Small business tax accountant / writeoff advice?

[Mitsu3000gt]

Does anyone have a reasonably priced small business tax accountant they can recommend? Or perhaps a Beyond member?

Basically I have a small side business in addition to my main career. It doesn't make a ton of money and I don't want to put much more time into it than I already am, but it's nice for a little bit of extra cash.

I want to take advantage of as many write-offs as possible, assuming I qualify.

What I am looking for is someone who can answer questions like:

- What I can write off, and how often
- Are there are limits to what I can write off based on my small business income?
- If I write off more than I make in a year from the business, is that a problem?
etc.

Anyone have a good contact? TIA

[msommers]

Is it for your photography stuff?

Mine handles my rental and photography stuff, plus did my geology consulting before going back to school.

MNP in Airdrie. PM for specifics if you wish...

[ExtraSlow]

Having more expenses than income isn't an issue, I did that my first fiscal year for my business. You can carry forward expenses to future years to pay yourself back, and paying for your own expenses doesn't count as income.

Here's my legit guide for what you can actually write off as a business expense, and my accountant confirmed it was a good starting place.
1) are you trying to write it off because you just want to find more write offs and pay less tax?
2) is it something you legitimately need to run your business?

If the answers are No and Yes respectively, then you are good to go. If you answers are "I'm not a scammer" and "who's to say what's legitimate", then you are on your own, you scammer.

[Mitsu3000gt]

Originally posted by msommers
Is it for your photography stuff?

Mine handles my rental and photography stuff, plus did my geology consulting before going back to school.

MNP in Airdrie. PM for specifics if you wish...

It is yes - I just want someone to tell me how much camera gear, computer gear, car mileage, home office expenses, etc. I can write off before raising any eyebrows basically, given that this isn't my primary income source.

Originally posted by ExtraSlow
Having more expenses than income isn't an issue, I did that my first fiscal year for my business. You can carry forward expenses to future years to pay yourself back, and paying for your own expenses doesn't count as income.

Here's my legit guide for what you can actually write off as a business expense, and my accountant confirmed it was a good starting place.
1) are you trying to write it off because you just want to find more write offs and pay less tax?
2) is it something you legitimately need to run your business?

If the answers are No and Yes respectively, then you are good to go. If you answers are "I'm not a scammer" and "who's to say what's legitimate", then you are on your own, you scammer.

It's for my photography business, so the one-time costs of certain things are very high (i.e. the camera gear I already own, computer, etc.) They are absolutely required to conduct the business properly at my standards of quality, and I would like to write them off if possible. The reason I need to talk to someone is that the cost of that stuff will likely exceed my yearly income from the business, at least for the first little while - so if that's going to be an issue then I need to find out. I'm not trying to pull a fast one on anyone, but if I am entitled to certain write-offs I would love to take advantage of them.

[benyl]

You can't write off capital costs directly. It is amortized over a number of years.

For instance, the CCA for a laptop is 55%.
http://www.cra-arc.gc.ca/tx/bsnss/tp...g.html#class50

That means you can only write off 55% of the value every year until it reaches zero. You can't write off the whole value the first year because the laptop doesn't become worthless after 1 year.

[Mitsu3000gt]

Originally posted by benyl
You can't write off capital costs directly. It is amortized over a number of years.

For instance, the CCA for a laptop is 55%.
http://www.cra-arc.gc.ca/tx/bsnss/tp...g.html#class50

That means you can only write off 55% of the value every year until it reaches zero. You can't write off the whole value the first year because the laptop doesn't become worthless after 1 year.

Good info, thanks.

Can that apply to things I already own that are now used for my business but weren't previously, or only on brand new items I buy specifically for my business?

[msommers]

Pretty sure it's purchases made during that tax year.

From what I understand, CRA is slighly lenient with write-offs and low income for the first couple years as you're not expected as a small business to instantly be making it rain. However, you need to justify your writes offs that this is actually a business and not a hobby. Photography being consistently 1% of your yearly income year after year will definitely be viewed poorly.

I don't know the "cut-off" for this.

[Mitsu3000gt]

Originally posted by msommers
Pretty sure it's purchases made during that tax year.

From what I understand, CRA is slighly lenient with write-offs and low income for the first couple years as you're not expected as a small business to instantly be making it rain. However, you need to justify your writes offs that this is actually a business and not a hobby. Photography being consistently 1% of your yearly income year after year will definitely be viewed poorly.

I don't know the "cut-off" for this.

Thanks. Yeah as best I can tell, the problem seems to be two-fold, and I don't want to get in any trouble which is why I am seeking the proper advice.

1) A business like this requires significant one-time investment necessary to do a proper job (computer, camera gear, car to get around, etc.) Obviously you aren't buying those new every year, but maybe every 5 years.

2) You can't run the business without the above mentioned things, but you also have no idea how successful the business will be. Maybe it becomes really profitable, maybe it fizzles out after a few years.

So how do you approach that and still stay above-bar? If I buy things necessary for the business, obviously I want to write them off or depreciate them or whatever, but if the business doesn't do as well as planned after several years, of course I will still own all those items at the end of the day, so how does the CRA deal with that? The items would eventually be paid off with business proceeds, but as to how long that will take there would be no way for anyone to ever know that up front.

[chkolny541]

lol this is sounding less and less like a legitimate business and more and more like a casual photographer who wants to try and expense his hobby off. If you really are trying to seek the proper advice as you mention you should be asking more questions to a legitimate accountant and less to a public car forum. If you want the CORRECT advice you gotta pay to play.

[Mitsu3000gt]

Originally posted by chkolny541
lol this is sounding less and less like a legitimate business and more and more like a casual photographer who wants to try and expense his hobby off. If you really are trying to seek the proper advice as you mention you should be asking more questions to a legitimate accountant and less to a public car forum. If you want the CORRECT advice you gotta pay to play.

Not at all like that (hence why I am putting in any effort necessary to do things properly and legally), and yes I have already initiated contact with an actual accountant. The intention of the thread was just to ask for contacts, but obviously was bound to stir up some discussion. Thanks.

[ExtraSlow]

Paul Hoglin at CHH has been really helpful for me.

[Mitsu3000gt]

Thanks guys, I think I've got a good start with some contacts

[yipb]

Originally posted by Mitsu3000gt


Good info, thanks.

Can that apply to things I already own that are now used for my business but weren't previously, or only on brand new items I buy specifically for my business?

Maybe you could "sell" the items to your business and use that as the cost base?

[Twin_Cam_Turbo]

I have a question, as a Sole Proprietor do I get taxed on everything I make in a year or just whatever I withdraw from my business account? I assume it's everything I earn in a year? I've basically just been withdrawing a set amount minus XX% which I leave in my business account and plan to use for taxes.

I have no experience with this and haven't found much help on google.

[msommers]

TCT, are you a SP with a business account or Incorporated?

[HiTempguy1]

Originally posted by Twin_Cam_Turbo
I have a question, as a Sole Proprietor do I get taxed on everything I make in a year or just whatever I withdraw from my business account?

If you are a sole prop, you pay your personal tax rate on your profits (ie income earned).

http://canadabusiness.ca/starting/be...roprietorship/

I don't know what MS means by "with a business account or incorporated". Sole props aren't incorporated, hence unlimited liability. What account you have with the bank means nothing. It matters how much money you have earned (net profit) at the end of the year.

Maybe I am misunderstanding MS? But regardless, if you are sole prop, you pay tax on whatever net income you earned (net income, the way I am using it, meaning after writeoffs and expenses).

[ExtraSlow]

Yeah, when you are an SP, you as a person "earn" every dollar in revenue at the exact moment that your company receives it. You can't shelter it or delay it within the company bank account. Basically, the company isn't a separate entity.

That's one big advantage of an incorporated business, you can choose to defer money inside the business and only pay yourself when you choose. I have a buddy who used to pay himself $40k/yr for several years, and then basically didn't work for two years in a row, but he could continue to pay himself. Doesn't work for everyone, but it's nice flexibility.

[msommers]

^Yep exactly.

TCT, what you were describing is what you'd do if you were incorporated. The business account has no bearing on being tax sheltered or not - this is where I was seeking clarification.

As an SP, regardless of where the money is held/deposited, it gets taxed completely as personal income (just like your regular job).

Being incorporated, you can pay yourself personal income of your choosing, to a reasonable degree, which gets included in your overall personal income for the year. However, if there is money left in the account, this gets taxed at the business rate (14% IIRC). This is why people prefer to leave money in there over time, provided them give themselves enough money to live off of for the year!

[Twin_Cam_Turbo]

Originally posted by HiTempguy1


If you are a sole prop, you pay your personal tax rate on your profits (ie income earned).

http://canadabusiness.ca/starting/be...roprietorship/

I don't know what MS means by "with a business account or incorporated". Sole props aren't incorporated, hence unlimited liability. What account you have with the bank means nothing. It matters how much money you have earned (net profit) at the end of the year.

Maybe I am misunderstanding MS? But regardless, if you are sole prop, you pay tax on whatever net income you earned (net income, the way I am using it, meaning after writeoffs and expenses).

That's what I thought made sense, thanks!

I don't have a lot of expenses, less than $2k I'd say to write off.

[TimG]

I was just about to post a similar question in another thread - good thing i searched first

i'm also thinking of taking my hobby business from hobby to legit as it's starting to pick up more than i expected.

My main questions for you guys who might have gone thru this are:

1) my hobby would be considered "light manufacturing." the lightest of the light. personally i don't even think it should be considered this, but that's the closest option on the city web site. What is it like to get your residential property rezoned for something like this? should this be step 1 before anything else happens?

2) i use part of my basement and garage for this. How does it work for claiming a portion of the house/mortgage for the business?

3) is it better to be in a SP or incorporate? i think liability is very small. if you incorporate do you need to set up independent bank accounts, etc?

4) if you're only making around 10k or less per year, is it worth all the headaches?