Presenter Cristian Cupen, B.Comm., CGA info@cupen-cga cupen-cga Tel: 647-290-3067

1. Presenter Cristian Cupen, B.Comm., CGAinfo@cupen-cga.comwww.cupen-cga.comTel: 647-290-3067 Cristian Cupen, CGA

2. Accounting and Taxation Tips for Small Business Cristian Cupen, CGA

3. Types of business: • Sole Proprietorship • Corporation • Partnership • Accounting Methods: • Cash Method • Accrual Method Cristian Cupen, CGA

4. Accrual Versus Cash Accounting • In accrual accounting, income is reported in the fiscal period it is earned, regardless of when it is received, and expenses are deducted in the fiscal period they are incurred, whether they are paid or not. • In cash accounting, revenues are recorded when cash is actually received and expenses are recorded when they are actually paid. • Accrual accounting is the method of accounting most businesses and professionals are required to use by law. Cristian Cupen, CGA

5. Bookkeeping • Electronic Records: ■Microsoft Excel. ■ Small business accounting applications: • QuickBooks • Sage 50 Accounting • Many more… • Paper and electronic records– six years after the end of current fiscal year end. Cristian Cupen, CGA

6. Income Tax Compliance • Sole proprietorship: • Income tax payable due April 30 • File income tax return by June 15 • Corporation: • Income tax payable due 60 days after fiscal year end (90 days for CCPC). • File income tax return up to 180 days after fiscal year end. Cristian Cupen, CGA

7. Incorporated / Not Incorporated Benefits of Incorporating Benefits of not Incorporating • Limited Liability • Small Business Deduction rate of approximately 15.5% on the 1st $500K on net income (compared to 46% individually) • Defer taxes • Income Splitting (reasonability test / not for dividends) • Unlimited number of owners • Tax Advantage of Capital Gains Exemption • Easier to obtain financing • Losses can be deducted against other sources of personal income to reduce your tax liability • Do not have to account for all the bank activity Cristian Cupen, CGA

8. Employee versus Self-employed • Individuals prefer to be self-employed for the following reasons: • No withholding of taxes • Easier to claim “business” expenses • Under the Act, the “incorporated employee” is said to be operating a “personal services business” (PSB). Income from a PSB is not eligible for the low small business tax rate and the corporation is restricted in the types of expenses it can write off for tax purposes; it’s limited only to the expenses an employee can deduct. Cristian Cupen, CGA

9. Employee versus Self-employed • Tests to consider when determining whether an individual is an employee or self-employed: • Control – Consider the degree of control held by the payer or the degree of autonomy held by the worker. • Tools and Equipment – Who owns the tools and equipment? • Financial risk – Are there any fixed ongoing costs incurred by the worker or any expenses that are not reimbursed? • Opportunity for a profit – Can the worker realize a profit or incur a loss. Cristian Cupen, CGA

10. Other Relevant Topics / References • Goods and services tax/harmonized sales tax (GST/HST) http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html • Payroll http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/menu-eng.html • Workplace Safety and Insurance Board (WSIB) http://www.wsib.on.ca/en/community/WSIB • Canada Revenue Agency – Business http://www.cra-arc.gc.ca/tx/bsnss/menu-eng.html • Ontario – Ministry of Economic Development and Innovation http://www.ontariocanada.com/ontcan/1medt/smallbiz/en/sb_home_en.jsp 11/16/2014 Cristian Cupen, CGA

11. Other Relevant Topics / References • RC4070 Guide for Canadian Small Businesses http://www.cra-arc.gc.ca/E/pub/tg/rc4070/rc4070-e.html • RC4409 Keeping Records http://www.cra-arc.gc.ca/E/pub/tg/rc4409/rc4409-e.html • RC4110 Employee or Self-Employed http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html 11/16/2014 Cristian Cupen, CGA

12. Thank you! Cristian Cupen, B.Comm., CGAinfo@cupen-cga.comwww.cupen-cga.comTel: 647-290-3067 Cristian Cupen, CGA