You have an online business and it is finally beginning to show a return for you. What you need to realize is that even though you are only operating online, it is still considered a business by the CRA. This means you are responsible for tax filings for this entity. It may be based on a self-employed service, a sole or partnership, or even a corporation.
In every one of these cases if your online presence is generating money then you should be using the services of a small business accountant. Don’t just wait until your online company is generating money to do this either. The moment your website is up and running then you are in business and you need to have your accounting methods in place.
At first just like any business you will be operating at a loss for a short time. You will have your start up costs, plus your ongoing expenses that you will need to keep track of. This means you need a proper bookkeeping system set in place. If your business entity is small you can use a simple spreadsheet to track all of your business dealings. Then at year end you can have your small business accountant prepare your year end statements and complete your tax filings.
By being organized with your accounting right from the beginning you are going to be sure to keep track of all of the expenses you have incurred. Quite often the expenses are incurred online. You may be ordering software, or spending money on web design and set up. These are usually paid for online, so you may forget to track them.
Take the time to set up the proper business accounts online if this is the way that you are making any purchases related to your business.
A lot of businesses are now dealing through paypal. If so then make sure you set up a business account with them. You should have a separate business account, and even a business credit card that you can use through online payment platforms. This helps to keep your personal financials separate from your businesses finances, which makes it much more appropriate for accounting purposes.
Be sure to speak with your accountant as soon as you decide to launch your online business. It helps to be really organized right from the start. Many online businesses are operated from home, and it is easy to become a little lazy when it comes to the business approach. Also, many online business owners are new to business and don’t have a full comprehension as to what it takes to run a business in regards to the administrative and tax obligations, and this is where a quality accountant can really help.
