Crystal Cahill is responsible for the social media and marketing at Cahill CPA. Crystal completed her Bachelor of Arts Degree at Simon Fraser University in English, and has an Education Degree and teaching certification. She enjoys keeping clients updated on new accounting practices, upcoming tax deadlines, and news & events within the Cahill CPA office & staff. She is married to Cahill CPA partner Jordan Cahill, and together they have two young children.
Sole Proprietorship, Partnership and Corporation
You asked! We answered!
Our accountants have had many questions lately surrounding the topic of partnership or incorporating businesses. Many of our clients have been unsure what these structures are and what might be the best option for them. Understandable! It can be a confusing and even stressful thing to consider for your small business. Below we’ve highlighted some important information to consider, and a helpful resource from BDC. Talking to a professional accountant about the specifics of your business is always a great idea when making this type of decision.
BDC website: Choosing the Right Structure for your Business
There are three types of legal structures for a business:
- sole proprietorship
- partnership (which is a form of proprietorship)
1. Sole Proprietorship
A sole proprietorship is informal and easily created, which is why it is the most common structure chosen by new businesses.
In this structure, the business and the operator are one and the same in the eyes of legal and tax authorities. Tax law treats a sole proprietorship as an income source for the proprietor and therefore requires that the business’s financial details be listed in a separate section of the personal income tax form.
In a sole proprietorship, the business’s money and responsibilities are the proprietor’s, and vice versa.
This presents some possibilities for tax management on the part of the sole proprietor. If the business generates a loss, that loss can be applied to reduce income gained from other sources. That is why most part-time businesses are sole proprietorships.
However, sole proprietorships have a downside in that the proprietor is personally liable for all functions and debts of the business.
A partnership is similar, but instead of one proprietor there are two or more.
As with a sole proprietorship, there is no legal structure for a partnership. However, partners usually have some type of contractual agreement that governs, in percentage terms, the sharing of revenues, expenses and tasks.
When preparing their taxes, the partners apply those same percentages to their income and expenses.
Corporations are more complicated legal structures compared to sole proprietorships or partnerships.
Incorporation is a process in which a separate legal entity, owned by its shareholders, is formed.
Incorporation creates formal ownership shares, which produces a taxation and legal distance between the company and the shareholders. This in turn has tax advantages for the owners, who are usually paid as employees of the corporation.
Incorporation provides some liability protection for the corporation’s debts and offers some measure of protection for a company’s name. Company officers and shareholders may come and go, but the corporation exists until it is wound down.
Incorporation is most often done under a charter in the operator’s home province, but some companies that operate in many provinces or internationally, or that require enhanced credibility, incorporate federally, which is more costly and complicated.
Corporations must keep meticulous records and report their financial situations to competent authorities yearly. Therefore, their financial statements must be audited annually by chartered accountants.
To discuss your business specifically, and which option is best for you, get in touch with our experienced accountants here at Cahill CPA.
Content for this article from the: BDC Website
Canada Child Benefit (CCB) & Your Tax Return
The Government of Canada recognizes that young families in particular have been impacted by the unpredictable expenses of the COVID-19 pandemic. This money will help pay for things such as short-term child care arrangements, healthy food, clothes, and activities they can do at home as a family.
Families could receive up to $1,200 in support per child under the age of six in 2021. This will benefit about 1.6 million Canadian families and about 2.1 million children under the age of six.
In 2021, families that are entitled to receive the CCB with a net income of $120,000 or less, will receive $300 per payment for each child under the age of six.
The first payments will be issued on May 28, 2021, which will include both the January and April payments for those entitled to them. The final two payments will be issued on July 30 and October 29, 2021.
Families that already receive the CCB will not need to take any action to receive the payments. However, families do need to file their 2019 and 2020 tax returns to access them. The payments that will be made in May for each of the first two quarters – January and April - are based on the family net income for 2019. The July and October payments will be based on the family net income for 2020. This may mean that payment amounts differ for some families mid-way through the year.
Families that have not yet filed for either year could still qualify for CCB and for the CCBYCS by doing their taxes as soon as possible.
Make sure to contact us here at Cahill CPA to begin your return, and ensure you are receiving all the benefits & support you are entitled to.
You can use this calculator to see what child and family benefits you may be able to get and how much your payments may be.
Let us know how we can help!
Cahill CPA: North Vancouver Accountant, CPA
Important Income Tax Deadlines
Feb 22, 2021: Earliest you can file online
***We began filing returns for our clients, and many of you have already connected with our team during this process.
Mar 1, 2021: Deadline to contribute to a RRSP, PRPP, or SPP
Apr 30, 2021: Deadline to file your taxes
***This deadline is not predicted to change (as it did last year) so please ensure you are in touch with our team as soon as possible, so you don’t incur any late filing penalties.
Jun 15, 2021: Deadline to file your taxes if you or your spouse or common-law partner are self-employed
Payment date for 2020 taxes
- Apr 30, 2021: Deadline to pay your taxes
Interest Releif if you received COVID-19 Benefits
Interest relief on 2020 taxes owing will be given to people who have a total taxable income of $75,000 or less in 2020 and received at least one COVID-19 benefit in 2020.
You must file your 2020 tax return to qualify for this interest relief.
For all this information on the CRA Website, click here.
For any questions regarding these dates, or your return, please get in touch with our administrative staff.
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Well isn't this exciting!
Our very own Matthew Jacquet and Tony Elliott grace the pages of CPA BC magazine.
Recently Matthew and Tony were featured on the "Announcements & Accolades" page of the March/April issue.
Cahill Chartered Professional Accountants LLP in North Vancouver would like to announce that Tony Elliott, CPA, CA, and Matthew Jacquet, CPA, CGA, have been named to the firm's partnership. Tony joined the firm in 2018, specializing in assurance and tax. Matthew joined the firm in 2013, specializing in small business accounting
You can read the full issue of In Focus here. CPA BC "In Focus" March/April, 2021. Our announcement is on page 42 of this issue.
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Important Changes to your 2020 Tax Return
There is a lot of confusion this year regarding your 2020 income tax return. With all the changes from CRA, all the talk, and all the news…. there’s no wonder! We are here to help. We will break down some of the changes in our online posts & through our blog, but as always, make sure to ask one of our experienced accountants if you have any questions!
One of the first major topics that we are hearing from clients- is the deadline extended?
The answer is, no. This year CRA has announced that the deadline to file will NOT be extended, so you will need to file by April 30th, 2021.
The next question that follows has been: has the deadline to PAY any taxes owing been extended?
The answer is, yes...for some people. If you received Covid-19 benefits, and had a taxable income of $75,000 or less, CRA is providing Canadians with interest relief. If you are eligible, this relief will be automatically applied on your taxes owing.
According to CRA
Interest relief will be given to individuals who meet all of the following:
- Your total 2020 taxable income was $75,000 or less
- You received at least one COVID-19 benefit in 2020:
- Canada Emergency Response Benefit (CERB)
- Canada Emergency Student Benefit (CESB)
- Canada Recovery Benefit (CRB)
- Canada Recovery Caregiving Benefit (CRCB)
- Canada Recovery Sickness Benefit (CRSB)
- Employment Insurance (EI) benefits
- Provincial or territorial emergency benefits
- You filed your 2020 income tax and benefit return
- You have a balance owing for your 2020 taxes
So make sure to file your income tax return by the deadline (April 30th, 2021) and check your correspondence from CRA for information on taxes owing & deadlines.
For the full CRA link to this information- Click Here.
Finally, if you are worried about your ability to pay taxes owing, make sure to check out the options through CRA. If you cannot pay in full by the deadline, CRA does offer some payment arrangements. Visit this page to see your options for payment.
Over the coming weeks, we will continue to post more about your 2020 tax return, changes, important deadlines, and more. Check back, follow us on facebook, instagram and/or twitter, and contact us if you have any specific questions! We look forward to working with you this tax season (and beyond!).
THANK YOU, THANK YOU!
North Shore's FAVOURITE Accountant
We are so thankful for all the support from our North Shore community! Cahill CPA is the leading accounting firm on the North Shore, providing exceptional service to all of our personal & corporate clients. Thank you for voting us your favourite accountant for the third year in a row!
We recently added two new partners to our firm- Matthew Jacquet and Tony Elliott. Matthew has been with Cahill CPA since 2013, and Tony joined us in 2018. We are so happy to have these experienced, professional, and hardworking accountants join our team of partners.
We would also like to recognize our amazing office manager Shannon Hampton. She is an integral part of our team, and our clients always get the most friendly, professional service from her. Thanks for all you do Shannon!
Cahill CPA offers remote, online services, to safely file your income tax return this year. We hope to connect with our clients, new and returning, in the coming weeks as we approach tax time!
North Vancouver Accountant, West Vancouver Accountant. CPA. North Vancouver CPA. West Vancouver CPA.
RRSP's and TFSA's
We get a lot of questions year round on RRSP’s and TFSA’s- and often our clients aren’t quite sure the difference between the two. Understandable!
We recently came across this article posted by CPA BC, and it breaks it down quite simply:
Know the difference between a RRSP and a TFSA
The RRSP is a government-registered retirement savings plan that you open at a financial institution such as a bank or wealth management firm, and to which you and your spouse/common-law partner can make contributions. RRSP contributions can be used as deductions to reduce your tax annually. Any income you earn in your RRSP is usually tax exempt, if the funds remain in the plan, but you will have to pay tax when you make withdrawals (with some exceptions, such as buying your first home).
Put simply, a RRSP is a tax-deferring vehicle. The key concept here is that your income tax rate should be lower when you retire than when you are working. Therefore, you are better off seeking the benefits of the tax reduction now and paying it in retirement when your income and tax rate is typically lower.
Many are confused about the Tax-Free Savings Account, TFSA, and its purpose. The TFSA began in 2009 as a way for Canadians 18 and older to set money aside tax-free throughout their lifetime. But the TFSA isn’t just a savings account. Treat your TFSA as an investment vehicle instead. Any amount contributed and any income earned in the account, such as investment income and capital gains, is generally tax-free, even when it is withdrawn.
Remember, your RRSP contribution looks backwards and it is calculated based on your previous year's income. Your TFSA is based on a go-forward basis, but both are cumulative. The difference between the two is how you are taxed (or not taxed) when you eventually access your funds.
The deadline to contribute to your RRSP for the 2020 tax year is March 1, 2021. Make sure to contact us with any questions prior to this deadline.
RRSP and TFSA: 4 things every Canadian should know about by Jeff Brown Article Link
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Why Realtors Need a Professional Accountant
Real Estate is a HOT topic right now! If you are a realtor here locally, you probably know what we are talking about!
Cahill CPA specializes in realtors & real estate- we are experts in questions regarding:
- important tax credits & deductions
- write offs and business expenses
- whether to buy or lease your vehicle
- whether to buy in your company or personally
- commission rebates
- rental properties & short term rentals
- setting up a personal real estate corporation (PREC)
- and more.
We have a lot of clients that are realtors, and many are finding that last year was one of their most unique and busiest years yet! Even more reason to find a trusted accountant to help you with your accounting.
Get in touch:
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Charitable Giving & Your Tax Return
With tax time approaching, clients often ask about their charitable contributions from the previous year or are beginning to gather their donation tax receipts.
CPA BC has some important reminders to keep in mind when choosing which charities to donate to. Their reminder is clear- it’s important to be informed when spending your money, even when it’s giving to charity. You want to make the most informed decision, and know that the majority of your donation is going to the cause that you care about.
Their tips include:
- Ensure a Charity is registered. This can be done with a simple search on the CRA website. Link here.
- Find their financial statements
- Review how much percentage of your giving goes directly to the cause.
- Look for results. Do some research on what this charity is doing with their donations, and see if they are forthcoming with examples of how they are spending the donations.
To read the full article:
Online Tax Credit Calculator:
Another interesting online tool is the tax credit calculator. The Red Cross has a simple to use online calculator to determine how much tax credit you could receive depending on the size of donation.
Cahill CPA Can Help!
Make sure to let us know when we are preparing your return, if you have made charitable donations this past year. We can help you determine how much to claim on your income tax return, what you might wish to carry over for next year, and give you advice on how best to maximize your donations in the future.
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Conversion to limited liability partnership
We are pleased to inform you that Cahill Chartered Professional Accountants have been converted to Cahill Chartered Professional Accountants LLP effective January 1, 2021 (the “Effective Date”), respectively.
Cahill Chartered Professional Accountants LLP would like to welcome our two new partners to our firm, Mathew Jacquet CPA, CGA and Tony Elliott CPA, CA. Matthew & Tony have both been invaluable members of our firm, and now we are proud to welcome such professional, experienced accountants to our partnership.
Please quote Cahill Chartered Professional Accountants LLP, as applicable, in all of your dealings with us.
If you have any queries, please contact us at .