As tax time is here I have been thinking about my method of accounting. I am very organized, and keep EVERYTHING but I know there is room for improvement. Things are getting a bit more complicated now that I have a sole proprietorship, a partnership and income from my part-time work as a fitness instructor. I am often tempted to hire a book-keeper or accountant - but that costs money! Besides, I like to learn new things and I want to understand it all, despite the elevated stress levels that comes with it!
One of the things I am doing to make things easier for myself – and for our Cent$ible Students business - is to switch to the Quick Method of Accounting. I always assume these tasks are complicated. But guess what! It was a simple one-page form that I filled out and mailed to the Tax Services Office. I could have also have done this online, but that would have meant looking up my tax information from my 2011 return as this information was necessary to register for an online account. Do I know where this is? Yes of course! However sometimes I like the old paper method as I can keep a copy in my files and take a quick walk to the mailbox for some fresh air. For those that want to do this online, here is the link:
Result – Savings?
Do I know how much money this will save me this year?
Since I don’t know how much I will earn this year, I cannot calculate the actual savings. Ultimately I will not have to remit the full amount of HST I collect using this method. Instead of paying the full 13% I only have to pay 7.8% on the first $30,000 of income and 8.8% on income above that amount. So, if I made $30,000 then I would pay $2,340 instead of $4,500! That is a savings of $2,160!
So, I will be a little smarter, AND richer next year!
For a copy of the Quick Method of Accounting guide, click here!