Sole Proprietors and Taxes
Sole Proprietors and Taxes
Small business drives the Canadian economy and at Calgary’s Choice Tax Services we help you maximize your net profit. We support Sole Proprietors in their quest for success. A sole proprietorship is an unincorporated business that is owned by one individual, the simplest of business structures.
- It is critical to understand the difference between operating as a sole proprietor or partnership and incorporating your business. An incorporated business and its owner(s)/shareholder(s) are separate legal entities. It can enter into contracts and own property in its own name, separately and distinctly from its owners. This means that the owner(s)/shareholder(s) are protected from liability and their personal assets are secure. The second major benefit is that if all funds are not required personally by the owner(s)/shareholder(s), funds can remain within the corporation and personal tax deferred until a later date.
- It is critical to consult a tax professional before making the decision to incorporate. In a sole proprietorship, the owner and business are one and the same. If there is more than one owner, it is referred to as a partnership. As well, each year, every dollar of net profit will be taxed personally in the business owner’s hands.
- Sole proprietors should keep clear, organized and concise records. At Calgary’s Choice Tax Services, we provide you with checklists to make that work easier and to save you money on tax preparation. For sole proprietorships, income is generally reported on a calendar-year basis. A sole proprietor reports income on a special statement within their personal T1 tax return.
- At Calgary’s Choice Tax Services, we educate sole proprietors on the expenses they can claim to put more money in their pocket. Motor vehicle expenses, an office in the home, business license and fees, and meals and entertainment are just a few of the expenses sole proprietors can claim.
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- Self-employed individuals (and their spouses or common-law partners) must file their income tax and benefit returns by June 15. However, to avoid interest charges, you must pay any balance owing by April 30. Starting your own business should be a well-thought-out process and success requires planning but being your own boss may be well worth it!
At Calgary’s Choice Tax Services “Let Us Worry About Your Personal and Business Taxes, So You Don’t Have To!”
