Working with your Corporation Part 2: Bookkeeping & GST

In this blog, we’ll go through some guidelines you should know about Bookkeeping and GST remitting. 

Bookkeeping:

Businesses must be looked after on a regular basis.  Bookkeeping should be done regularly, preferably no less than monthly.  Kustom Design has packages that include bookkeeping. However, you may also choose to do your own bookkeeping.  Many realize that is not a wise use of time when they could pay a small fee for monthly bookkeeping and utilize those hours marketing their business, or running their core business.  It is good, however, to at least understand the process of bookkeeping.  It is also very important to look at basic financials of your business each month to see if you are headed in the right direction or not.  Training and seminars on Bookkeeping are offered by Kustom Design for this purpose - to provide business owners with the basic knowledge of the bookkeeping process.  Whether you choose to do your own bookkeeping or have Kustom Design do your bookkeeping, we are here to help you!

GST remitting:

GST is required for a business when the business’ gross income is over $30,000 in a year, whether a sole proprietorship or a Corporation.  The business can also voluntarily register for GST.  GST can be remitted annually, quarterly or monthly for larger businesses.  This must be decided when you first apply for the GST number. It is best to file annually and make installments quarterly, if necessary.  The GST owing is simply calculated by the GST collected minus the GST paid on expenses (unless you are on quick method).  Kustom Design includes GST remitting with all 3 of our accounting packages.

Important Note on GST: Always keep your GST filings up to date!  If you fall behind CRA may Notionally Assess you, which means they pick an amount that you owe, and they will then collect it from you, even if it means freezing your bank accounts and trying to collect from your clients!

Next week, we’ll discuss payroll remitting, corporate year ends and annual returns. 

Structuring your Corporation part 1

There is so much to consider in structuring a corporation and this blog will definitely not be able to cover all the considerations and options for structuring, nor should this blog be misconstrued as legal advice.  That said, in this blog series I will give you a lot of very useful information and tips on structuring corporations.  Because this blog series is on corporations, we will not be going into any great detail on the various other entities and contracts you can use in your structure, such as trusts and Limited Partnerships. 

There are virtually unlimited options when it comes to structuring your corporation as there are many different classes of shares within multiple categories.  The different classes of shares are in letters, such as class A shares, class B shares, class C shares, class D shares etc.  The 3 main categories of shares are:

1. Voting Shares – Used for the main shareholders with voting rights
2. Non Voting Shares – Used for other shareholders with no voting rights
3. Preferred Shares – Shares with preferred treatment, typically used for attracting investors or in restructuring existing corporations

Let’s start with some basics that you should know in structuring a corporation.  First you should always consider making both you and your spouse a shareholder in your corporation if you are married.  In making both spouses a shareholder you are opening up the door for income splitting the profits of the corporation through dividends.  Being a shareholder does not mean liability is taken, in fact it is typically the director that would take all liability of the incorporation as we’ve discussed in a prior blog.  So both spouses can be shareholders and receive benefit, while only one spouse could be a director taking the liability on.  It is always good to keep one spouse sheltered from liability. 

We’ll continue our blog series on “Structuring your Corporation” on my next blog post.