There are really very little bookkeeping differences between a sole proprietorship and a corporation.
The focus of the sole proprietorship is mainly on the income statement and may not even have a balance sheet.
The entire net income of the sole proprietorship is taken into the income of the owner and tax is paid at the 辞飞苍别谤香蕉视频直播檚 marginal tax rate so the focus is to reduce taxable income.
When you have a corporation, it is like you have created another separate person because a corporation has 颈迟香蕉视频直播檚 own tax rate and own tax credits.
滨迟香蕉视频直播檚 when money is taken out of the corporation and paid back to the owners either by way of salary or dividends that the tax is paid by the owners.
The focus is on minimizing taxes while at the same time putting as much money in the 辞飞苍别谤蝉香蕉视频直播� pockets as possible.
Revenue and expenses in a sole proprietorship are recorded on a calendar year basis, while in a corporation you can choose a fiscal period.
Many sole proprietors pay their personal expenses out of their business bank account because that is the one that has the money and then it becomes the job of the bookkeeper/accountant to separate the two when it comes time to file taxes.
If you are running your sole proprietorship or your corporation from home you do have the ability to allocate some of your household expenses toward your business, but CRA has very specific rules on how this should be accomplished.
Assets can either be owned by a corporation or by an individual, but if you are a shareholder and are using assets owned by a corporation, then there is a benefit to you and a value of that benefit needs to be calculated and included in your tax return by way of a T4, T4A or a T5.
Depending on the kind of asset, It is often better to have the asset owned by the individual and then the corporation can reimburse the individual for the business use of the asset.
The main difference between the 2 business structures shows up in the balance sheet in the liabilities and equity section.
With a sole proprietorship, the 辞飞苍别谤香蕉视频直播檚 investment into the business is called the 香蕉视频直播榗辞苍迟谤颈产耻迟颈辞苍香蕉视频直播� and if there are funds withdrawn from the business for personal expenses, that becomes 香蕉视频直播榙谤补飞颈苍驳蝉.香蕉视频直播�
In a corporation, the 辞飞苍别谤香蕉视频直播檚 investment is called a 蝉丑补谤别丑辞濒诲别谤香蕉视频直播檚 loan which can be classified as short term if the loan is repayable within the current fiscal period, or long-term if the loan is required to stay on the books for some time.
The equity section also shows the classes of shares and the income that has been retained in the business from year to year.
Many people with a corporation choose to use personal credit cards to help pay the expenses because a personal card is much easier to get.
But the payment of the credit card fees would be considered a personal expense which could become problematic.
