FAQs | Timmons Dykstra CPA

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How to Register for CRA’s My Business Account

https://www.canada.ca/en/revenue-agency/services/e-services/digital-services-businesses/business-account/about-business-account.html

If you sign-in via a partner, use your personal, not business, bank card.

Once registered, you can authorize our firm to access this account:

Select Profile > Authorize Profile > Authorize Representative > Authorize a Representative

RepID, GroupID: BN enter business number: 863683538 (Timmons Dykstra)

Level = 2

Online = Yes

No expiry

Salary vs Dividends

Companies have the option of paying their shareholders a salary, a dividend or a combination of both.

The shareholder pays all the income tax on a salary. If a dividend is paid, some of the tax is paid by the company and some by the shareholder. In theory, the total tax paid under either option is supposed to be the same. In practice, however, dividends sometimes have a lower tax rate.

If a salary is paid, source deductions (CPP & income tax) must be remitted to CRA monthly. As there are significant penalties if a payment is late, we recommend using a payroll service.

A salary increases your RRSP room.

A salary entitles you to future Canada Pension Plan (CPP) benefits (at a cost up to $8,111 per year).

A salary reduces the company’s income tax instalments, as a salary is an expense deductible by the company.

A salary reduces personal income tax instalments, as tax deductions are remitted monthly.

CRA Audits

When CRA audits a business, they have the right to request business and personal bank statements going back several years.

They will also disallow expenses if the supporting documentation is not provided.

Here is a list of what you need to keep. We recommend saving these documents on your computer in PDF format.

Business bank statements
Personal bank statements
Credit card statements and supporting receipts
Supporting documents for expenses (supplier invoices / emails)
Investment statements
Payroll registers

Medical Expenses

You may be able to reduce your medical costs by setting up a medical benefits plan. If you meet the conditions below, your company can reimburse you for 100% of your medical expenses (including drugs, dental, glasses, therapy). This process turns a personal medical expense into a company expense. You pay the expense and submit a claim online. The funds are withdrawn from the company and deposited into your personal bank account.

Conditions:

You own a corporation
You receive a salary from your corporation
Your family medical expenses are usually over $1,000 per year
You or your spouse do not belong to a group plan
You have no employees (except family members)

Olympia Benefits Inc has set up a plan that is popular with small business owners.

Here is a link to additional information: http://www.olympiabenefits.com/health-and-dental-plans-for-small-business

We recommend the Olympia HSA “Plus” plan.