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If you are self-employed, then you should consider Employee Insurance. When you are employed by a business, employee insurance is taken care of by your employer. However, just because you are self-employed or the sole employee of your business, you don’t have to skip on employee insurance.
So, what should you know about employee insurance?
Open to Self-Employed and Small Business Owners
Over 2.6 million Canadian are self-employed and from 2011, they have been granted access to the Employee Insurance program.
However, you will have access only to certain benefits of the insurance program.
Once you register for Employee Insurance, you start paying the premiums, which is exactly the same rate as a normal employee, a minimum of $1.88 per $100 to a maximum of $930.60 of insurable earnings.
The weekly benefits amount is 55% of your average earnings in a week, based on the last tax filed before you applied for the benefit. The maximum collectible amount is $524 per week.
Other Things to Consider
Is it for you?
Employee Insurance is not for all self-employed or small business owners. In its current state, registering for employee insurance may bring you more loss of income than assistance. The income generated from your business, while you receive special benefits, can be reduced. Furthermore, you do not have full access to all the benefits provided by Employee Insurance as a usual employee does.
One of the advantages of being self-employed is that you don’t have to take employee insurance and you earn more income. However, depending on your personal situation if you want to become a parent or you may have to take care of a sick parent in the future, employee insurance may be for you.
Every situation is different. That’s why it is important that you speak to an accountant who will be able to understand your situation and advise you accordingly.
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A new year is like a fresh breath for your business. A new year, a new chance to achieve your business goals. With tax season around the corner, your business needs to be prepared to file its taxes, avoid mistakes and get the whole process right.
Here are 7 tax tips to help you with 2016’s tax season.
Inserting the wrong data is the most common mistake when it comes to tax filing. Keep your eyes peeled, be careful, and double check the data.
The Canada Revenue Agency (CRA) has a very thorough list that you can go through so you don’t miss anything.
You should also watch the calendar for other dates like payroll, income tax installments and GST/HST.
Whether you use a smartphone calendar or a paper calendar, mark the dates on your calendar. Additionally, CRA Business Tax Reminders app, which can be downloaded on iOS and Blackberry devices, allows you to set key date reminders.
This holds true even if the caller or sender is from a financial institution.
Taking assistance from a professional service such as ATS Accounting will prevent your business from committing mistakes when filing taxes.
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Hiring a tax preparer is an easy way to handle your tax preparation whether you are an individual or a business. However, you should always keep your eyes peeled for tax prep scams. While most Canadians use tax preparers without any problems, you are always at the risk of coming across a tax preparer who is unscrupulous.
Here are some tips on how you can avoid tax prep scams.
Researching on the tax preparer is your best chance of getting into a scam. What does this involve?
Once you select a tax preparer, you are still not out of the woods. You need to ascertain that your financial documents are safe on the tax preparer system. This includes:
Avoid Work From Home
Literally anyone can become a tax preparer. One does not have to have a background in accounting or such. This results in the industry containing people many people who work from home. Unless a personal and trusted acquaintance has recommended the person to you, avoid work from home tax preparers.
This is just a safe precaution that reduces the chances of you getting scammed.
Usage of Old Tax Laws
A favored trick used by old tax preparer scams is using old tax laws to dupe customers. They will pull out an arcane tax form for you to fill out.
If the tax preparer can’t write or speak good English, you should back away immediately. Tax preparers are required to go through a stringent course and exam that requires good English. Whether it is emails, formal documents, or conversations. If the grammar is bad, you are probably in touch with tax preparer scammer.
Not asking for Paperwork
The problem is that without all the required paperwork no tax preparer can conduct a complete job. If a tax preparer does not ask for your financial documents, then that is a big red flag.
Tax preparers are an effective and time efficient way to get take care of tax preparation, just don’t hire someone in a hurry otherwise you may land up in a scam.
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The Canadian Revenue Agency (CRA) is constantly streamlining the tax return procedure so that the process is easier for the public. This 2016 CRA has released a set of changes that you should be aware of before you file your tax returns. With more and more people getting online, CRA has many updates to ensure the online processes are as simple as possible.
So before you start sending in your tax returns, here are the changes you should know about.
Notice of Assessment
The CRA has an improved system of notice of assessment. It’s a new and simpler format that provides the most critical information of your assessment on the first page. This simple step enhances CRA’s correspondence with individuals. Online tax records are as official as paper records.
Auto-Fill my Return
CRA has made the Auto-fill my return feature available through a few certified tax applications. Through this feature, you can automatically fill in certain parts of your income tax and benefits return.
To gain access to Auto-fill my return feature, you need to have an account on CRA’s My Account. As the year goes on, more and more certified tax applications will have this feature.
Online mail offers the quickest, easiest and most secure way to manage your tax correspondence. Rather than getting your notice of assessment through mail, you can receive it through online mail. This way, you avoid the waiting period that the mail takes to reach your home from CRA.
To get online mails, ensure that you either provide an email address on your income tax and benefits return, or register with CRA’s My Account.
New correspondence, like benefits statements, will be added this year.
Universal Child Care Benefits
Universal Child Care Benefits (UCCB) was introduced to provide additional financial assistance to parents. For the 2015 tax year, families will receive $160 every month for each child under the age of 6, and $60 every month for each child from the age of 6 to 17.
Disability Tax Credit
Canadians filing their T1 return form, claiming Disability Tax Credit, will be able to file the form online. This is regardless whether or not the Form T2201, Disability Tax Credit Certificate, has been submitted to CRA for this tax year.
Children’s Fitness Amount
As of January 1, 2015, Children’s fitness amount is a refundable tax credit available to families who have children enrolled in a prescribed physical activity program. This credit was non-refundable prior to the tax years of 2015.
Child Care Expense Deduction Limits
Since the January 1, 2015 tax year, the Child Care Expense Deduction dollar limits have increased by $1000. So, now the maximum amounts that can be claimed have increased to $8,000 for children under the age of 7, $5,000 for children at age 7 through to the age of 16, and $11,000 for children who are eligible for the Disability Tax Credit.
MyCRA Mobile App
Last October 2015, CRA gave their mobile app an update and loaded tons of new features on it, like personalized benefit payment information, enhanced tax return status, and Canada child tax benefit application status. You are also able to update your address, manage your online mail with CRA, and sign up for direct deposit.
So ensure you update your tax filing process and take advantage of these new changes!
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With good bookkeeping, you are aware of your company’s financial situation, you easily fulfill your tax obligations and you stay within compliance. So the question for you is which method of bookkeeping do you use?
Single and double entry bookkeeping systems are the two most widely used bookkeeping systems. It is advisable to utilize these two methods because they are an industry standard.
At the core of it, single entry keeps track of what went in and out of your business account. Single entry maintains the accounts of debtors and creditors and the cash book. Through single entry, each financial transaction is recorded in a log book.
As you can guess from the name, double entry requires two account entries for each transaction. It serves the purposes of eliminating any accounting and bookkeeping errors. Double entry also offers a more complex bookkeeping system, allowing a business to keep track of all its accounts, like personal, real and nominal accounts.
The above are just major differences between the single and double entry system.
So which one do you pick?
The general rule is that small businesses utilize single entry, while growing companies use double entry. Single entry works for small businesses because they mainly deal in financial transactions and aren’t likely to make a mistake when accounting them. Double entry works for growing companies because it allows for management of multiple accounts, which suits a company’s complex financial framework.
A bookkeeping system can be simple or complex as per the business requirement. Even though double entry may seem complex, there are many accounting tools that can simplify the process.
You pick a bookkeeping system that fits your business. If your business is a small one, then the single entry bookkeeping system is perfect. However, if your business is growing swiftly, then you want a robust bookkeeping system and double entry would be right.
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Incorporating, or turning your small business into a corporation simply means that the business is a corporate entity, separate from its owners. When you incorporate, your business removes the sole proprietorship or partnership ownership.
Incorporation is a big step, so here what you need to know.
Advantages of Incorporation
Disadvantages of Incorporation
So, should you incorporate your business?
The purpose of mentioning the pros and cons of incorporation was to generate a basic understanding of how your small business will be transformed. This has given you the information to make a decision. Incorporation is perfect when your vision of the business is to grow and develop on a large scale.
However, if you know that your business is not going to grow beyond what it is now, then incorporation is not right. Furthermore, if you are the sole employee, then incorporation is definitely not appropriate.
Each person’s situation is different. To get the best answer to this question, consult with ATS Accounting, where we will completely understand your business and business vision to give you the right answer.