service?

Thanks
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Oct 30, 2017
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Ottawa, Ontario
xxgosokxx wrote:
Oct 5th, 2018 9:27 am
Hi Philip,

I started a small business on the side, and i am estimating my gross income will be around $6000 this year. I have been good with keeping track of records and stuff, but when it comes to filing taxes I am not so confident.

At what point is it worth getting someone (like an accountant) to file taxes on my behalf? I guess it depends on cost, if they are gonna charge $3000 then obviously it is not really worth it. I guess what I really want to ask if what kind of cost am I looking at for this type of service?

Thanks
Hi, is that a corporation return? if yes, I think it is a good idea to get an accountant to file it for you. it is because corporate return is more work than a personal tax return and it has things that you are not very familiar with. as well, there can be tax planning involved of how to allocate that income, should you paid the corporate tax? or pay out to yourself for personal tax in salary? dividend? etc.

a corporate return with financial statement can cost you about $1500. if you are interested, send me a private message and we can discuss in more detail. I might be able to help you.
you can always send me an email as well, or you can search my website to see what service I provide.
thank you very much
Philip Kwok, CPA, CGA

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