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Owning A Holding Company In Canada

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Owning A Holding Company In Canada

What is a Holding Company?

 

A holding company is a business entity that owns other companies’ outstanding stock. Owning a holding company in Canada may be used for business, tax, or estate planning purposes. While the ownership structure of a holding company can vary, the business purpose is typically to hold assets or provide central management for a group of related companies.

 

Advantages of Setting Up a Holding Company

 

There are several advantages to setting up a holding company, including the following:

 

  1. Reduced business risk – By consolidating businesses under one umbrella, a holding company can reduce business risk. This is because the financial performance of each business is less likely to have a significant impact on the overall performance of the group.

 

  1. Enhanced business opportunities – A holding company can also provide enhanced business opportunities. This is because the holding company structure allows businesses to pool resources and share expertise.

 

  1. Improved financial flexibility – A holding company can improve financial flexibility by allowing businesses to access financing on more favourable terms. This is because lenders often view holding companies as less risky than standalone businesses.

 

  1. Simplified tax planning – A holding company can simplify tax planning by allowing businesses to take advantage of corporate tax rates. This is because the holding company structure allows businesses to file a single corporate tax return.

 

  1. Enhanced shareholder value – A holding company can also enhance shareholder value. This is because the holding company structure allows business owners to sell shares in the holding company rather than each business separately.

 

Disadvantages of Setting Up a Holding Company

 

There are also several disadvantages to setting up a holding company, including the following:

 

  1. Increased complexity – A holding company can increase the complexity of business operations. This is because businesses must now coordinate their activities with those of the holding company.

 

  1. Increased costs – A holding company can also increase business costs. This is because businesses must now pay for the services of the holding company, such as accounting and legal fees.

 

  1. Reduced decision-making flexibility – A holding company can reduce decision-making flexibility. This is because the holding company structure gives business owners less control over each business.

 

  1. Increased regulatory compliance – A holding company can also increase regulatory compliance. This is because the holding company must comply with both corporate and securities laws.

 

  1. decreased accountability – A holding company can decrease accountability. This is because the holding company structure can make it more difficult for shareholders to hold business owners accountable for their actions.

 

If you are considering setting up a holding company, it is important to weigh the advantages and disadvantages carefully. This will help you determine whether a holding company is the right business structure for your needs.

 

Talk to a professional at BBS Bookkeeping Services if you have any questions about setting up a holding company in Canada.

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Shareholder Loan

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Shareholder Loans

What is a Shareholder Loan?

 

A shareholder loan represents the balance of funds that you have contributed to the corporation. On the flip side, it also represents the funds that you have withdrawn from the company.

 

For example, let’s say you are a shareholder in a corporation. You loaned the company $10,000 last year. The corporation has since used that $10,000 to pay for operating expenses. The loan is still outstanding and the corporation now owes you $10,000.

 

If you are a shareholder in a corporation, it’s important to track your shareholder loan balance. This will help you keep tabs on how much money you have loaned to the company and how much the company owes you.

 

How Shareholder Loans are Used

 

A shareholder loan is typically used to cover short-term financing needs. For example, if a corporation is having cash flow problems, a loan can be used to bridge the gap until the company is able to generate more revenue.

 

Shareholder loans can also be used to finance long-term projects as well. For example, if a corporation is planning to expand its operations, a shareholder loan can be used to fund the expansion.

 

If you are a shareholder in a corporation, you may be asked to loan money to the company at some point. It’s important to understand how your loan will be used before you agree to loan the money.

 

Be sure to consult with your accountant to ensure that the loan is properly documented and accounted for. This will help you avoid any potential problems down the road.

 

Bottom line

 

Shareholder loans are a complex topic that is best handled by professionals. If you have any questions and would like to learn more about shareholder loans call BBS Bookkeeping Services for more Information!

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Questions For Your Bookkeeper

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Questions For Your Bookkeeper

When you are looking to hire a new bookkeeper, there are a few key questions you should ask in order to ensure they are qualified and able to provide the services you need. A few examples of what you should ask before hiring a bookkeeper are as follows:

 

– What services do you offer?

– Are you experienced in bookkeeping?

– What is your usual turnaround time for services?

– How much do you charge for services?

– What are your hours of operation?

– What payment options do you offer?

 

By asking these questions, you can get a better idea of the bookkeeper’s qualifications and what they can offer you. This will help you make a more informed decision when hiring a new bookkeeper.

Why hire a Bookkeeper?

 

There are many reasons why you might need to hire a bookkeeper. Perhaps you’re starting a new business and need assistance with your accounting and financial planning. Or maybe your current bookkeeper is retiring and you need to find a replacement. No matter the reason, it’s important to choose a qualified bookkeeper who you can trust.

 

A bookkeeper can help you keep track of your income and expenses, prepare financial statements, and reconcile your accounts. Bookkeepers can also offer advice on tax planning and compliance issues but to keep it short, a bookkeeper performs a multitude of tasks within your business and can help you manage your finances to free up your time so that you as the business owner can focus on other aspects of your operation.

 

If you’re thinking about hiring a bookkeeper, contact us at BBS Bookkeeping Services. We would be happy to answer any questions you have and provide you with a free consultation.

 

We look forward to hearing from you soon!

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Personal Use of a Business Vehicle

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Personal Use of a Business Vehicle

 

The Canada Revenue Agency (CRA) is always assessing whether a vehicle is being used for personal or business purposes. If the CRA believes that a vehicle is being used for personal reasons, they may tax it as a corporate benefit.

 

When Can You Use The Vehicle?

 

There are a few exceptions where using a business vehicle for personal reasons is allowed:

 

– If you are the owner of the business, you can expense the cost of using the vehicle for business purposes.

– If you are an employee of the business, you can use the vehicle for commuting to and from work.

– If you are an employee of the business and you use the vehicle for business purposes, you can expense the cost of using the vehicle.

 

If you are using the vehicle for any other reason, the CRA may deem it as a corporate benefit and tax it accordingly. It is important to keep track of your business use of the vehicle in order to avoid any penalties from the CRA.

 

CRA Looks For Mileage Problems

 

The CRA is always looking for businesses that are not reporting their mileage accurately. If the CRA suspects that a business is not reporting their mileage accurately, they may audit the business and impose penalties if they find that the business owes corporate taxes.

 

If you are using a vehicle for business purposes, it is important to keep accurate records of your mileage. This will help you avoid any problems with the CRA.

 

Tips For Keeping Accurate Mileage Records

 

Here are a few tips for keeping accurate mileage records:

 

– Keep a logbook in the vehicle that records the date, time, and purpose of every trip.

– Keep track of all business-related receipts, including fuel, maintenance, and repairs.

– If you use your personal vehicle for business purposes, make sure to keep track of the mileage so you can claim it as a business expense.

 

Following these tips will help you avoid any problems with the CRA and ensure that you are accurately reporting your business mileage.

 

If you have any questions about whether you can use a business vehicle for personal reasons, you should speak to a tax professional at BBS Bookkeeping Services.

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Should You Invest Inside Your Corporation?

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Should I Invest Inside My Corporation?

How much of the original capital will you retain?

 

If you keep your profit within your corporation and invest it here, you will retain a large portion of the original capital to invest. By keeping a larger portion of the original capital and paying less in tax out of the gates, your investment can grow larger, and more quickly because of the size of your original investment.

 

There are a number of things to consider when making the decision of whether to invest inside or outside of your corporation.

 

What will the tax rate be on the investment income?

 

The tax rate on investment income (dividends and capital gains) is much higher than the tax rate on active business income. Investment income is taxed at a rate of 50% while active business income is taxed at a lower corporate tax rate.

 

What are the risks of investing?

There are risks associated with both investing inside and outside of your corporation.

 

When you invest outside of your corporation, you are subject to personal tax rates. This means that if the investment fails, you could lose a significant amount of money.

 

If you invest inside your corporation, you are subject to corporate tax rates. This means that if the investment fails, you may not be able to deduct the losses from your personal income.

 

What are the benefits of investing?

The potential rewards of investing inside your corporation are greater than the potential rewards of investing outside your corporation.

 

When you invest outside of your corporation, you are subject to personal tax rates. This means that if the investment is successful, you will keep less of the profits than you would if you had invested inside your corporation.

 

What is the best option for me?

The best option for you depends on your individual circumstances. You should speak to a tax professional at BBS Bookkeeping Services to determine what is best for you.

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Salary vs. Dividends

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Salary vs. Dividends

Should you pay yourself a salary or dividends?

 

The decision of whether to pay yourself a salary or dividends as a business owner is an important one, as it can have tax implications. If you pay yourself a salary, the payments are both a corporate expense and personal employment income for you, complete with a T4 slip. This income is then taxable.

 

Paying yourself dividends, on the other hand, means that you are taking money out of the corporation which is not subject to payroll taxes. The downside is that dividends are taxable as personal income, so you may end up paying more tax overall.

 

The decision of whether to salary or dividends ultimately comes down to a few factors: your business structure, how much money you want to take out of the business, and your personal tax situation. You should speak to an accountant to get advice tailored to your specific circumstances.

 

Why pay a salary?

 

There are a few reasons why you might choose to pay yourself a salary:

 

  1. It’s a predictable income stream: If you rely on dividends for your personal income, the amount you take home can fluctuate significantly from year to year depending on the profitability of your business. A salary gives you a predictable income stream that you can count on.

 

  1. It allows you to contribute to the Canada Pension Plan: If you are a sole proprietor or partner in a business, you are not able to make contributions to the Canada Pension Plan (CPP). This can be a significant disadvantage if you have not yet reached retirement age and are relying on the CPP for income in retirement.

 

  1. It may be tax-deductible: If you pay yourself a salary, the payments are considered a business expense and can be deducted from your company’s income for tax purposes.

 

  1. You may be able to access government benefits: If you are paid a salary, you will have employment income which can make you eligible for certain government benefits, such as employment insurance.

 

Why pay dividends?

 

There are a few reasons why you might choose to pay yourself dividends:

 

  1. Dividends are not subject to payroll taxes: When you pay yourself a salary, the payments are both a corporate expense and personal employment income. This means that you have to pay payroll taxes on the salary, which can be a significant cost for your business.

 

  1. You can take advantage of the dividend tax credit: When you receive dividends, you are eligible for the dividend tax credit. This credit can help to offset the taxes you pay on your dividends, and may result in a lower overall tax bill.

 

  1. Dividends can be paid to multiple shareholders: If your business has multiple shareholders, you can choose to pay dividends to them instead of salaries. This can be advantageous if you want to distribute the company’s profits among the shareholders in a tax-efficient way.

 

  1. You can time your dividend payments: If you are looking to minimize your personal tax bill, you may want to consider timing your dividend payments. For example, you could wait to receive dividends until after you have retired, when your personal tax rate is likely to be lower.

 

Making the decision

 

The decision of whether to pay yourself a salary or dividends is a complex one, and there is no right or wrong answer. You should speak to a professional at BBS Bookkeeping Services to help you decide whether you should pay yourself a salary or dividend.

Canadian Tax Guide to ECommerce

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Canadian Tax Guide to ECommerce

 

As an eCommerce business owner, it’s important to have a solid understanding of the tax requirements that apply to your business. Depending on the type of eCommerce business you operate, there may be different tax implications. For example, if you sell digital products online, you may be required to charge GST/HST on those products.

 

There are a few different tax implications to consider when operating an eCommerce business in Canada.

 

First, you’ll need to determine whether or not you need to charge GST/HST on your products. If you do, you’ll need to register for a GST/HST account and charge the appropriate tax on your products. You may also be required to collect and remit provincial sales tax (PST) on your products, depending on the province in which you operate.

 

Second, you’ll need to consider how you’ll handle taxation on shipping and handling charges. If you charge GST/HST on shipping and handling, you must include those charges in the price of your product.

 

Third, you’ll need to decide how you’ll handle taxes on returns and refunds. If you offer a refund or exchange on a product, you’ll need to refund the tax paid on that product as well.

 

Lastly, you’ll need to make sure that you file your GST/HST return and remit any taxes owed to the government on a timely basis. Failure to do so can result in penalties and interest charges.

 

Understanding the tax implications of your eCommerce business is vital to ensure that you are in compliance with the law. If you have any questions about your eCommerce business and taxes, be sure to consult with a professional at BBS Accounting CPA. We can help you navigate the tax requirements of your eCommerce business and ensure that you are in compliance with the law.

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Top 5 Property Management Mistakes

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Top 5 Property Management Mistakes

 

If you own a property management company, you know that it requires extensive accounting work. This is because you have to track both your tangible assets (property, buildings, etc.) and your intangible assets (permits, licenses, etc.).

 

However, with all of this accounting work, it’s easy to make mistakes. Here are the top 5 mistakes that the average property management company makes:

 

  1. Not tracking all of their expenses: This is a mistake because you can’t deduct all of your expenses if you don’t have a record of them. Make sure to track everything, from the purchase price of the property to the cost of repairs and renovations.

 

  1. Not keeping separate bank accounts: This is a mistake because it makes it difficult to track your income and expenses. It’s important to have separate bank accounts for your personal finances and your business finances.

 

  1. Not getting a property appraisal: This is a mistake because you won’t know the true value of your property unless you get it appraised. An appraisal will also help you determine the correct amount of insurance to carry.

 

  1. Not tracking their time: This is a mistake because your time is valuable and you should be compensated for it. If you’re not tracking your time, you may be working more hours than you’re being paid for.

 

  1. Not having a budget: This is a mistake because you need to know how much money you have coming in and going out. A budget will help you track your expenses and make sure that you’re not spending more than you’re bringing in.

 

By avoiding these mistakes, you’ll be on your way to becoming a successful real estate investor.

 

If you have any questions about real estate investing or need advice for your existing real estate portfolio, call us at BBS Bookkeeping Services today!

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Tracking Crypto Gains In Canada

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Tracking Crypto Gains In Canada

 

If you’re buying or selling cryptocurrency, a crypto tracker is a must-have tool. The crypto market is becoming just as complex as the stock market, so it’s important to have a way to track your gains and losses.

 

There are a few different ways to track your crypto gains in Canada. One option is to use the Canada Revenue Agency’s crypto tracking tool. This tool allows you to track your crypto gains and losses for tax purposes.

 

Another option is to use a crypto tracker app. There are several different apps available, so you can choose the one that best suits your needs.

 

What does a Crypto Tracker do?

 

A crypto tracker is a website or app that allows you to see all of your coins and track your crypto gains and losses. This is important because The CRA has the right to request account holder info from exchanges since any income from transactions involving crypto is treated as a capital gain or as business income.

 

Any losses can also be considered capital or business loss.

 

Another way to use a crypto tracker is to keep track of your investment. This is important because it allows you to see how your investment is performing in the volatile market and you can make changes as necessary.

 

The importance of a Crypto Tracker

 

A crypto tracker is an important tool for anyone buying or selling cryptocurrency. It allows you to track your crypto gains and losses so that you can stay on top of your investment. This is especially important as the crypto market becomes more complex.

 

There are several different crypto tracker apps available, so be sure to choose the one that best suits your needs.

 

If you have any questions about tracking your crypto gains in Canada, be sure to call BBS Bookkeeping for more information or help on this matter.

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CRA Reviews and Audits

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CRA Reviews and Audits: What To Expect

CRA Reviews and Audits;

As a business owner, you may be subject to a tax review or audit by the Canada Revenue Agency (CRA). Here’s what you can expect if you are selected for a CRA review or audit.

 

What Is The CRA Looking For?

 

The CRA will notify you in writing if you are selected for a review or audit. The letter will outline the specific areas that will be examined.

You will be required to provide supporting documentation for the areas being examined. This may include tax returns, invoices, receipts, and bank statements.

The CRA will also analyze your documentation and may make adjustments to your tax return. If the CRA finds that you owe additional taxes, you will be required to pay the amount owing plus interest.

 

What Are Your Rights And Responsibilities?

 

You have the right to be represented by a tax professional during a CRA review or audit. You also have the right to appeal any findings of the CRA.

It is your responsibility to keep accurate and complete records of your income and expenses. You should maintain these records for at least six years in case you are selected for a CRA review or audit.

 

How Can You Prepare For A CRA Review Or Audit?

 

You can take steps to minimize your risk of being selected for a CRA review or audit. Be sure to keep accurate and complete records of your income and expenses. You should also file your tax returns on time and pay any taxes owed.

If you are selected for a CRA review or audit, stay calm and cooperate with the CRA. Be sure to provide all of the required documentation and information. If you have questions, seek professional tax advice.

Following these tips can help you avoid or minimize problems if you are selected for a CRA review or audit.

If you have questions about CRA reviews or audits, you should speak to a tax professional BBS Bookkeeping Services, we can help you understand the process and ensure that your rights are protected.