With so many years of experience, some questions are bound to come up more then others. We would like to highlight some that we have come across that can be answered or partially answered in general terms.
We welcome your questions and would be more then happy to go into further detail regarding your specifics.
Q: I have a business. Should I incorporate?
A: It depends. Every situation is different and what works for one individual may not hold true for another. Most people are aware that a corporation may limit your personal liability and offer tax savings. It is the latter that most people are interested in.
In order to take advantage of the potential tax savings one must be in a position to leave money in the corporation. The tax advantage of a corporation is to defer tax on the income earned. If you need to take all the money out of your corporation, then you are not utilizing this option.
Q: Should I contribute to my RRSP or my TFSA?
A: The advantage of both options are that any contributed funds can grow tax free for the duration of time they are invested. So then what is the real difference?
When you contribute to your RRSP you get a corresponding deduction on your tax return and if you take it out, you must add that money to your income for the year.
With a TFSA, there is no deduction when you contribute and no addition if you withdraw.
As a general rule, if you do not have a stable income or may need funds at a later date, then contributions to your TFSA would be more appropriate. This is to avoid a situation where in addition to your regular income, one would need to withdraw from their RRSP causing an increase to their income unnecessarily.
Q: Do I need to register for HST?
A: If you are performing services or selling goods that meet the definition of a taxable supply by the government, you are required to register for HST after earning $30,000 in revenue.
If you make less than this amount you are considered a small supplier and are not required to register. It is important to note that if you charge HST, you are required to remit those amounts regardless if you did not register.
Once registered, you must remit 13% of your revenues less any HST you paid on expenses regularly.