Small Business Magazine
Trade or Business:
A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. The regularity of activities and transactions and the production of income are important elements. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need, however, to make ongoing efforts to further the interests of your business.
Part-time Business
You do not have to carry on regular full-time business activities to be self-employed. Having a part-time business in addition to your regular job or business also may be self-employment.
Example: You are employed full time as an engineer at the local plant. You fix televisions and radios during the weekends. You have your own shop, equipment, and tools. You get your customers from advertising and word-of-mouth. You are self-employed as the owner of a part-time repair shop.
Below is following issue about small business Applying
Sales tax
Applying Provincial Sales Tax is necessary for a number of business transactions. You must register with the Consumer Taxation Branch, Ministry of Provincial Revenue, and collect social service tax (retail sales tax) on your taxable sales and leases if you engage in any of the following activities:
• Selling goods at retail.
• Leasing goods as a lessor.
• Providing legal services.
• Selling parking rights within the Vancouver Regional Transit Service Area.
• Providing taxable services (e.g. repairs to goods).
• Providing telecommunications services.
• Business Registration Number
The Business Number is a numbering system that identifies you and the various accounts you maintain. You receive a BN, when you open one or more of Canada Revenue Agency's four major business accounts. The four accounts are:
Corporate income tax
Import/export
Payroll deductions
Goods and Services Tax (GST)
You must register for GST as an individual, a business or an organization operating in Canada with worldwide annual revenues from taxable supplies of goods and services over $30,000. You must register for GST if you are a taxi or limousine operator.
If your annual GST-taxable sales and revenues are under $30,000, you are not required to register, but may register voluntarily as long as you are carrying on a commercial activity.
Business Records
If you are operating a business or have a self-employment income, you must set up an orderly record and accounting system as required under the appropriate laws. We recommend that you contact the nearest office for relevant forms, information on expense deductions, interpretation bulletins and income tax return forms. We also recommend securing the services of a qualified accountant.
Income Tax
Income Tax is an important consideration for every entrepreneur to understand. The difference between understanding and complying with the Income Tax Act as a small business owner or not could put your business in jeopardy. While the information contained herein is an excellent starting point, we advise that you seek the advice of an accountant and lawyer for a professional perspective.
Reasonable Expectation of Profit
If your business is operating under a sole proprietorship or a partnership, it is subjected to a test of reasonable expectation of profit (REOP) review. A REOP review involves examining the various factors of your business to determine if there exists a reasonable expectation of profit, and thus the existence of a business, for income tax purposes.
While this is not a complete list, some of the factors that the Canada Revenue Agency has used to evaluate REOP are:
• Profit and Loss experience in past years
• Significance and growth of gross revenues
• Development of the operation to date
• Planned or intended course of action
• Time spent on the activity in question
• Education, background and experience
• Extent of activity in relation to that of businesses of a comparable size
Expense Deductions
As a rule, you can deduct any reasonable expense you incur to earn business income. The expenses you can deduct include any goods and services tax (GST) you incur on these expenses unless you claim an input tax credit on these expenses. Therefore, enter only the business portion of expenses on the form. Please note that you cannot claim expenses you incur to buy capital property.
Deductions might include:
• Advertising
• Bad debts
• Delivery, freight and express costs
• Fuel costs
• Insurance
• Interest on money borrowed to run your business
Maintenance and repairs
• Management and administration fees
• Meals and entertainment (50% of the amount you incur, or an amount that is reasonable in the circumstances, whichever is less)
• Motor vehicle expenses (including license and registration fees, fuel costs, insurance, interest, maintenance and repairs and leasing costs)
• Telephone and utilities
• Disability related modifications, devices and equipment
• Expenses for disability-specific computer software and hardware attachments
• Computer leasing costs
• Other leasing costs
• Small tools (i.e. less than $200 cost per tool)
• Convention expenses (maximum two conventions a year)
• Capital cost allowance
• Allowance on eligible capital property (e.g. goodwill, franchise)
• Business use of home expenses
• Commercial loans
Have you thought about obtaining a commercial/business loan Going into business for yourself does require a certain amount of capital, and for some, which means taking out a business or commercial loan to fund your new enterprise.
Commercial loans are given for the express purpose of operating your business and they are a viable source of startup revenue for many people.
Business Management
One of the problems of running a small business is that the small business owner gets to do everything himself at least until he can afford to hire other people. Business management can be a particularly thorny area for people who dont have any management experience and/or aren't familiar with management basics.
Managing the vision means having long-range goals and objectives for your company and then planning how to achieve those goals. What do you want your small business to look like next year, three years, and five years down the road. The importance of encouraging small and medium-sized enterprises to improve their environmental performance is now well recognized.
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