1. Accounting for Start-ups
Presented by: Julia A Lee CPA, CA
Gordon B Lee & Company CPAs

2. Agenda Sole proprietorship vs Corporation Eligible business expenses
Log book
Online sales
GST/HST requirements
Sub contractor vs employee
Hiring employees

3. Sole Proprietor vs Corporation
Report income and expenses on personal return
Register the name of business
Personally liability
Less compliance cost
Easy to set up and close
Separate legal entity
Corporate veil?
Use a lawyer or do it yourself
Select an accountant
Annual tax returns
Financial statements

4. Income and Revenue Sales – when is it a sale
Service is complete
Manufacturing – shipped to customer
Money you receive for service or goods

5. Business Expenses

6. Eligible Business Expenses
Advertising and promotions – include networking fees
Meals and entertainment – clients/customers (50% deductible)
Insurance
Bank charges
Interest expense on bank loans or line of credits
Office expenses - supplies
Professional fees – legal and accounting
Motor vehicle expenses( fuel, interest, insurance, maintenance and repairs, license) refer to Log Book
Repairs and maintenance to your office
Travel expenses
Home office expenses (heat, electricity, insurance, maintenance, mortgage interest, property taxes)* area for business use/ percentage
Sub contractors and employees wages

7. Log Book
Require to determine the percentage of your vehicle that is used for business use.
Odometer reading at beginning of year
Make down every business related trip in the log book – total km’s of the trip, date and reason for the trip.
Odometer reading at end of year
Log Book can be a physical book or an app

8. Log Book
Log book app should only be used if it is Printable

9. Car expense - example Total Gas = $2,000 Car Insurance = $1,200
R&M =$1,000
Total car expenses for year =$4,200
Odometer reading beginning of year 5,000km
Odometer reading end of year 20,000km
Total Kms for business trips = 6,000km
% of expenses for business = 40%
Total business car exp = $1,680

10. Online sales
Registrants who has physical presence in one province and sells goods to consumer in other province
Charge GST/HST based on the where the goods are delivered
Example:
Ontario service provider providing services to consumer in Newfoundland required to collect HST at rate of 15%
Shipping to USA – Contact Cross Border Professional ASAP
Wayfair/Shopify
Over 10,000 tax districts

12. Introduction What is GST/HST (13%): Goods and services tax
Harmonized sales tax
Taxable supplies:
Most goods and service supplied in or imported into Canada are subject to GST/HST
Zero rated supplies (0%) GST/HST is not charged
Groceries, agricultural products, livestock, most fishery products, prescription drugs, hygiene products

13. Sales tax rates by province
Type
PST
GST
HST
Total tax rate
Alberta 5%
British Columbia
GST+PST 7%
12%
Manitoba
New Brunswick
15%
Newfoundland and Labrador
Northwest Territories
Nova Scotia
Nunavut
Ontario
13%
Prince Edward Island
Quebec
GST+QST
9.975%
14.975%
Saskatchewan 6%
11%
Yukon

14. Registration for GST/HST
You have to register if:
Sales over $30,000 – have to start charging GST/HST
Taxable goods and services in Canada
Effective date of registration is the day of supplies go over the threshold amount (within 29 days from that day)
As a registrant you can claim Input tax credit (ITCs)
GST/HST paid or payable on the purchases and operating expenses related to your business activity
Small supplier – refers to a person whose revenue (along with the revenue of all persons associated with that person) from worldwide taxable supplies was equal to or less than $30,000 ($50,000 for public service bodies) in a calendar quarter and over the last four consecutive calendar quarters.

15. Reporting periods Threshold amounts Assigned reporting period
Optional reporting period
$1,500,000 or less
Annual
Monthly, Quarterly
More than $1,500,000 up to $6,000,000
Quarterly
Monthly
More than $6,000,000
Nil
GST/HST return is due Canada Revenue Agency – best to file online

16. Sub contractor vs Employee

17. Factors to determine Control Tools and equipment Financial Risk
Hours worked
Enter in contracts/sales
Pay suppliers
Independent
Tools and equipment
Ownership
Requirement for up keep of tools and equipment
Financial Risk
Investment responsibility
Opportunity for profits

18. Employees

19. Hiring Employees Employee’s Social Insurance Number (SIN)
Name, address , date of birth
Complete TD1 forms for Federal and ON taxes
Job description
Have Employee filled out required forms – ex confidently, understanding your business policies and procedures – ex phone use
Payroll deductions requirements
Remit/submit money to CRA by the 14th of preceding month
CRA – payment online
Personal files/information
locked up or password protected

20. Thank You!