How We Work

NEW INCORPORATED BUSINESS

Congratulations for incorporation. Although your daily business operations have not changed much because of that, you have to realize how many things have changed for you from the tax perspective.

Here is what we can help to get the full benefit from corporate structure:

1. Keep track of all your transactions and be sure to have the supporting documents. The good accounting shall maintain an up to date file of all transactions, so that at any point in time you are aware of your Revenues, Expenses and Net Income. In case you are too busy with other tasks and wish to leave calculations for later, at least be sure to store all:

  • Invoices
  • Receipts
  • Bank statements
  • Agreements
  • Letters from CRA, WCB, and others
  • Keep a separate file with articles of incorporation, minute’s book and other documents related to the foundation of the company.

The good idea would be to store any and all the documents related to your business activities, so when you will need evidence to support your position before CRA, you will have support material at your disposal. You might not always know, what will be useful, so keeping everything could be a good idea for the start. You can keep simple bookkeeping file in Excel, without being at any disadvantage to those who use accounting software like QuickBooks or Simply Accounting.

2. Think twice before leasing/buying/spending in order to reduce tax, there are other ways where you can save on taxes and keep your money! If you decide to go ahead with vehicle financing, remember that maximum cost to be considered by the CRA for write-off is $30,000. Hence if the car is worth more, it will still be considered $30,000 car for tax purposes.

3. Use your business account carefully. From the CRA's point of view, any deposit to the bank account shall be treated as income, unless it can be proven otherwise (i. e. loan, investment, refund or transaction reversal). If you got a deposit that is not income, be sure to retain enough documentation to prove it. Otherwise you may be liable for Income Tax and/or GST/HST on that deposit.

4. Keep shareholder account accurate. This is one of the areas that draws special attention of tax collectors as most tax avoidance cases involve withdrawing funds without withholding tax, as it is in case of regular payroll. From CRA's point of view, your net withdrawals from your corporation, is your income subject to tax. This income needs to be declared in T1 Personal Tax Return. An accurate calculation of what you withdrew less what you invested is the key here.

5. Meet CRA criteria for self-employed in case you are the one and only director and shareholder in your corporation. To be considered a business from the Income Tax Act perspective, you must meet certain conditions. CRA has developed a range of criteria that distinguish the business income from employment income. These criteria help the CRA to apply tax according to economic reality instead of legal structure. To be considered a business, you typically must have more than one client, bear responsibility for completion of the whole work project, use your own tools, and hire workers in process of performing the contract. These criteria do not need to be necessarily met all together, but you have to be ready to defend your position from that angle.

6. Plan for Salary or Dividends in advance. If your business generates net income, you as an owner would probably withdraw all or part of it. You may decide to do that in form of salary or dividends. Salary is a tax deductible expense for the corporation, whereas dividends are not. However, the recipient will pay different tax on salary vs. dividends.

7. File on time, stay on good record. Fulfilling our obligations before the Canada Revenue Agency is obviously a good business practice, keeping you more organized and ready for possible audits or inquiries. Knowing that your books are in order and having no reason to be worried about tax issues will lift a great weight from your shoulders, so you can concentrate your business and enjoy creative work.

To discuss more, please contact us.

SWITCH FROM OTHER ACCOUNTANTS

We know changing accountants is a big decision. We take pride in being friendly, professional and efficient, and we welcome the opportunity to work with you.

Clients have changed to us from other accountants for a number of reasons, but two main issues keep coming up. Some clients felt their previous accountant “talked down” to them or didn’t explain what was happening, and the other complaint was that they were not given the information they required to manage their affairs.

In other cases, some felt they were paying too much tax (and they were often right!), or the previous accountant’s lack of experience meant opportunities for legal deductions were lost. And others felt they just weren’t important to their previous accountant – either it took too long for their returns to be filed, or their phone calls or emails just weren’t being returned.

Becoming a client of Mark Zhang Professional Corporation is easy. You don’t even need to talk with your old accountant if you don’t want to. Here is how it usually works:

  • You have a free, no obligation, one-hour meeting with accountant in our firm.
  • If you would like to switch to us as your accountants, we ask you to sign a Letter of Engagement (which is required by Chartered Professional Accountants of Canada).
  • You may want to advise your old accountant yourself, but if you don’t, we can do that for you. Your old accountant is obligated to pass on and provide records such as your financial statements, tax returns, loans and agreements, company or trust files, and any personal records they may hold. Those can be sent straight to us.
  • Our extensive knowledge and experience helps us quickly get up to speed with your records, and to partner with you in what you’re trying to achieve. We also proactively make suggestions on your accounting, taxation, and (if you have a business) provide sound general business advice.

 

Our Clients