FAQs

I have a simple mindset switch I recommend when this topic comes up.

Put yourself in a corporate mindset… let’s use TD Canada Trust.

If you want to buy something, would TD Canada Trust reimburse you for that purchase?  Would they order it for you and for others?

If yes, then my answer is probably yes.

If no, then my answer is probably no.

So put your corporate hat on… what would the answer be?  If it is still in a grey area, ask one of us.  If we can make a strong enough cause if it gets audit/reviewed, then we will likely say ‘let’s try but I cannot guarantee it passing.’

MAKE LESS OR SPEND MORE.

But both result in you having less money… but sure, you pay CRA less.  Congrats…

Simple but true. Until you are making multi-millions, the different strategies will cost you WAY MORE than it will save you.  Laura has seen those strategies and has been a part of the implementation.

Yes,  BUT PLEASE READ THIS WHOLE ANSWER BECAUSE I (LAURA) DO NOT RECOMMEND IT 98% OF THE TIME!

Sole proprietor/partnership, the answer is no. You can’t.

Iincorporated, yes, you can but please read on!

Here are my reasons not to…

• TAXES: You need to be taxed on the personal portion of the car usage.  Which means you still need to keep track of both business and personal usage. Higher bookkeeping fees are likely applicable.
• CRA: Vehicle use (especially if one is on your books) are reviewed/audited OFTEN. 90% of our reviews are on vehicles/travel
• INSURANCE: It costs more to insure a vehicle in a business name
• LIABILITY: if an accident is to happen and the business owns the vehicle, your personal name and your business will be named in the lawsuit if a ‘substantial’ personal injury is to occur.

The biggest question… is the vehicle used for business at least 90% of the time?  (Driving from home to work and vice versa DOES NOT COUNT)

Having a vinyl sticker advertising your business and business number does not change my opinion. Actually, I recommend NOT doing that for the same liability reason as above.

Here are my reasons to…

• Vehicle is 100% business
• Vehicle is driven by an employee
• Vehicle is WRAPPED in business branding

There is no ‘best’ – each option has pros and cons.  We mainly work in three:
Quickbooks Desktop, Quickbooks Online, Sage

But lets break it down a bit…

Quickbooks Desktop:

• The perfect blend of user friendly and accounting
• One time fee, not monthly
• Possible to get away from buying the program annually  (as long as you do not use the payroll function)
• Hard to get quickbooks to sell it to you, they will push and push for QBO
• If you subcontract to bookkeepers… you will need them to come see you or let them remote on to your computer.  It is possible to do accounting copies but its clunkly.

Quickbooks Online:

• Web-based
• Monthly subscription
• Payroll add on; posts itself (not the best payroll service)
• Business owner, bookkeeper and accountant can all access at the same time (Pro and Con!)
• Too user friendly, can often sabotage accounting integrity
• Automated report pulling (I have my annual Profit Loss statement emailed to me every Saturday morning)

Sage:

• Best accounting software for financial integrity.
• Least user friendly

All of them suck at multi currency.
None of them should be used for inventory management.

I won’t lie, I like Quickbooks Desktop the best.
But at KeyPoint, it likely means we have your numbers and we send you reports.

By the last day of the month following the applicable period or with five (5) business days of your filing.

So in theory, you could file on March 31st, but you would have until the next five business days to make the payment.

Exception:

ANNUAL SOLE PROPRIETOR HST FILERS

April 30th.

If you are a sole proprietor or partnership, you will file with your personal income taxes. This does increase the cost of your return, so be sure to budget for that.

If you are incorporated, during your incorporation you may have selected a year end date, it can be any month of the year.

Monthly

Filing is due on the last day of the month after the applicable period.

Ie. If filing for January 2023, it is due February 28th.  If the last day of the month is on a weekend, the deadline moves to the next business day.

Quarterly

Filing is due on the last day of the month after the applicable period.

Ie. If filing for Q1 (January to March), it is due April 30th.  If the last day of the month is on a weekend, the deadline moves to the next business day.

Annually

Sole Proprietorship – Filing is due June 15th with your tax return

Corporation – Filing is due March 31st.

**These are subject to be different if you are incorporated and select your HST Quarterly/Annually to match your fiscal year rather than calendar year.

Sole Proprietor/Partnership

You are taxed on the profit, whether you have taken it all out of the business bank account or didn’t!   So be sure to watch your profit and keep atleast 20% aside for taxes.  Your business may warrant for higher ratio than 20%.

Incorporation

You have two options:  Payroll or Dividends
We always recommend payroll – it makes it easier to plan cashflow. Dividends – no CPP!  If you are still interested in getting mortgages (personally) dividends would be a bit more volatile in your application.

This comes us all the time – sometimes we just have to use our personal funds.

If we are talking about one transaction, I recommend sending that exact amount to yourself, recording it as if it was normal. BUT make sure you make the applicable notes on the receipt.

If more than one, I recommend using a reimbursement form to total up the grand total, transfer yourself, and then record appropriately.

Alternatively, do then once a year when getting to preparing your tax return and have your tax preparer take care of the transaction.

Depends on your income sources.  NOTE: If you owe, those funds are DUE APRIL 30th.

• Standard T4 return:  April 30th
• Rental Property: April 30th
• Foreign Investment: April 30th
• UHT Filing: April 30th
• Self Employment: June 15th

Email taxes@keypointbusiness.ca with an explanation of what sources of income you have.  We will respond with the applicable forms.

Totals are sufficient.

The only receipts we will hang on to if you present them: medical, daycare, legal (if applicable, purchase/sale of principal residence, purchase/sale of investment property, assets added to business or rental, and donations.

Yes, we can calculate an estimate but at KeyPoint we actually decline these requests and connect you with a financial advisor.  There are a lot of things to take into consideration.

Work with someone who will look at your ENTIRE FINANCIAL PORTFOLIO.

Our go to recommendations right now:

Val Stratford – Parallel Financial

Jane Bradley – Edward Jones

If you are living together, chances are yes! If you have been living together and in a relationship for 12 consecutive months, you are common law in the eyes of Canada Revenue Agency.

We can pull this, but PLEASE open your own My CRA Account to pull yourself.

We do not build in the cost of pulling NOAs into our tax return preparation fee.  These requests always put us in a slightly hard spot, it take 15 minutes away from our clients that pay for our support every month.

If you have absolutely no ability to pull, you may email office@keypointbusiness.ca to request one.

This is one of my MOST asked questions.  You are not alone!

There are two main reasons to incorporate:

1. Financial Planning and Strategy
   Possible scenarios: you are making enough money that you do not want to be personally taxes on it all (corporate tax is still a thing for the profit that stays in!), you have a large purchase coming up so you need to save the profit to improve your borrowing application, you already own an incorporation, you intend to sell the business, and/or your anxiety needs the business income and money to be COMPLETELY separate from your personal. There are many other reasons… but that is some of the top.
2. Liability
   For when you need more security that the assets in your personal name are safe from your business activities.  This need is subjective.
   Industries/Services that I would recommend this for:  lawyers, paralegals, medical (holistic to practitioner), medical aestheticians, restaurants/bars, services for youth, transportation based operations, and financial services.  Not limited, but clear recommendations.

Please, please do consider every single bullet below!

PROs

• Forced separation between money for the business and personal money
• Tax planning between personal and business. (THIS DOES NOT MEAN ESCAPING TAXES!!  Its about leveraging to your needs!)
  • Corporate tax rate is lower with the small business break.
• Increased liability protection
• Ability to play with payroll vs. dividend

CONs

• MUST keep business separate from personal! Money, expenses, all of it!
• Corporate Tax Filings – These can cost $1500 minimum from a CPA firm, budget accordingly!  You cannot escape!
• Annual Information Filings – these are new, more information to come!
• Increased need for bookkeeper – With a corporation, you cannot supply only profit and expense totals.  You will also need a balance sheet. Not to mention the ability to explain for increases/decreases year to year.
• Should keep a formal minute book.  It is possible to do this on your own, but depending on your activity, you may want a lawyer for this.  This is an annual need, at the longest.
• Painful process to close, if you choose to one day.

I put out these three options:

1. DIY via trusted website – I use Dye & Durham’s OnCorp eCorp.
2. KeyPoint incorporates for you (using the website above, we just collect the information from you, ask some questions and complete it)
3. Find and utilize a lawyer you trust.

9/10, here in Ontario, an Ontario corporation is suitable.

Canadian corporations is a consideration if you intend to expand into other provinces or countries.  You will still need to do the paperwork to be able to operate in those other locations, but Canadian Corp is still likely the best choice.

Think about the practicality of your year end? You don’t want it to be during the busiest part of your year. Instead of automatically going with December 31st, try to find another date. When your filing will be due, most to all accountants will be very busy with tax season.

Do discuss this with your tax preparer.