Corporate tax accountant for Maple Ridge corporations

The compensation decision sets the return

A one-owner Maple Ridge corporation — a trades company, small services firm or home-office consultancy — usually has one large discretionary number: what the owner takes out. Salary is deductible to the corporation and employment income to the owner. Dividends are not deductible and are taxed differently. The corporate return changes with a decision often made informally and justified afterwards. Making it deliberately, before year-end, is planning rather than reporting. Salary versus dividends works through the comparison.

What salary buys and what it costs

Salary creates RRSP room and Canada Pension Plan contributions, and earned income that supports personal borrowing. It also requires a payroll account, source deductions remitted on schedule and T4 reporting, and brings in the BC employer health tax once BC remuneration passes the threshold. Dividends avoid that administration and the CPP cost, and the benefits with it. Neither is always right; it is a corporate tax question because taxable income moves with it.

The shareholder account nobody reconciles

The most common defect in an owner-managed file is a shareholder loan account used as a dumping ground: personal card purchases, cash taken, a vehicle payment, a double reimbursement. Under subsection 15(2) of the Income Tax Act, an owner’s loan must generally be repaid within one year after the end of the taxation year it arose in, or the balance is added to personal income. Shareholder loans sets out the rule and the ways around it.

The truck the company bought

A corporate vehicle used personally creates a taxable benefit, often costlier than owners expect. Owning the vehicle personally and having the corporation reimburse business kilometres at a per-kilometre rate is often simpler and cheaper for a work vehicle with real personal use. Either way, the evidence is a mileage log kept during the year. Vehicle deductions covers both routes and what to record.

Paying a spouse who actually works

Paying a family member is legitimate where the work is real and the amount reasonable. It is also a frequently reviewed deduction, and the defence is documentary: a record of hours or duties, a payment that actually moved, and matching payroll reporting. Dividends to family shareholders are different: the tax on split income can apply the top marginal rate unless an exception is met. Paying a spouse a salary covers what has to be true.

The home office and the corporation

A Maple Ridge owner cannot deduct part of the house in the corporation, which neither owns nor rents it. The options are reimbursing a calculated share of actual costs, or renting to the corporation and reporting the income personally, both set up on purpose. BC’s combined rates of 11% and 27% apply to what remains. Home office through a corporation covers the options.

How the engagement runs

EverStone is a fully virtual, one-CPA firm with no Maple Ridge office. The work runs remotely: secure upload, a video call on the pay decision before year-end, e-signature and electronic filing. The CPA weighing salary against dividends prepares both the corporate and personal returns, so they are decided together.

The pay decision at year end needs a profit figure to aim at, and a budget built from the operations supplies it long before December.

If personal tax in Maple Ridge and trades accounting in Maple Ridge is the more pressing job, start there instead.

Businesses that also want monthly books for Maple Ridge businesses and getting the Maple Ridge returns filed can have both quoted together.