EI for the self-employed

“I am thinking about applying for EI. How will they calculate how much I have to pay?”

-Kyla Hubbard, Cyclona Designs, Victoria, B.C.

Your EI premiums will be calculated based on your income tax and benefit return for the year in which you apply. For example, if you register in 2012 , your EI premiums will be calculated based on your 2012 income tax and benefit return and will be payable by April 30, 2013.

Regardless of when you register during a given year, EI premiums are payable based on your self-employed income for the entire year. See calculation of premiums page for more information.

See my blog post on EI for the self-employed for more information.

 

 

What’s in a name? (And what to do when I choose one?)

Naming your business can be as time consuming as naming a child. You want to find the right moniker, something that communicates the essential nature of your business, and something that will stand the test of time. You want a name that is both unique and memorable, something that sounds, well, right. And you need to find a handle that no one else is using.

Firstly, think about what you want your business to be. You may want to look for a name that suggests the nature of your business, or the location. But try not to be too limiting. You want to have the opportunity for your business to grow and adapt without having to change your name.

If you are a writer, artist or a bookkeeper, for example, something where your business is you, you may want to do business under your own name. (NB. If your legal business name is your own name, you do not need to register your business.)

When you have an idea, do a quick internet search to find out if any other businesses are using that name. I suggest starting with a domain name search. Ideally you want to get the domain name for your exact business name. Even if you don’t plan to set up a website right away, once you have settled on a business name, buy the domain name.
I also recommend doing some market-testing with your name. Ask as many people as you can what they think of your name. Do they find it memorable? What kind of impression does it give them of your business? For me, this was the most valuable part of the process of choosing ,my business name.
If you are a sole-proprietorship you do not necessarily need to register your name, though you will want to if you plan to get loans, open business bank accounts or to incorporate in the future.

To register your business, you first need to get your name approved by  B.C. Registry Services. They will check your proposed name against the list of BC registered corporations to make sure your name is unique. However, they do not check against other proprietorship or partnership names, so that initial Google search can be helpful to find out if anyone else is using the name you want.

Once  your business name has been approved, you have 56  days to register your business name.

As a sole proprietorship or partnership you can register online at the OneStop Business Registry in person at Small Business BC or by mail to the B.C. Corporate Registry.

In most municipalities in BC, you also need to register for a local business licence. Contact your city hall to find out which permits you require

Depending in the nature of your business, there may be additional licensing or other requirements. Be sure to confirm your obligations with local, provincial and federal authorities.

Preparing to file your taxes?

I know tax talk is not everyone’s cup of tea, but in my experience, having a simple checklist can really help alleviate that overwhelming feeling of burdensome bureaucracy. So whether you are filing your own taxes or are having someone else do them for you here’s a list of what you need to put together:

a) personal details: name, address, sin, date of birth and marital status (name and sin of partner if common-law or married)
b) all income information including:
T4, Statement of Remuneration Paid
T4A, Statement of Pension, Retirement, Annuity, and Other Income
T4A(OAS), Statement of Old Age Security
T4A(P), Statement of Canada Pension Plan Benefits
T4E, Statement of Employment Insurance and Other Benefits
T4RSP, Statement of RRSP Income
T5007, Statement of Benefits
RC62, Universal Child Care Benefit statement
RC210, Working Income Tax Benefit Advance Payments Statement

c) information about dependents – ages, plus any eligible expenses including childcare, arts and sports expenses

d) any student loan payments (you should receive a statement which details how much interest and principal were paid off over the year.)

e) Your Notice of Assessment from your most recent tax return

f) Details about any RRSP contributions made

g) If you want to file your taxes online (by far the quickest, easiest and even the cheapest option), you need your NETFILE access code, which should be sent to you by mail.

NB. VERY IMPORTANT. To use NETFILE CRA must have your current address. If you have a different one than the one they have on file, you must first contact them to update your address. If you are not sure which one they have, call the NETFILE Help Desk: 1-800-714-7257.

Subcontractors

“If you contract to another business, how do you deal with that on your taxes?”

– Mat Davy, Smiling Dog Gardening and Landscaping, Victoria, B.C.

If you subcontract to another business, and you bill the client for the work they do, this is still part of your income. Make sure you have that subcontractor invoice you so you have the paperwork you need to claim their fees as an expense. If you are working in the trades, discuss who will pay the subcontractor’s WorksafeBC coverage. If they do not have a clearance letter showing that their account is up to date, you must pay for their WorksafeBC coverage.

WordPress on Visually Branding your Blog

Here is some advice from WordPress on how to improve the look and impact of your blog. I feel a bit self-conscious posting this as I have paid very little attention to how it looks. I still do not even have the fonts I want. But it is good solid advice so I thought I would pass it on.

http://dailypost.wordpress.com/2013/01/30/visualbranding/

Choosing an Accountant

Whether you do your own bookkeeping, or enlist the help of an administrative assistant or bookkeeper, as your business grows, you may decide to hire an accountant.

Accountants can help with more complex financial issues such as long-term tax planning, business planning or deciding whether or not to incorporate. Many business owners prefer the security of having a designated accountant file their year-end tax returns.

Choosing an accountant is an important decision. Here are some pointers to help you choose who to work with.

The big picture

First off, decide what you need. Do you want to go with a big firm, or do you prefer the feel of a small one? Do you need monthly or quarterly bookkeeping, or just year-end services? Do you need financial planning support?

Ask around

Ask other business owners who they recommend. Bookkeepers often can make solid recommendations as we tend to work with various accountants.

Interview prospects

Don’t just take other people’s word for it. Meet potential accountants in person to discuss what they offer and what you need. Don’t be shy to interview a few different candidates. It is a personal relationship and you need to be sure you can communicate clearly with your accountant.

Be prepared

When you meet an accountant, have a list of questions prepared.

Ask about his/her education.

How much do they charge?

What is his/her experience with your type of business?

What type of software are they using?

How often do they usually meet with their clients?

Being clear about your expectations will help you both decide if you will work well together.

Best of luck!

Employment insurance for the self-employed

I was asked recently about claiming Employment Insurance (EI)benefits as a self-employed person. Here are the basics of what I understand about how to apply, how much you will have to pay and under what conditions you can claim benefits.

Since January 2011 in BC, self-employed people can access EI special benefits. These special benefits are described as maternity benefits, parental benefits, sickness benefits and compassionate care benefits.

How to apply?

In order to be eligible for EI benefits as a self-employed person, you first have to register with the Canada Employment Insurance Commission, applying online with a My Service Canada Account. Then you must wait 12 months.

NB. There are some people who are not eligible to apply for these benefits, so contact Service Canada to confirm eligibility.

 How much will you pay?

Your EI premiums will be calculated based on your income tax and benefit return for the year in which you apply. For example, if you register in 2012 , your EI premiums will be calculated based on your 2012 income tax and benefit return and will be payable by April 30, 2013.

Regardless of when you register during a given year, EI premiums are payable based on your self-employed income for the entire year. See calculation of premiums page for more information.

How can you claim?

(From the Service Canada website ) After 12 months a self-employed person can claim these special benefits if:

You have reduced the amount of time devoted to your business by more than 40% because:

    • your child was born,
    • you are caring for your newborn or adopted child or children,
    • you are ill, injured, or in quarantine, or
    • you need to provide care or support to a gravely ill family member.

AND you have earned a minimum amount of self-employed earnings during the calendar year preceding the year you submit a claim. This amount may change from year to year. If you want to apply for benefits in 2012, for example, you would need to earn at least $6,222 in 2011.

AND

  • for compassionate care benefit claims – you have provided medical proof showing that a gravely ill family member who is at risk of dying within 26 weeks needs your care or support,
  • for EI sickness claims – you have provided a medical certificate as proof that you are unable to work because of illness, injury, or quarantine,
  • for EI maternity or parental benefit claims – you have provided the expected date of birth of the child and the actual birth date once it has occurred, or the official placement date in the case of adoption.

If you are self-employed and an insured employee, you can choose whether to apply for EI special benefits either as a self-employed person or as an employee. See amount of weekly benefits page for more information.

Welcome to Bird’s Eye View

 

Welcome to Bird’s Eye View, the blog for Bird’s Eye Bookkeeping in Victoria, B.C.

I am a self-employed bookkeeper and freelance writer passionate about supporting the growth of local small businesses.

The other day, in celebration of BDC Small Business Week (October 16-22, 2012), I started making a list on Facebook of everyone I knew of who was self-employed. As I began typing names, I was astounded by how long the list grew. I started with the small business owners I work with or patronize, but as I looked over my friends list, I realized how many people work as independent subcontractors in the trades, or as artists, performers and musicians. Some people run a small business on the side of regular employment, others are successfully working full time at their business. Some are struggling financially, others have found their groove. All of them inspire me to continue along the challenging but rewarding path of self-employment.

As a small business owner myself, I learn daily from the successes and challenges met by my clients, friends and community members who run their own businesses. I hope to share some of this inspiration, as well as to provide some bookkeeping tips along the way.

I will also be profiling local business owners and inviting them to share some of the lessons they have learned on their roads to financial self-sufficiency.

Now I best get back to work.