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How to start a fresh fall season with great business and tax advice, read our September 2015 Newsletter

M.I.A.G.E. Business Solutions Inc.
Tax and Business Newsletter
September 2015

How to start a FRESH FALL season


September is here, which means we have to say goodbye to summer. It's a weird sort of feeling when you have to give up relaxing all day and ease back into mountains of work. How about focusing on all new and exciting projects that you dreamed about for so long. It is time to move, plan and act on it. As professional business and tax advisers, we are here to help you do that next step in your career, life and finances. So, let's start a fresh fall season with many fresh ideas. Try to focus, get good advice and act!


SELF-EMPLOYED: Building your dream (is it the right time?)

So, you are tired of office politics, business restructuring, change of  bosses and being an employee for many years. Nothing could be better than working for yourself and becoming an independent contractor. When is the right timing for this important move? You can surely improve your chance for success in this area by reviewing the following important aspects and consulting the right adviser.

Here are some of the advantages of becoming a self-employed:
  • Sense of achievement and ownership
  • Deducting reasonable business expenses from their business income in order to reduce the overall taxes (such as accounting & legal fees, convention expenses, advertising and promotions, regular commercial insurance, professional membership dues, training expenses, private health services plan premiums, office rent, home office expenses, salary paid to assistant, meals and entertainments, equipment and furniture, interest and bank charges)
  • Incorporating a self-employed business can have lots of tax and legal benefits: you can get more detailed information about this part by contacting one of our professionals at www.miagesolutions.com 
Here are some disadvantages to being self-employed:
  • Increased CPP/QPP contributions (as self-employed you must pay double for this contribution)
  • Loss of security and some benefits (such as vacation, statutory holidays and severance pay or termination notice).
  • Loss of tax-free benefits (such as medical and dental plans)
  • No company/employer pension plan
  • Loss of social aspects of the job (interactions with employees)
  • Difficulty in getting credit as your income is unpredictable 
  • GST/HST & QST registration requirements when annual taxable income within Canada will be over 30K.
  • Record keeping and compliance aspects for taxation and authorities.
  • Legal considerations (Legal protections for salaried employees which are not available for self-employed individuals)
  • Business risks and insurance (as self-employed, you will be personally reliable for all business risks. Consulting Professionals can help you structure your business to avoid all related risks)

 

TAX DEFERRAL on accrued corporate BONUS

A bonus accrual at the fiscal year-end of the corporation is a great method of tax deferral. A bonus is generally deductible to the corporation in the year it is accrued, if it is paid within 180 days of the corporation's year-end. And it is basically taxable to the individual as employment income when it is received. The ideal is when the corporation fiscal year-end fall in the second half of the calendar year (meaning between July 31 to December 31). So, the bonus income would not have to be recognized personally for tax purposes until the next calendar year and therefore taxes on bonus would have been deferred for six months. If you have enough RRSP room, you can even arrange transferring your bonus payout directly into your RRSP and waiving the Federal and Quebec taxes at source (in this case, only the QPP, QPIP and EI will be considered at source). 
 

Tip of the month


 

Car Log and great free Apps for smart phones

Get the free EASY LOGBOOK through your App store on your smart phone.

Absolutely the easiest way to track your business mileage and claim or deduct your business car expenses with peace of mind. Press the start button when starting a trip and the stop button when you reach your destination, enter a quick description and you're done! (You can easily email the csv report file to any email address in few seconds). 

 


DEDUCTING EXPENSES as an EMPLOYEE

Salaried employees are very limited in the expenses they can deduct when calculating their income taxes for each taxation year. But you should not be discouraged. You can deduct some type of expenses and by structuring your employment contract, you can still be able to reduce your tax bill. Basically, if the employee by his/her employment contract is required to pay his/her own employment expenses, the employee can deduct such expenses from her annual income and consequently reduce his income taxes. Please note that in this case, the form T2200 declaration of conditions of employment must be completed and signed by the employer. 
Here are some deductible expenses for salaried employee based on his/her employment contract: Professional and Union dues, salary paid to an assistant, supplies consumed, travelling expenses, capital expenses-automobile and office rent or home office expenses. For certain types of employees, there are special rules that allow them to deduct other expenses in addition to  the ones described above (example: depreciation related to the musical instruments of  musicians, artist's employment expenses related to artistic activities, meals and beverage expenses for Long-haul truck drivers, meals and lodging for Railway employees, new tools for Tradespersons).
Copyright © *September 2015 Newsletter* *MIAGE BUSINESS SOLUTIONS INC.*, All rights reserved.


Our mailing address is:
6600 Transcanada, suite 750, Pointe-Claire, QC, H9R 4S2

Contact: Mrs Mahtab Saghafi, Senior Finance and Tax Advisor
Tel: 514.426.7200 ext 101
Email: Info@miagesolutions.com