Starting home business – important things to know

Nowadays it’s becoming more and more popular to carry on business without creating a corporation.

But what are the advantages and disadvantages of these types of business?

The main distinction between The Corporation and your own business (Sole Proprietorship) is that Corporation is legally separated from you and although you control it you don’t owe the business. This means that you aren’t liable for the corporation’s debts.  But keep in mind, that you, as a director are liable for example, for remitting GST/HST or employee source deductions.

There are no legal requirements for running home business. You only must register for GST/HST account if your sales exceed $30,000 per year and charge your customers with GST/HST. There are different methods of filing GST which can be even bring you little money.

When you run sole proprietorship you will have to report your income on your tax return as “Business income”. It is calculated as Total sales-Business expenses. Business expenses are the expenses of carrying on your business. As an example can be automobile expenses, meals and entertainment, telephone expenses, etc.

Today we have discussed just some of the issues about sole proprietorship. Certainly there are many other different questions which you might have. In this case you can ask for advice from professional Accountants.