At Kerr & Company, chartered professional accountants, we not only take care of accounting tasks for your Kelowna small business but we also offer business advisory services, bookkeeping, accounting software training, tax planning and much more. If you want to stay on CRA’s good side, work with a Kelowna accounting firm, like Kerr & Company to ensure all of your documents are in order, taxes are paid on time and your bookkeeping is top notch.
We work with a variety of small business owners every day and have put together some of the most common questions heard by our Kelowna accounting professionals:
1. Do I need a business number?
You only need a business number if you are registering for any government program accounts such as GST/HST, payroll deductions, import/export, corporate income tax and excise duty. You can read more on the nine-digit business number here.
2. Do I really need to keep all receipts?
Keep any and all receipts that have anything to do with your business. It is much easier to toss out what has been determined as unnecessary tax receipts than to hunt down receipts you may have thrown out months ago. Self-employed people are much more likely to be audited, so good records and an experienced Kelowna accounting team are essential.
3. Do I need to pay into CPP?
You will have to start paying CPP once your net income from your business is more than $3,500. Also, it will be doubled the rate than if you were a regular employee of a company. As your Kelowna accounting professionals, we are experienced in knowing all deductions available to you and your small business including a non-refundable tax credit for regular contributions to CPP.
4. My business is small; do I need a GST number?
Once your business revenues reach $30,000, you are required to register for the GST/HST. However, in many cases, it is advantageous to register even if your revenue is less than $30,000 so that you can claim input tax credits for the GST/HST you’ve had to pay to run your business.
5. Can I claim losses?
Losses on your business can be used to offset other income and if the losses are more than your income from other sources then you may be able to claim a non-capital loss. This non-capital loss can be carried forward to future years when your income has increased.
6. Keeping track of mileage is time-consuming; can I use a flat rate?
Keeping a mileage logbook is a must. There’s even an app for that! If you use your vehicle to help run your business, then mileage tracking is essential. What’s the good news? Besides the app, there is a new simplified method that we can discuss but you are still required to keep a logbook for a year before you can use the simplified method.
7. What are installment payments and do I have to make them?
Canada Revenue Agency wants the tax owed to them and they will request that you pay installments rather than an annual payment if the tax owed is from any two of the last three years. Failing to make these payments may result in interest charges. At Kerr & Company, we take great pride in our Kelowna accounting firm’s ability to help our clients through the installment payment process and help prevent extra charges. Tips on how to respond to a first installment reminder letter are found on our blog HERE.
8. I work at home so can I claim my mortgage payments?
The principle is not a deduction and the amount you can deduct depends on the square footage of your home office. The home office needs to be clearly separated from the rest of the home. The office space must also be used regularly for business-related meetings or consistent everyday work in order to claim a portion of your mortgage as a home office expense.
9. How much money should I be putting aside for taxes?
Generally, the self-employed should save between 30 to 40 percent of their income for taxes. It is always a good idea to speak with your Kelowna accounting firm to get expert advice for your specific business. But as a general rule, it’s better to have saved a bit more than you may need than to come up with potentially thousands of dollars at tax time.
10. If I’m self-employed, do I have to pay EI premiums?
Registering for the EI program is optional. EI premiums only cover benefits regarding maternity, paternal, sickness and compassionate leave. It does not provide any benefits or coverage if your business were to fail.
These are just some of the common small business questions we hear in our Kelowna accounting firm, Kerr & Company. We understand that each business is unique, every business owner has a different level of experience and every client has their own set of questions. We are here to help with all of these questions and offer accounting, bookkeeping and many other types of support so that you can excel and grow your business.
To see our full list of services, visit us online at www.kerrtaxcpa.com
Contact us today for a free consultation.