Taxes Plus Expanding the Business

[ronaldk]

I have 4 properties under my business name.2 is making + cash flow and two is - . Overall its a positive cash flow.I havent made tax returns on the business name and i made it under my personal income as I have a full time job. Should I continue under my personal name or just doing income taxes under my business name as it is Incorporated.It is just a holding company and I am at present not doing any real estate transaction (no buying or no selling.)What are some expenses that is allowed to reduce the income made in business. How can I expand my business?

Any personal individual that could help me, would be appreciated.

Thx.

 

[Thomas Beyer]

I suggest you file taxes for the corporation ASAP.



if the corporation owns s.th. or has income (or a loss) you MUST file taxes annually, by end of June for the previous tax year ! get on it .. PRONTO.



The corporation is a different legal entity. Thus, it files in addition to you as a person !



It is different is you have a sole proprietorship where you co-mingle business and employment income for an annual personal income tax filing.



You do not pay any taxes on rental income usually, as you can deduct depreciation (or CCA, capital cost allowance, up to 4% of house value excl. land annually) - in either corporation or personally.



You pay taxes on sale .. called re-capture - on this portion of earlier tax savings !

 

[ronaldk]

Hi,

So if I do not show depreciation on the Return, would I have to pay anything when I sell the property?



Does capital gain and depreciation related in anyway?



Thank you.

 

[moparcanuck]

Thomas is correct. If there is a corporation, you do have to file a seperate tax return (T2) from your individual tax return. The due date is 6 months after your year end (a corp can choose any year end it wants). However, do keep in mind that any tax owing is due 2 months after the year end, otherwise you will start accruing interest on the balance due (however, as mentioned, there is rarely any income in an investment corp as deductions will usually bring it down to zero, or the owner will bonus it out to themselves due to the high tax paid on investment income in a corp).



As far as the CCA/depreciation question, there's a decent thread already going on that here.



Have a good one.

 

[ronaldk]

Hi,

I was woundering ,around how much should a accountant charge for doing taxes for a incorporation for a year provided the business is just a holding company for just 4 residential rental properties.I would provide with updated Income Statement.Or do investors consider doing it themselves?

Thank you.

 

[Thomas Beyer]

[quote user=ronaldk]how much should a accountant charge for doing taxes for a incorporation for a year


maybe $1500 to max. $2000 assuming the statements from property manager are clean and you provide all the corporation's bank statements and offers to purchase (OTPs) when you bought properties. Perhaps a bit higher year 1 due to reading OTPs .. less in year 2 and beyond (maybe 30-50% less)

 

[moparcanuck]

[quote user=ronaldk]Hi,

I was woundering ,around how much should a accountant charge for doing taxes for a incorporation for a year provided the business is just a holding company for just 4 residential rental properties.I would provide with updated Income Statement.Or do investors consider doing it themselves?

Thank you.




Most accountants will charge at least $1500 to prepare the financial statements and tax return for the corporation. From there, it pretty much goes up depending on how much work they have to do (ie, if you have poor records and they have to do a bunch of bookkeeping, it's going to come out of your pocket).