One of the greatest myths in the small business community is that a CA or large accounting firm must complete your Corporate Tax Return and Financial Statements each year; nothing could be further from the truth!
Why spend your hard earned dollars unnecessarily? Why rely on an individual that considers themselves to be a bookkeeper because they know how to use an accounting software application, when you can trust your books and financial information to a Professional with the education and skills necessary to help you succeed?
At Ledgers Canada, we provide our Network Members with the tools and training to assist you in making your business better. A Ledgers Professional has the training, skills, support and infrastructure to complete your financial statements and tax returns professionally and in a timely manner, usually at a FRACTION of the cost of the large firms.
Personal Services Corporations - Look out for CRA!
Firstly, we should define a Personal Services Corporation:
Under CRA’s rules, your Corporation would be considered a Personal Services Corporation if you provide services on behalf of your Corporation to another Company and you would reasonably be considered an employee or officer of the company to which you provide the services.
A Personal Services Business is not eligible for the small business tax deduction (lower tax rate on the first $500,000 in earnings) and the expenses that can be claimed for tax purposes are severely restricted.
If your Corporation however employs more than five full-time employees or it provides services to an associated Corporation, it will generally not be considered a Personal Services Corporation.
These rules were introduced to prevent employees from terminating their employment with a company and then working for that same company through their own corporation to obtain tax advantages.
Now, the Government has approved legislation that is virtually going to eliminate the advantages associated with this type of Corporation.
Effective with tax years beginning after October 31st, 2011 income from Personal Services Corporations will be taxed at a Federal Rate of 28% (up from 15%) plus the applicable Provincial Tax Rate. If for example your year-end is December 31st, this tax hike applies to your year that ended on December 31st, 2012.