Why you need an accountant for your small business
If you have a small to medium sized business, like many Calgarians, you need to stay on top of all the paperwork. This includes the day to day accounting for your business and also could include payroll.
I have known more than one person who thought it would be a good idea to start a small business or buy an existing business. I think it is a great idea too, but there is a great deal of work that needs to be done. First, you need to get a business number from revenue Canada. This number is the nine digit base number or identifier. Then you need an extension for every type of account you need. For GST it starts with RT, and for Payroll it starts with RP.
You need to have a corporation set up which can be just a numbered company or you can apply for a trade name – this would be something like “Bob’s Drywall”. If no one else is using that name or a name similar to that, you can register it as yours through a registry office anywhere in Calgary. Once you have the corporation, you must setup a business bank account which will be totally separate from your personal money. One thing people have trouble with is understanding that the corporation’s money is not their money even though they own the company. If it is a very small company there may be only one shareholder and that person may also be the director of the company as well. However, you can have as many shareholders as you want and each person must purchase their shares and pay the corporation for them with their personal money. A minute book must be kept to record any transactions that happen through the corporation.
You should get the company credit cards and only use those for business – no personal use. That way it will be easy to add up all of your business expenses at tax time. You also need to keep all of your original receipts in case the CRA asks to see them. As for payroll, if you will be taking a salary for yourself or another employee, you need to remit deductions to revenue Canada every month or at least every quarter. These deductions include Canada pension plan, EI premiums, and income tax. For the CPP the corporation must match 100% of what the employee pays, and for EI the corporation must pay 140% of what the employee pays. So, probably every month when you cut a cheque for yourself or your employee, you need to calculate how much the employee gets and how much you have to send to the government. Do not forget to do this. The government charges interest on any late fees and no excuses will be accepted.
Just remember to be organized and keep records of everything. You can do this, but if you would rather focus on building and nurturing your business instead of doing paperwork, I recommend Daniela and her Calgary team of accountants at Padgett Business Services 2808 41 ST SW
If you have an office in Edmonton, try Rajiv at Padgett Business Services 3-10020 29A Avenue Northwest