Hello CD's,
I recently Incorporated my business and have couple of questions.
I really appriciate your help if someone can answer these.

1) How do I withdraw money from my business account.Is there any set procedure to follow or I can withdraw money whenever I need it.

2)Do I have to set up payroll for my business to withdraw money from business account? If so do I need to pay CPP/EI on that?

3)Is there any Ball park amount that works better if I withdarw that amount as my payroll..assuming my business revenues around $7000-8000 a month?

4)How much % rent I can claim as expences for my business assuming I use my apartment for my business.

I know I can get these answers from a good accountant..I am in the process of choosing one but when I approched them iam getting conflicting answers from them...thought CD's can through some light on this ..and may help me how to go about it.

Thanks
Sathish

First question - Where are you located? Ontario?

1. You are allowed to withdraw money from your Business A/c, however at the end of the year it would either be counted against your personal income or the Dividend. You're allowed to some Dividend from your Business A/c.

2. Yes, you need to set up a Payroll to be drawn each month. In other words, you pay yourself. You would also need to pay EI(optional) and CPP (mandatory with your share and company's).

3. You may withdraw all or part of it, depanding upon how much Income tax you are willing to pay at the end of the year. My suggestion, keep yourself in lower tax bracket and withdraw accordingly.

4. 10% to the max.

I know above doesn't provide you the exhaustive answers to your questions, but you may get some idea. I would recommend the following:

- Go to CRA website and try to find what you are looking for.
- Hire a professional accountant (CGA). Get some referrals from people you already know. Although, you can handle it yourself, yet there are intricacies that could be best handled and advised of only by the Accountant. Try to dig through your own Network, rather than finding the one through Google.

One more thing, from the day of Incorporation keep all your expenses' receipts, i.e. Gas, Car maintenance, Rent, Food, Office Equipment, etc. You can claim them under your Corporate taxes and GST/HST filing.

Incorporation, initially is overwhelming. However, with a good Accountant coupled with an eventual knowledge will get you in a groove. Worth it - as you end up paying less tax on your income.

Good luck!

Thanks febpreet..for the information this helps.I live in Toronto, ON.
Another question about the Auto insurance how much % max that I can claim in expenses .Most of my commute is for my business .

Febpreet covered most of it, but I just want to add on to some things.

1) you can withdraw in whichever way you wish, but before you do that, you really should setup an Excel schedule for payroll/dividend. If you're going to setup payroll, visit the Payroll Deductions calculator on the CRA website to help you out with the source deductions:

https://apps.cra-arc.gc.ca/ebci/rhpd/startLanguage.do?lang=English

2) if it's your own corporation, you will be EI exempt.

You will have to remit CPP (employer and employee) and income tax to the CRA on a monthly basis.

3) Generally, the first $39,000 of dividends would be tax-free personally, if you have no other source of income. This is because dividends are after-tax cash distributed from the corporation; also, the dividend tax credit along with other tax credits help to wipe out the personal tax. Dividends may also be preferred because you avoid CPP.

4) The ratio depends on the sq. footage of the home office, with respect to the total sq. footage of the home. Make sure that the home office is used exclusively for work, or that is the principal place of business. You can claim a pro-rated portion of the house expenses in lieu of rent, items such as utilities, insurance, mortgage interest, property tax, etc.

http://www.taxplanningguide.ca/tax-planning-guide/section-1-businesses/the-home-office/

I apologize for the sheer amount of material posted! I hope this helps.

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Madan Chartered Accountant team
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Originally posted by sathishbaburaj

Thanks febpreet..for the information this helps.I live in Toronto, ON.
Another question about the Auto insurance how much % max that I can claim in expenses .Most of my commute is for my business .

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You should keep a car log in which you record how many km you drive for business purposes. The CRA may ask for this.

-----------------------------------------------------------------
Madan Chartered Accountant team
http://www.madanca.com" rel="nofollow">LINK