Entrepreneurship & Small Business

Ask me about Small Business accounting

  • Last Updated:
  • Jun 25th, 2020 1:48 pm
[OP]
Newbie
User avatar
Jun 7, 2019
11 posts
6 upvotes
Messerschmitt wrote: Question for you.

If working for stuff like uber, ubereats, etc (person or food delivery), they consider you a contractor aka you are self employed right?

Can you claim this in this case?
https://www.canada.ca/en/revenue-agency ... rates.html

Or is the link above only if you are an actual employee (which you are not with uber, ubereats and the like)?
And I assume the 58c/km would replace any need of keeping receipts for gas, maintenance, repairs, insurance, etc right? (as in you can't claim both 58c/km and expenses via receipt).

Am I right in my research that as a contractor aka self-employed I could only claim the actual expenses with receipt? (gas, maintenance, repairs, insurance?
Those rates in the link you noted are the maximum prescribed reimbursement for employees using their personal vehicle for employment purposes. Example, if you are employed by a company and you need to drive 200KM to a meeting using your personal vehicle. The company can reimburse you 200 x $0.58 = $116 for using your personal vehicle without it being a taxable benefit to you. If they reimbursed you more than 58c/KM it would be deemed to be a taxable benefit on your personal tax return.

Those rates aren't intended to be the amounts deducible for a self-employed person in lieu of tracking KM's and saving receipts.

Thanks
Deal Guru
User avatar
Jul 17, 2008
10713 posts
3422 upvotes
PerfectBalance wrote: Those rates in the link you noted are the maximum prescribed reimbursement for employees using their personal vehicle for employment purposes. Example, if you are employed by a company and you need to drive 200KM to a meeting using your personal vehicle. The company can reimburse you 200 x $0.58 = $116 for using your personal vehicle without it being a taxable benefit to you. If they reimbursed you more than 58c/KM it would be deemed to be a taxable benefit on your personal tax return.

Those rates aren't intended to be the amounts deducible for a self-employed person in lieu of tracking KM's and saving receipts.

Thanks
That's what my understanding was, that because with uber/ubereats etc, you aren't an employee, but contractor aka self employed so you can't claim directly that mileage, instead you need receipts for all expenses.
Deal Fanatic
May 23, 2003
9562 posts
1108 upvotes
GTA
Thanks for offering to answer questions. For our small business we have been putting extra cash into a high interest savings account or laddering GICs. I am thinking of starting to invest in ETF (ie. index ETFs replicating SP500 or other indexs) as we won't need a large portion of the cash for a while.

I am wondering how this should be accounted for accounting wise. Our accountant just said to keep it in one account but I don't know how the purchases are accounted for then? We setup a seperate account a while back for GIC puchases so everytime bought a GIC we had it come out of the investment account and into the "GIC" account and then when it was sold it would go back into the investment account.

Maybe better to just keep a spreadsheet for all of the purchases/sales and just show the "gains" and losses when there is a sale or dividends are received?

Any suggestions on setting this up would be appreciated. We use Simply Accounting (older version). Also if you have any other tips related to investing via corporation account would be appreciated.
Deal Addict
Jul 1, 2006
1068 posts
38 upvotes
What are your thoughts on digital receipts. Do we need to keep the hard copies? Does keeping things digital help small business run better? Also is there a method to book keeping that an average person can learn that you would suggest?
[OP]
Newbie
User avatar
Jun 7, 2019
11 posts
6 upvotes
YLSF wrote: Thanks for offering to answer questions. For our small business we have been putting extra cash into a high interest savings account or laddering GICs. I am thinking of starting to invest in ETF (ie. index ETFs replicating SP500 or other indexs) as we won't need a large portion of the cash for a while.

I am wondering how this should be accounted for accounting wise. Our accountant just said to keep it in one account but I don't know how the purchases are accounted for then? We setup a seperate account a while back for GIC puchases so everytime bought a GIC we had it come out of the investment account and into the "GIC" account and then when it was sold it would go back into the investment account.

Maybe better to just keep a spreadsheet for all of the purchases/sales and just show the "gains" and losses when there is a sale or dividends are received?

Any suggestions on setting this up would be appreciated. We use Simply Accounting (older version). Also if you have any other tips related to investing via corporation account would be appreciated.
I'm not sure if your accountant discussed with you the implications of investment income such as this through a corporation, however in short, it's not always advisable to do so as investment income in a corporation is taxed at the highest rate. If you have TFSA or RRSP room you will be better off to remove the cash from the corporation through a dividend and invest it personally in your TFSA or RRSP.

Nevertheless, if you invest through the corporation then all of your purchases and sales would need to be tracked on a spreadsheet and any gains/losses reported on the tax return in the year that the sale occurred.
Newbie
Sep 19, 2014
1 posts
Markham, ON
Thanks for offering to answer questions,
My company (Incorporated in Ontario) recently sold a property and have some questions.
1. How to make a journal entry for this transaction.
2. How to report this in HST return. Buyer did not pay HST saying he will report in his HST return instead.
3. What is the best way to withdraw the profit generated.
[OP]
Newbie
User avatar
Jun 7, 2019
11 posts
6 upvotes
tripleflip wrote: What are your thoughts on digital receipts. Do we need to keep the hard copies? Does keeping things digital help small business run better? Also is there a method to book keeping that an average person can learn that you would suggest?
I always recommend digitizing receipts and I do so for all of my clients as it is much more likely that you will retain the digital format in a way that can actually be found at some point down the road if need be. However, I also do suggest tossing the original in a box and keeping them. The CRA has standards in how your documents must be digitized and if they determine you aren't meeting this standards your digital files could possibly be disallowed. The original paper copies are more of a just in case that you could go digging for if you really needed to but probably unlikely.
Newbie
Feb 4, 2017
80 posts
44 upvotes
My wife just got a new contract to work at home. Her employer is asking her to cover all costs of home business including internet, phone, stationery, papers, office supplies, etc.

1. The Internet is currently in my name. Should I include her name on the billing so she can claims internet as part of her business expense? Or it doesn't matter if the bill is not in her name as we're married ?
2. Is it normal the employer does not cover any costs for home business such as papers, printers, supplies, etc ?
Jr. Member
Apr 25, 2019
176 posts
63 upvotes
PerfectBalance wrote: I'm a CPA specializing in working with Small Businesses on their bookkeeping, accounting, payroll and HST needs.

I'd like to give back to the RFD community by answering questions that some of my fellow small business owners may have. I've had many clients whose books were a complete mess when they came to me, which really could have benefited from some simple advice had they had someone to ask questions.

So feel free to ask me any accounting questions you may have or if you'd like to bounce some ideas off me. I'd like to try and stay away from getting into detailed Tax questions here if at all possible.

Thanks
Bought a car under business name for 15K, claimed 1 year CCA at 30%.
Next year plans to quit contract job and start permanent so that car needs to be transferred back to personal.
If I sell the car for 12K then believe 12K money should go to company bank account, why would this be because CCA was only claimed at 30% for 1 year?
Newbie
May 29, 2019
30 posts
4 upvotes
Hi

I am an IT contractor Incorporated in Ontario. I have been pretty careless past few years when it came to my taxes and completely trusted my accountant for balancing the books, etc. I would provide him the ledger and would ask him to provide me exact numbers for personal and Corp tax.


Recently when I was looking to refinance my mortgage; I found that my company is supposed to have around 250,000$ in retained earnings. However when I look at business bank account; there is barely 15,000$. All the money was withdrawn by me; but seems that my accountant did not declare the personal income properly (he would declare 50k whereas I would have taken 150k) and hence I have this big discrepancy. I spoke with him and he advises that we will pay more taxes in coming years and may be take a directors loan and balance the books in two-three years.

However I am afraid that if CRA comes for audit; We will be in trouble. Should I take a personal loan and go back and get all the taxes amended for previous years? Or may be take the loan and withdraw 250k as mix of Salary and dividend this year? Will this raise any red flags for CRA; taking a lot of Salary towards end of the year.

His other option is to close the corporation. I don't understand how that will get me off the hook from this 250k

What do you suggest?
Deal Addict
Sep 19, 2009
1943 posts
767 upvotes
Toronto
Hi PerfectBalance,

I was wondering if I could get some guidance regarding this situation, for the purpose of filing T2.

  • end of year is Feb 29
  • I have to pay employee(s) for Feb 16 - Feb 29 period, pay date Mar 6.

I plan to record this as follows:

  • the amount owed to employees under line 9060 – "Salaries, wages, and benefits" as expense in income statement
  • under line 2624 - "Wages payable" same amount as liability in the balance sheet

Is this the proper way of doing it?

TIA.
Newbie
User avatar
Mar 1, 2020
31 posts
2 upvotes
PerfectBalance wrote: I'm a CPA specializing in working with Small Businesses on their bookkeeping, accounting, payroll and HST needs.

I'd like to give back to the RFD community by answering questions that some of my fellow small business owners may have. I've had many clients whose books were a complete mess when they came to me, which really could have benefited from some simple advice had they had someone to ask questions.

So feel free to ask me any accounting questions you may have or if you'd like to bounce some ideas off me. I'd like to try and stay away from getting into detailed Tax questions here if at all possible.

Thanks
Current Situation:

My business is incorporated.
Vehicle is under personal.
No employees, 1 man company

My company was incorporated a few years back but I have recently decided to use it to start a business. Since mid year last year I started conducting business but have not had any income until early this year.

1. All out of personal expenses can be paid back using company as lum sum as long as I have receipt and it is for business intent correct?

Which brings me to second question...

2, If my business is a consulting type of business which technically does not require starting capital, just phone, laptop, car. Can I use the money I have spend previously as a start up cost/capital? And in CRA terms do I need starting capital in order to pay dividends?

Personal income/payroll.

3. I dont want to be like every person on this forum or everywhere else and ask how to not pay taxes. But what would the best way of doing it? Do I need to payroll myself? (EI,CCP) I want to report personal income but also save taxes.
"Employee by Day, Entrepreneur by Night"
Newbie
Apr 23, 2020
21 posts
Hello I have some questions about incorporating federally I live in Ontario.
This my new This is my new corporation I need some information about
1-how I can How I can choose my corporation fiscal year end?
2-How I can get a minute book for my corporation?
3-How I can get bylaws for my corporation?
4-how to register federal company in Ontario and have a business license?

I’m starting brand new federally for selling online (Amazon & eBay).
Sr. Member
Nov 4, 2012
529 posts
129 upvotes
Burnaby
I have a corporation, the fiscal date end is December 31st and the corporation has around 30K invested in stocks. The corporation was sitting and had no income for 3+ years as I did not use my corporation at all. I was working full time for 3+ years.
Recently I started a short term contract from Feb to May 21st 2020. My corporation is receiving payments from a middle vendor (job agency). I don't have a payroll setup or did not have a payroll setup in the past. I paid myself in dividends. I didn't do my 2019 corporate taxes yet (Due date is June 2020). Corporation does not have a tax balance due. Do you know if I as a employee can qualify for CERB or CEBA?
Deal Addict
User avatar
Jul 26, 2007
4784 posts
2335 upvotes
Toronto
craigslist123 wrote: I have a corporation, the fiscal date end is December 31st and the corporation has around 30K invested in stocks. The corporation was sitting and had no income for 3+ years as I did not use my corporation at all. I was working full time for 3+ years.
Recently I started a short term contract from Feb to May 21st 2020. My corporation is receiving payments from a middle vendor (job agency). I don't have a payroll setup or did not have a payroll setup in the past. I paid myself in dividends. I didn't do my 2019 corporate taxes yet (Due date is June 2020). Corporation does not have a tax balance due. Do you know if I as a employee can qualify for CERB or CEBA?
When and if you file your corp tax have nothing to do with current requirements for CERB or CEBA. As already mentioned in your other thread, pay yourself 2019 payroll for $5000+ and all deductions and penalties for CERB. Increase this amount to $20000+ for CEBA. And also bend little over for potential audit for the obvious from the taxman.

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