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Real estate is booming in Canada and even more so in major cities like Toronto. With home prices being at an all time high, it’s often difficult to evaluate the financials behind the purchase of a house or a commercial property. Navigating this space by yourself could be time consuming and extremely confusing while many factors could make how much this purchase will actually cost you in the end. Real estate accounting services are typically recommended with the purchase or sale of a property / building.

Do you need a real estate accountant?

In Canada, there is no law that specifies the need to consult or have an accountant when you are purchasing or selling property. In most cases however, doing so will help push multiple factors in your favor such as:

• Getting pre-approved for a mortgage or a loan
• Obtaining a proper valuation of the property
• Presenting your financials to your investors, mortgage broker or bank
• Getting familiar with real estate tax and property taxes
• Finding the best way to structure the purchase or sale
• Finding the most suitable mortgage rate for you

In the case of a real estate agent or business operating in the real estate market, having a accountant on your side will ensure that you maximize your investments and minimize the costs and tax repercussions.

What do real estate and property accountants do?

The job of a property or real estate account is primarily to help you get the most out of your transaction. If you are buying property you want to know how you can maximize your loan without putting yourself in financial trouble. You also want to understand the difference in mortgage rate types and get a good idea of how much you will be paying each month.

When you want to sell, a property accountant will work with you to maximize your return and reduce the impact on your taxes. This is only one of many benefits of hiring an accountant to file your individual taxes or having one for your small business.

Real estate accountants are mortgage specialists

Mortgage Consultation

The right mortgage can make a massive difference in how much you are actually paying for the property in the end. Real estate accountants are professional accountants that take a look at your finances and establish the best type of mortgage structure for your specific situation.

This sort of service ensures that every step of the way, you understand all the possible impacts of your mortgage. Wide-reaching advisory means that your real estate accountant is looking at every potential ramification and opportunity.

Mortgage Applications

Whether you are applying for your first mortgage or refinancing an existing one, a chartered professional accountant is there to help you through the entire application process. This includes making sure your information is accurate and up to date to guarantee you get the best mortgage possible.

For self-employed individuals or business owners, getting approved for a mortgage can be a bit more daunting as you will likely need to provide more documents and records from your operations. Knowing what you will need and how to prepare these documents will be a great help in simplifying the process altogether and increasing your chances at an approval financing.

Mortgage Evaluations

Real estate accounting services are there to evaluate each mortgage option and what it means for your current and long-term wealth goals. You will then understand where the mortgage fits into your investments and the management of your overall wealth.

Understanding the short and long term impacts

A major reason to consult professional accounting services is to better understand the impact of a mortgage in the short and long term. As we emerge from a global pandemic, getting a mortgage is going to get harder as rates will likely hike and banks now have to administer additional stress tests to new homebuyers.

Getting all your financials in order with the help of a real estate accountant is the best way to maximize your chances at becoming a homeowner in this day and age.

Professional accounting to help you answer common questions:

What’s the difference between fixed and variable rate — which one is right for me?

There are advantages to using both fixed and variable rate mortgages based on the situation and intention. If you borrow $800K using 30-year amortization the variable option could save you $337 monthly. But if you wanted to refinance your home this situation could become more complex.

When a bank lends you a larger mortgage it might not even offer you an ARM-grade mortgage at this rate. Do not compare this to any real-world situation of switching to fixed rate mortgages. If you think the Bank of Canada will increase the interest rate 8 times this year a good comparison is necessary to see if it’s even worth it or not.

Is the interest on the mortgage deductible?

If someone breaks a higher fixed interest mortgage to reduce a lower interest fixed mortgage you probably have a high penalty for a mortgage violation. If a penalty is deductible as an expense, the penalty is also less costly than the penalty that is not tax-deductible.

You should consult a real estate accountant and find out more about each rule before starting anything. Because a single company writes it away doesn’t mean that it can’t be paid after tax. If you break an investment mortgage for the property you want to repay for personal debts, it may make this penalty more taxing. If the tax is not tax deductible, the cost is less.

In Canada, the interest paid is not a tax deduction like it can be in the United-States, however, if you run a business and pay interest on a mortgage, the interest remains an expense.

Tax specialists for real estate investors and landlords

The Canadian law on real estate is pretty liberal in terms of ownership. Non-residents can also have rental properties in Canada but they must file annual taxpayer returns. FinanTech Accounting provides a plethora of tax services for real estate investors developers, builders and contractors.

Your personal property accounting agent is an industry leader that can protect your interests and encourage you to make smart real estate investments. We can analyze key financial ratios and prepare loan applications.

Getting valuable real estate tax tips

The Canadian Income Tax Act allows Canadian taxpayers to deduct reasonable expenditures that are for the purpose of earning business income or property income subject to a bunch of exceptions. For an investor who focuses on property, the most common expenses for this process are charges for financing.

The income earned by using this part of your investment income is categorized as being income tax deductible. If you use your residence for business or rental uses as well making claims can affect both the claim as your primary residence and further expense against your rental property.

Accounting for Real Estate Professionals

The CRA examines the facts on the working relationship between taxpayer and property developers. Real estate agents in Toronto have to know whether they are employees or independent entrepreneurs which can alter their income records in some cases. Talk to us to discuss your facts so we can determine correctly whether you qualify as an employer or a self employed individual.

Finding deductions for Realtors and Real Estate Agents

Years of experience in the Toronto real estate market is required to optimize your returns. Whether you are a real estate agent or realtor, you will be faced with constant transit and traveling costs which will likely account for the majority of your expenses. Agents rely massively on advertising to generate new leads, business prospects and find tenants and an accounting firm can easily help you get most back from these costs.

As per EPA requirements a real estate course provides tax refunds which is beneficial to you. We can verify this by obtaining the correct information and filing when needed. Licensing & Professional Education are also allowed advertising costs. We have the expertise to optimize home offices expenses for agents to maximize their house sales write offs, auto expense can be categorized according to method detailed or simplified.

Accountants for a rental property and landlords

Landlords who own a single rental property or multiple real estate investments will definitely benefit from consulting with a real estate accountant to maximize their deductions. There are tons of deductions and tax write offs that can be used to lower your income tax.

This type of accurate tax planning is a well-known secret in the rental business that has been helping landlords with efficient cash flow and defer paying some tax by making new acquisitions or purchases. A rental business typically works with an accounting firm to properly use expenses, lower tax and save money.

Working with FinanTech

FinanTech offers strong Real Estate accounting services that include financial guidance and assistance during real estate transactions and the preparation stages which include financial documents and filing tax returns.

Whether you have one property or a thousand properties, FinanTech can manage challenges specific to your business. Whether your business is getting larger or owning a specific property you may need advice from a real estate accountant.

Get started today by setting up a one-on-one meeting with a FinanTech Chartered Accountant

Every year millions of Canadians swarm the big box stores and lineup either physically or virtually to snag some sweet deals. Despite the pandemic, it was estimated that Canadians spent about $4.6B in 2020 on Black Friday, which brings the average to about $360 per individual Canadian. Black Friday has also now become the most profitable holiday, surpassing even Boxing Day or Cyber Monday in recent years.

While this spending may seem like a lot for the average person, it’s worth noting that Black Friday is an incredibly good time for businesses, small or big, to purchase almost anything needed for their operations. This gives them an opportunity to not only save money on the sale price of items but to also turn around and use those purchases as write-offs — effectively hitting two birds with one stone.

What is a write-off?

First let’s just clarify what we mean by write-off: A write-off is a business expense deducted for tax purposes. Expenses are things obtained through operating a business for profit. The price of these items is deducted from revenue to reduce the total taxable revenue. Examples of such write offs include office space (real-estate), vehicle expenses, equipment, etc.

What does it mean to write off taxes in Canada?

You can write off dozens of things on taxes such as the cost of training new employees, safety gear, software, some business travel expenses and much more . Some income-tax write offs also offer non-refundable credits that reduce you overall tax payment. Write offs can save taxpayers money on their tax bills by cutting down tax debt and taxes. You can also write off various other expenses including child support and employment costs to reduce your total income.

In the case of purchases made on Black Friday, only some things apply as you likely won’t be getting a deal on your rent, mortgage payment or any bad debt. This being said, there are tons of items that you can write off and we’ve compiled a list of categories and items that you could write off to your benefit.

In any case, it is recommended to consult with an accountant as these benefits could vary if you are an individual, a small business or are taking advantage of being incorporated.

Black Friday Tax Write-Offs to help reduced taxable income

Computers and tablets

The first thing that comes to mind and has become one of the top purchases for businesses on Black Friday is computers and related items. If you’ve visited a Best Buy, Staples or Canada Computers you know how many people are after crazy deals on Laptops, tablets and desktops.

Shopping for one of these items on Black Friday often guarantees a better bang for your buck when it comes to performance per dollar, something that can make the difference between your device lasting three years instead of two.

In Canada, you cannot write off the purchase of a device listed above in only one year. Instead this business expense will be deduced over multiple years as a depreciation on capital assets, meaning an amount can be used over a longer period of time to help reduce your business income.

A small business accountant will often be the one to bring up this tax factor when new business owners think they can write off massive purchases in one go

Computer accessories

Now its one thing to buy a whole new computer but what about everything else that goes with it? If you need to purchase a new monitor, mouse, keyboard or even a printer, these are all business expenses that can can be written off. Some of these like the purchase of a large industrial printer could also follow the rule of a depreciation asset. It is recommended to consult with an accountant to understand what can be written off entirely in one year and what can’t. Other items to consider as a tax write off in this category are:

• Portable hard drives
• Headphones
• Charging cables and ethernet cables
• docking stations
• microphones
• speakers
• Routers / networking equipment / modems

Software and Subscriptions

Every business relies on some form of software or service subscription to operate. In many cases, this includes the purchase of accounting software (ironic) and enterprise day-to-day suites like the Microsoft or Adobe suites. It is possible that your company leverages a back office outsourcing company to do most of the heavy lifting, but its likely you your business still needs software at some level.

The recent trend that we’ve seen in the software world is offering said software with a monthly or yearly subscription. You can still use this payment as an expense, so if you decided to save a lot on a new yearly subscription or chose the monthly option, you can write it off.

Often you can get really good deals on new account activations, which is especially helpful for a new company or a new business owner.

Phones

The purchase of a new phone or multiple phones for your employees can be a great tax write off. In recent years the cost of a new device has greatly increased which is both a burden for individuals and business owners. Thankfully you can claim some of its value back.

In some situations you can also expect your new phone purchase to come with spendable credits, an example of this in recent years is Best Buy offering anywhere from 100-500$ in store credit with the purchase of a new phone.

You can turn around and spend that extra money other items you may also need.

TVs and Projectors

Conference rooms and dining areas often make use of TVs or projectors. Over the years, televisions have become much cheaper. Even now as we transition to 4k as the standard television resolution, the price may not be too bad. Consider the cost of new TVs or projectors as a tax write off.

You also consider devices like Chrome casts and Apple TV as they are frequently used in conference rooms or to play content on displays around your premise.

Kitchen and Appliances

Restaurant owners across Canada use Black Friday as an opportunity to upgrade their commercial kitchens and supplies. Over the years, an increasing amount of suppliers offer great deals on large industrial appliances, tables, seating and more. These larger expenses also count as depreciating capital assets to help balance the tax bill over a few years.

Additionally, if your business is related to renting out real-estate, this is a great time to buy appliances for your units or to furnish them altogether.

Vehicle purchases and leases

The delivery and servicing industry has been using this trick for a while now. The purchase or leasing of new vehicles can be quite beneficial with the right Black Friday deal for both the business and from the angle of deductions. If you are self-employed, you should talk to an accountant to see how you can use this to reduce your income tax as you may only be able to claim a certain percentage back, depending on your division between personal and business use.

Office Supplies

You know those post-its and pens that your employees seem to be losing by the dozen every day? Well perhaps you should take advantage of Black Friday deals to stock up for the next year. Office supplies of any kind are heavily discounted on Black Friday especially in larger quantities. Check your local Staples, Walmart or Amazon for great savings, and claim all of it back under your Office supplies write offs.

While most think of office supplies as pens and paper, you can also think about getting that giant whiteboard you’ve been wanting or new filing cabinets among other things such as:

• staples / staplers
• ink
• markers / highlighters
• usb sticks
• notepads / sketchpads
• tape

Things to consider before you purchase anything

While its nice to spend money on Black Friday to take advantage of great sales and get some big ticket items that you or your business could use, there are certain things to keep in mind if you plan on writing off some of these purchases.

1. First, consider that buying an item on a payment plan may or may not save you money – You can try to offset the cost of the interest generated by your payment plan by writing off the payments and sometimes even the interest. Consulting with an accountant is highly recommended in this scenario to determine if it is to your advantage or not.
2. It’s easy to get carried away with spending, so keep in mind that your write offs can reach a maximum depending on their nature and you may not end up saving as much as you anticipated. Remember the goal is to save money!
3. There is a greater limit of what you can write off depending on if you are planning to use these expenses as an individual, a sole proprietor/partnership or if your business is incorporated – again the guidance of an accountant can help you determine what would work best for you.

Conclusion

All in all, Black Friday is a great time to lower your cost for items and assets that you or your business will need. Business owners can reduce the amount of tax they will need to pay by claiming some of the purchases as expenses as tax write offs.

If you want to learn how you can maximize your personal, small business or corporate taxes, you can have chat with a FinanTech Chartered Accountant and see what you can use as business expenses.

Back Office Outsourcing is the process of outsourcing office processes to a specialized outside company. Back office outsourcing focuses on core business elements and frees up human resources within organizations. The heart of a business requires accurate bookkeeping, database management and everything else that goes with them, and improper completion of these things could have long term negative impacts on the business.

Your back office needs professional management and having a team behind the scenes to fulfill these jobs can be a costly burden. If you own or operate a small business you would likely seek out the outsourcing of these functions to another company.

A new report from Shared Services and Outsourcing Network (SSON) found that Fortune 500 companies lost $480 billion due to ineffective back-office systems. Even small companies can now enjoy outsourcing opportunities.

Most Outsourced Back Office Support Services

The most common back office support services include payroll, bookkeeping, human resources, information technology, marketing and data entry services. Businesses looking to increase profits have opted for back office outsourcing for years as an efficient option. Advantages include scalability, access to current technology and knowledge, cost-efficiency, concentrated attention on the core activities and much more.

Several core applications are undoubtedly taking advantage of outsourced service providers. Some reasons to do this include the missing knowledge to setup processes like payroll or bookkeeping. Outsourcing IT is required to provide the best technological support available. The decision to outsource back office functions is crucial to lighten the in-house team’s workload and set its sights on the important aspects of the business.

There are some positive side-effects that you need to know about business process outsourcing. Company employees must understand how to select the right back office solution that will work for them. Advantages should additionally be considered since outsourcing contributes further expertise and access to current technology.

Advantages of outsourcing back office services

Businesses who leverage outsourcing are able to save time and resources on back-office outsourcing. Outsourcing allows the firm to focus on core competencies while leaving the other tasks to professionals without needing to staff for each of them. Since 2013, Toronto businesses have largely capitalized on outsourcing their back office operations in an effort to maintain focus on their business activities. Back office needs may vary depending on the size and industry of an organization but outsourcing is available to accommodate SMBs through setup processes and growing stages. The cost of staffing for each job far surpasses that of relying on a company that does the work only when required. Outsourcing your back offices gives access to seasoned individuals with an aptitude and ability to provide excellent services and added value.

Back-office training is costly

The correct training could represent the difference between success and costly mistakes. When you hire Outsourcers for back office services you get support and training services for everything involved with an organization. Back office Services can help your company set up a new payroll service or bookkeeping service even if no one on your team has the training to do so. Outsourcing can be extremely helpful in preparing employees for the latest developments in your business.

Staffing Is Costly

When you outsource your back office management functions you don’t have to worry about paying for accounting or bookkeeping software. Opting to do this for your business is cheaper and allows your business to survive and keep more cash flowing into the business. If you have a small business, it may be difficult to open an office with full back office services, which can be costly both in terms of staff maintenance and office space.

Back office outsourcing increases your company’s flexibility.

Back office process outsourcing is ultimately scalable – which makes it quite popular across all aspects of a business. This easy way out can greatly reduce your workforce cost effectively. A team of back-office managers will reduce your staffing costs of 75% while giving you access to a competent workforce who is devoted to your company’s goals. As your team grows or shrinks, a flexible and cost effective solution guarantees better support for your company.

Working in a competitive market

Many business owners are reluctant to relinquish control over back office operations. In a competitive market however, you don’t have time to worry about back office functions or human resource and need to stay on top of your industry changes. An outsourcing company offering back office services will help you answer fundamental questions: How do you increase revenue in your business? Is your business geared toward expansion? There’s no doubt this is a cost effective strategy as you will be surrounded by a team of professionals in all aspects of your business.

Timing is everything

Back office functions might be time sensitive. A wrongful handling could lead directly or indirectly to fines and other financial problems. Hiring an outsourcing agency means you never have to worry about important back office operations being completed on time. We’ll pay your HST in full and then review your books. As part of our back office services, we also keep your payroll up to date.

Local back office outsourcing

While many offshore companies provide back office services, finding a local company to take on this type of work can prove to be incredibly more beneficial.

First, it’s not secret that a local company will understand your market and external factors better as they can more accurately gauge the elements that surround your business on a day-to-day. For example, Canadian winters have economical impacts on businesses as they may need to acquire new technology, hire more staff or spend more during these months.

A local company providing back office services is also easier to work with as the relationship tends to be stronger and more fluid not being subject to largely different time zones and work hours. The cost of choosing local support may be greater but piece of mind for operational support is well worth it and drastically improves your chances at success.

Why should a Small business outsource these operations?

Many Small businesses are inclined to do a substantial amount of back office work by themselves. This can use up time that you could be used better to pursue others core tasks. When outsourcing the back office, you save time and reduce costs. You can benefit from back office services provided by professional service providers without having to pay for employees or maintain staff, something that is usually a big deal for small businesses.

As a new small business owner, it’s very difficult to keep track of everything and learn new processes when your main purpose in the business is to make money. You may not know how to setup a payroll or benefits, let alone have the time to do your own bookkeeping. Outsourcing back office services will allow you to only worry about things that matter to you among other benefits

Back office outsourcing services for growing companies

Outsourcing labor intensive tasks is one way of freeing your in room workforce from mundane tasks. Responding to email, scheduling appointments and facilitating a meeting can be done by a remotely accessed personal assistant. In-house finance managers can be assisted by an incoming outsource team composed of a payroll manager and a professional accountant. Your operations team will benefit from outsourced business strategic development and your data entry could be taken care-of easily.

At all stages of company growth, new solutions and processes can be introduced by the outsourcing company to meet a new set of standards and needs. This could be related to HST/GST for a newly incorporated company, or simply getting a large influx of new employees on a payroll. Regardless of the growth speed, back office outsourcing services eliminate headaches and help maintain focus on core business.

What is the best way to choose back-office services?

It’s important that you are very clear about your goals and what you want to achieve from the perspective of your outsourcing partners. It is also crucial to find a service provider who meets or exceeds your expectations.

Overall your outsourcing partner must identify your primary needs effectively and revisit these regularly. You shouldn’t have to worry about deadlines and whether or not important tax documents were filed. The goal here is to replace your accounting or human resource department with a company that provides ample expertise.

Free up time and money

Young businesses utilize outsourcing in order to grow. It allows them time to work more efficiently with minimal overhead. Other benefits include the ability to save on time if required. You no longer have to pay a full time employee or team to manage an offsite business. You can get professional services whenever you want and as you need.

We are on your team: FinanTech Back-Office Outsourcing Company

Contact us to find out what services we can offer you and how you can benefit from having access to a local back office outsourcing company. Based in Toronto Ontario, we provide our professional accounting and back office services to a variety of clients. Free up time and resources; Get the back office services and support you need!

Getting your finances organized can be quite a cumbersome process when you have a lot of things on the go. Are you working, are self-employed, own a business, have investments, debt, retirement plans and are also trying to keep track of things like a budget, savings, properties, etc. If you’ve experienced major personal change that will directly affect your finances in any way that is related to the adoption of a kid, the purchase of property or the receipt of a large sum of money, it may be well worth it to hire an accountant.

Do I need a personal accountant?

In Canada. there is no law that requires individuals to have a personal accountant. Online tools and software are available to self-file tax returns and everyone has a different way of managing their money. While this can work for many, hiring a personal accountant to handle your finances and taxes help prevent mistakes that would be costly both fiscally and in your long term financial plans.

Sometimes credit card and bank accounts statements are incorrect which can mean that a correction will be made before it is deemed too late. You may opt to not repay a bill because that would hurt the credit rating. You may even overlook expenditures able to generate a tax deduction for your business. It’s important to keep track of your personal wealth especially when it is tax season.

Personal Income tax returns

FinanTech is here to assist you with maximizing your payouts – simple. Filing taxes is considered to be one of the most stressful times of the year for individuals and families. The true difference between filing online by yourself for your personal taxes and consulting with a tax professional is the flexibility of how your taxes are structured.

A personal accountant will have insight on things like using your RRSP or tax free savings account to your advantage while finding credits or deductions that you can claim to maximize your tax return. For example, if you are a first time homebuyer or invested in green-driven products, you may be entitled to a tax deduction or personal credit on your next tax filing.

Personal Tax planning

Income taxes are much more than filing paperwork for a refund of taxes. We may be your favored tax strategy for a number of reasons. We can also help you prepare for life changes, such as buying a home, starting a family, continuing education or leaving the workplace to begin a business.

Filing personal tax returns

It is incredibly important to file your taxes on time to avoid any penalties. This is why we provide services like tax preparation and timely filing to make sure you not paying anything you don’t need to. When you use a personal tax accountant to file your returns, you reduce your chances of being audited by the CRA as any red flags will be assessed and evaluated in advance.

Get the personal tax return you’re entitled to.

A personal income tax return is the final product – a report card – describing your income for the year. You have also the right to get many tax refunds. The Canada Revenue Agency will not tell you when you missed them and you should request credits for them. Accountants will take into account expenses, payments and other elements that can benefit your tax return.

Aside from personal income tax and tax filing, if you do not have an accountant to this point it’s a good idea to hire one to minimize the risk of being audited. A professional can assist in the planning of your audit procedure. It’s better to contact the accountant before an audit even happens, especially if one offers audit insurance. All audit insurance pays for legal and accounting expenses when a business has to respond to an official inquiry, probe or audit by a taxpayer.

Accounting and CRA Audit Assistance

Canadian tax experts can help you organize your books and make sure you understand your rights and responsibilities if the government calls.

FinanTech – Personal tax accountants in Toronto

FinanTech helps thousands of Canadians with their personal income tax returns every year. FinanTech Chartered Accountants in Toronto can recommend deductions you might include in your return which will in turn signify more money in your pocket.

Get started by chatting with FinanTech professional accountants today!

Personal Income tax for the Self-employed and business owners

Being in this situation can be tricky as you may be filing personal tax and business tax together or completely apart. We assist businesses and sole proprietor businesses in tax planning by structuring your situation for the best possible outcome.

We ensure you understand your tax rights with all regulatory compliance requirements. Our team can provide trusted counsel on a variety of issues including business growth, incorporation and HST. Let us worry about your business books and concentrate on growing your business and achieving your financial goals.

GST/HST

Registering for GST/HST may be in order as your grow your business. You will need tot know the terms and conditions to collect GST and/or HST. We will answer all your questions, train you for proper tax collection, teach you ways to track tax collections and payments and we’ll file it for you on time.

Get an accountant’s advice before you take on a franchise or buy / sell a business

Individuals who are interested in purchasing a franchise should most definitely consult with a professional. With a business franchise you can now remain your own boss without compensation for earning any revenue or equity from it. The franchise provider will help you with brand marketing, sales, product availability and other important things.

There are disadvantages to owning a franchise company and therefore having limited freedom of business. It can be difficult for a newcomer to the franchise world to decide whether the franchise fits the right requirements. An accountant can scan the franchise contract and find out the fees and percentage charges. This will help determine your expected income after deduction of the costs. Only you have the right to decide if you are ready for a Franchise.

If you buy some other brand you must always consult a reputable accounting firm first. They could check the companies accounts and see what happens to it to find any problems there may be. It’s a good idea to consult your attorney to find out all the details about the company you intend to buy. This gives you peace of mind that you get what you pay for. It is important to check if the enterprise has debts. For example, the authorities can check if a company has all but the assets which is leased or partially paid for.

By utilizing a professional accounting software we create useful charts and table data for your company. The prospective buyer could contact any of the buyer’s financial consultants or other specialists in the course of this work to discuss the transaction or to ask specific questions.

A professional accountant may work with you to plan how to make the most money from the sale of a business. Depending on the way sales are structured, their proceeds can vary significantly. In practice the lump sums may be less tax-efficient than the monthly repayments over a period of years, and provide better returns.

You’ll need an accountant to help you with the small business finances.

Small business accounting can get quite complicated if you do it on your own. If you feel your debts or debt have become unrecoverable your we can help you make some changes to your life. You may also want to look at key business metrics, like the ratio between wages and other paid-for employees to total revenues.

• More information on accountants for small business in Toronto and why you should get one here

The accountant you use will be able to share your personal business records for quick access. We can even produce diagrams that can allow you to view your current situation easily. It will help monitor a company’s pulse and make sure of important things like cash flows.

When it comes down to a small business dealing with the government, we’re here to aid in the preparation of many things. It can help your company get into conversations with the government in other ways. We can offer ideas that could help you save money.

Preparing your Tax Documents Correctly can save you more money than your accountant would charge. A good accountant will use their knowledge of the tax laws to recommend ways to free up money and save it for a potential business expansion.

You’ll need advice about the legal structure of your company.

Not all business have the same legal structure – there are various types based on different reasons. For instance you can make business as a company sole owner or a sole trading company, working in a self employed way and invoice using your own name.

If this is the case you will probably offset other expenses for life that are not taxable. Alternatively you can assume responsibility for your business operations as well. The structure for limited liability companies was different from other industries. As the name indicates the liability in that business is limited to the assets owned by the company, not by you personally. Read more about the benefits of incorporating in Ontario here. An accountant is able explain the different entities available for company formation and helps you get the one which suits you most closely.

When you engage an accountant in your business plan, they can automatically add financial projections and other reports to it. This will help you create a plan which is both realistic, professional and most likely to succeed. Hiring a professional at this point will be your best option right from the beginning. This could save you money as opposed to hiring a professional later.

Also, if you want any lender or investor to give you any money, you should show them the proper form of accounts. The further the backlogs of your records go, the more confidence they will have. It might be beneficial if you started with accountants as early as possible.

FinanTech Chartered Accountants in Toronto

Whether you are looking for a professional opinion or to get started with your personal and/or business accounting, our team is here to maximize your finances and help you pay less.

Contact us

Ever wondered how many many small-and-medium-sized businesses that operate in Canada? The answer, 1.14 million small businesses and 21,415 medium-sized businesses that were included in the Statistics Canada’s Business Register as of December 2015. Among these businesses we can count sole proprietorships, partnerships and corporations. You may opt to incorporate your company at certain times from a variety of factors. As with many businesses, incorporation has advantages and disadvantages. Below, we cover the benefits of incorporating in Ontario and explore other elements to consider.

What is a corporation?

By definition, a corporation is a legal entity that is distinctly separate from its owner(s). A small business operating as a sole proprietorship company or a partnership can become incorporated. A corporation can also be established at the creation stage of your business. A corporation in Canada must follow certain guidelines for tax payments, filing GST/HST returns and the assessment of responsibility for the corporation’s debts.

The primary advantages of incorporation

Personal Liability

The primary benefit of incorporating is the limited liability of the incorporated company. As the business owner, you will be treated as a separate entity from the business. Corporations have the same rights as individuals; that is they can own property, conduct business activity and enter into contracts, they can also raise capital and sue. Corporate governance consists in protecting the business owner of the corporate debt and obligations – inside certain limits. The corporation is considered an artificially created legal entity, separate than the individuals who created it and conducts its own operations.

Protect your personal assets

You are protected when you incorporate the business for the purposes of reducing business debt through establishing C or S corporations or limited liability companies (LLC). If your business goes through tough times, your personal property typically cannot be held for collection agencies. Similarly your home won’t become worthless since you missed paying your business loan.

If you file a business bankruptcy then your company could become something you can easily liquidate to repay your debt. These might include your home, cars investments or even any property that they acquire later on. Incorporation protects your company against all these scenarios and protects your assets along with withholding you from being personally liable.

As a corporation that can control its own assets, do business, incur liabilities and seek damages. A corporation has its own financial resources when it pays its own debts. Creditors generally can pursue payment only on the business’s asset. Sole proprietorships and partners can be held liable for personal assets and business assets in unlimited circumstances. Business owners have an option of selling their business for ten per cent cheaper than a conventional business.

Protect your personal assets from lawsuits

Without incorporation, your valuable assets could fall victim to another business suit against you. Some of them can collect based on judgments by taking control of possessions such as homes. Incorporation creates a firm barrier between your personal and household property and legal claims against a business. In case your business goes to litigation, your valuables will never be in any risk. If you take legal action against a customer for damage you can be personally liable.

Limits of limited liability

While being incorporated creates a solid separation between the owner and the business itself, there are certain limits that apply, it is always best to consult an accountant to see how limited liability affects your particular scenario and what would be covered for you. This is another reason why small businesses should consult a professional account.

Taxes and personal income

Incorporation to reduce taxes

Small business owners tend to incorporate because it provides them tax benefits which cannot be afforded for unincorporated entities. The benefits can help a small business owner save money every year. These taxes benefits include income tax splitting, benefits from reduced corporate tax rates, income tax deferral and capital gains exemptions. Additionally, multiple options are available to claim personal income at a time where it would have the least impact on your taxable income.

Corporate and personal taxes are separated

Incorporations separate your personal tax and business income. Your tax advisors will study what your corporate tax rate might be when you incorporate and compare that rate to your own effective tax rate. If it is lower, incorporation may be beneficial, it may be more beneficial to the individual as the corporation’s income and tax returns are not merged with their own, providing a tax advantage in some scenarios. The business receives income and the Canada Revenue Agency will treat the tax bill separately than that of unincorporated businesses.

Lower corporate tax rates – Less tax

Having a business in place allows for lower rates for taxation compared to taxes charged for an individual. Federal tax rates for corporate incorporated businesses range from 15% to as low as 9%. Small business owners have an advantage of the small business deduction. This reduces corporate income tax that you need to pay in a tax year. The reduced rate is available to those who earn business activity if the business cap is maintained for this year. Currently the federal business limitation is $5,000. The small business tax rate currently stands at 15% for incorporated businesses and is lower than the personal tax rate of an individual who operates in a sole-proprietorship and partnerships.

Tax savings and deferral

Incorporated business owners are faced with a multitude of tax issues and factors which can be included and considered as such in determining the tax advantages of incorporating. With a corporate entity you can make a business more flexible and earn more. It could reduce tax. Deferred tax dollars are effective in helping you grow your corporation. You also gain the capacity to plan personal income to benefit from lower tax rates.

Income splitting

A company incorporation will also give your child and their spouse interest in receiving money. These tactics offer great flexibility for an incorporated company given that the distribution amounts payable can vary from year to year. The money is allocated to lower taxable incomes. There is an additional income splitting strategy available to Canadian taxpayers but you should consult a tax professional to be sure this strategy is correct for your situation. In addition you can divide the dividends evenly between relatives to avoid your tax burden.

Think about your business in the long term

incorporating long term benefits

Although it is not necessary for all businesses to incorporate, most businesses will benefit from entering into the incorporated act. Your business structure will largely benefit from this as you look to expand or bring more people on board. Other factors to consider for the long term are:

Stronger record keeping

As corporations are treated separately from the owner(s), strong record keeping is in order to make sure that there is a clear distinction between what relates to the business and the owner. Corporations will have their own bank accounts, credit cards and expense accounts. As a sole proprietor or an individual in a partnership, you may be operating from your personal accounts or cards, bills may be in your name and such. Incorporating makes it so that your business can have its own set of bills and expenses that are tied only to the business. This type of legal structure makes it easier to keep track of anything that would get the attention of the Canada revenue agency. The business name will appear on every statement, record, tax returns, bank account and other paperwork involved.

Improved access to capital and grants

Attracting the eye of investors, angel investors and startups is much easier when your business is incorporated. Several credit-based programs are provided by the Canada’s government only to corporations. This can help boost the credibility of your company, which helps you find financing or negotiate with a supplier. This may also make it much easier to raise money and obtain grants. The idea adds credibility and gives you easier access to funds.

Lifetime Capital Gains Exemption (LCGE)

Lifelong capital gains exemption (LCGE) might save you money on tax for all or part of a sale. In a business, the cap for annual profit is $8893,824 for the 2019 year and will be $891,818 for the 2021 tax year. Farmers can claim a maximum exemption to $1 million and you can still use the exemption until the limitation is reached.

The LCGE is not a one-time exemption but it is cumulatively limited throughout the lifetime. There are often businesses incorporating just for the tax advantages. You could be able to use LCGE to avoid paying tax on half of your profit.

Your shares may qualify for a capital gains tax deduction when sold

If your shares are deemed Qualified Small Business Corporation shares and meet certain other requirements, you may be ineligible for an 880,000 life income tax exemption if you sell them. This means avoiding any additional tax liability after your retirement is completed.

Flexibility & Global recognition

Your official business address can be anywhere in Canada and meetings are held online and anywhere on the globe. Federal companies can be recognized worldwide. Incorporating your business can give it more notoriety compared to other business structures.

Estate and succession planning

In the event that the owner passes away or can no longer continue to operate, shareholding could then be transferred from the shareholder to his heirs. This stability gives you a better possibility of planning on a long term basis. It’s more flexible for transferring assets.

Corporations with all its relationships and contracts could survive the change in owners based upon the planning process. Having corporate shares transferred gives an advantage in time for succession. While incorporation is beneficial, it’s crucial to speak with your advisory team before proceeding, especially in tax free situations such as selling ownership rights to a person with no intention.

Other things to consider when incorporating your business

Costs related to incorporation

There may be higher administrative costs because of setup fees, more paperwork or the need to seek the assistance of specialists handling more complex tax filing requirements. Assessing your business and personal goals against the costs – both financially and through money – can help you to decide whether this structure will suit your need.

There’s annually legal filing fees payable and fees required to have an accountant filing an annual company tax return. The company requires one or more filings to retain good stead with government authorities. Losses that are difficult in a corporation but in a proprietorship are used only for short-term benefits of a reduction and tax credit.

Expecting losses

If the company expects its own losses at the start, it can also be helpful for a sole proprietor or the company to delay or not register as an entity. If it was lost by a sole proprietorship this individual may claim the loss against his other financial income and reduce personal tax burdens. The business could also be incorporated once it saw profits. If the business was incorporated, the loss could only be assessed against future corporate income. Incorporating limited liability may not outweigh the effects on income taxes and it is possible that a tax deferral would not benefit your particular case.

Real Estate Rental Businesses

In many cases operating an estate rental business as a corporation offers no tax advantages. Until the business becomes larger, the rent earnable by the organization is categorized as income from investment. Investment income is treated more heavily than business income because small business exemption doesnt apply. It is sometimes easier to obtain a mortgage personally than a corporation and If you live in the property prior to or after renting it you could use the Principal Residency Exemption to reduce certain capital gain tax upon the sale of the property.

Pay more taxes

Sometimes you could even have to pay more tax for operating a corporation. It usually happens when the small company business deduction aren’t available to corporations. In other cases individuals with the right to personal tax credits can be eligible for a lower rate for their personal business ownership. It is less common for a corporation to pay higher taxes overall but the situation can exist.

Administrative burden of incorporating your business

Each business is a separate entity and means that they must be updated regularly. If you want to cut down the company, there’s an additional checklist you must go through to do the job properly. If you are allergic to filings, you may want to avoid the extra overhead of a corporation. You should also ensure that the business operates and remains in a proper standing with the authorities before letting it down.

Conclusion

While business incorporation offers many advantages, many small business owners jump into the process too quickly without seeking advice from a professional accountant. There are instances where incorporating your business could still leave you with all the liability, business debts and financial losses much like that of a sole proprietorship. Having a discussion with a FinanTech accountant will help you understand if this is the right time for incorporating your business and help you through the entire process.

Starting and running a small business in Toronto can be both an exciting and stressful journey. On one hand, your business has access to close to 3 million local residents and a whopping 215,000 other businesses. On the other however, no matter if your business is B2C or B2B, owning a small business does come with a certain degree of financial responsibility that may be hard to keep up with especially as you focus on growing and doing what your business does best. To help you, we’ve put together a list of topics to discuss why Toronto small business owners should consider professional accounting services for their small business.

Does every small business need an accountant?

If you are planning to manage your finances and payroll by yourself, you will open your business to high risks that could put you in a bad financial position. An experienced financial accountant can manage all your small business accounting responsibilities to help you achieve a healthy financial standing and steer clear of tax and accounting blunders. In 2020 and for the better part of 2021, Toronto business owners were handling COVID-19 relief funds, hiring wage subsidies and many more elements for which proper records need to be kept and other implications/business decisions for which the guidance of a chartered professional would be ideal.

A small business tax accountant for tax planning

Small business tax specialists can help you save money with small business tax strategies. Your business taxes are tax planning tools that help you keep cash more efficiently. Everyone knows that planning for tax season can be a nightmare, especially if you have to navigate between your personal taxes, that of your family members and your small business accounting needs. A small business tax accountant will ensure that everything is in order when tax season rolls around. You will benefit from both effective tax planning and financial planning as well as first class accounting support through the entire process for both personal income tax returns and your small business taxes.

GST/HST

Almost all firms are required to file GST/HST return requests and make payments to the Government of Canada. We will set you up to collect tax correctly and file your tax return for you on time. If your business is going through a transitional period, such is the case with going from a sole proprietorship or partnership to incorporated businesses, an accounting firm ensures that everything is filed in a timely manner. You also benefit from proper financial reporting, which is likely to keep you away from audits.

Incorporating your small business

The pros and cons of incorporating your small business in Ontario can be explored with the help of a professional accountant. In some cases, you can drastically reduce your taxes by incorporating your small business.

Small business accounting to maximize your deductions

One thing that is often forgotten business owners is the effect of your tax deductions. Relying on self-use tax services is a sure way to miss big expenses or amounts that you can claim to minimize what you owe on your taxes or your HST/GST.

A small business accountant can help you reduce your taxes

Other reasons to consider small business accounting services

Small business tax credits

You may be eligible for small business tax credits in Ontario which can be a great way to help you keep more money in your business. A chartered professional can help you find and apply these credits.

Financial statements and records keeping for small businesses

Always keeping a complete inventory of all relevant documents including the financial statements and balance sheet is something that you will get with professional accounting firms and bookkeeping services . As a small business owner, you know how hard it can be to keep organized records, that’s why relying on accounting services will put your mind at ease when it comes to important financial statements.

Small business Tax professionals help you follow the rules

Tax rules change regularly. You can stay in line with tax law and avoid financial missteps by consulting a small business accountant who will inform you of changes and guide you through key business decisions and tax strategies.

Bookkeeping to assist your small business day-to-day

Maintaining important financial statements, tax returns, payroll deductions and expenses is best left in the hands of professionals. This will always ensure proper accounting and better business practices.

Selling your small business

Whether you have plans to sell your business or liquidate it, professional accounting services are essential to help business owners get more money from the transaction.

The verdict: Financial peace of mind for small businesses

Between the multiple advantages that offer tax professionals in regards to tax law, tax planning and tax services in general to the benefits of counting on your bookkeeping services for maintaining proper financial statements, hiring an accounting firm is a great way to ensure peace of mind. As a result, small businesses can continue to focus on their day-to-day activities and not have to worry about filing yet another tax return! The costs of small business accounting services far outweighed by the ability to help small business owners keep more money flowing through their business.

FinanTech: Small business accounting services in Toronto

FinanTech’s small business accountants in Toronto are here to help you plan and make better financial decisions to succeed in the GTA and online. Our excellent accounting firm will ensure that a chartered professional is there to offer proper accounting practices to your small business. We help companies grow in revenue and manage their expenses with detailed bookkeeping services and archives of your financial statements as well as any other accounting needs.

FinanTech are tax professionals in Toronto

Small business taxes often make a confusing system to navigate causing penalties and fees for a small business. A FinanTech small business accountant will be there to ensure that everything is done in timely manner. Our tax professionals will walk you through the ins and outs of the filing process, allowing you to maximize your deductions and tax returns. There are also many tax credits that small businesses can receive and a professional small business accountant with the right technical competence can help businesses respond to these opportunities. A low tax bill is also an excellent way to keep cash flowing in.

Customer Service Guarantee

Small businesses that work with our accounting firm only get the highest level of Chartered Accounting Services in Toronto. We guarantee an incredible customer experience and that we do an excellent job with all levels of service. We expect even more for ourselves and guarantee our clientele is satisfied for the level of service we provide. We are proud to have this advantage and to see the difference it makes every day for a small business owner.

Get your small business accounting onboard with us

Have a chat with with a FinanTech professional to see how our services can help your Toronto small business accounting needs.