Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
When you purchase items on Amazon, you might see an additional tax in the amount you need to pay on your receipt. Amazon is an eCommerce site, and it is no different when you buy goods in grocery stores or dine-in restaurants, and you need to pay for value-added tax (VAT) or sales tax. Just like other stores, the government mandates Amazon to collect taxes on its behalf.
Amazon created internal settings connected to collecting taxes that made it easier for business owners to remit sales tax to the government. Does Amazon charge taxes, and how does it work? Dig deeper, and let’s answer this million-dollar question.
A sales tax, particularly in the United States, is when the state and local governments such as counties, districts, or cities collect a percentage of the sale of a commodity from business to customer. The charge is a portion of the item's price, and there could also be charges on transfer costs. In Canada, sales tax is equivalent to goods and services taxes (GST).
Remember that income tax differs from sales tax or GST—income tax is a portion paid by the seller from their income, while sales tax or GST is a percentage of the retail price paid by the buyer. The government collects both taxes. An entrepreneur must know what items are subjected to tax and where to send the tax money. Here are the following steps you can apply to collect taxes on the goods or services you sell:
STEP 1: You have to register your business in states where you must collect sales tax.
STEP 2: Collect sales tax when customers buy your products or services.
STEP 3: File your sales report to the relevant state and turnover those sales taxes to each state.
Another thing you need to keep in mind is that you do not have to pay sales tax when buying goods to resell them. You can register for tax redemption status with retail companies such as Target, which allows you to increase your profit by removing the sales tax—this is known as Amazon arbitrage. Every state has its own unique sales tax rates and rules. If you fail to pay for sales tax, local governments can find ways to ruin your business.
Sales tax is regulated locally, not nationwide or globally—this is either by city, county, or state. When a sales tax is collected in multiple levels, it is now called the combined rate. Each of the 50 states and non-state United States territories, such as the District of Columbia, formulated their own sales tax laws independently from one another. Alaska, Delaware, Montana, New Hampshire, and Oregon are the five states that don't collect taxes.
You also need to remember that sales tax may vary from product to product. Clothes come at a lower rate of 0.50%, while restaurant foods are at a higher rate of 4.20%.
If you are selling in Amazon, you are considered a remote seller—an entrepreneur located in one area but ships products to customers in another area. A remote seller can collect sales tax if the seller has a nexus in the recipient’s state. When we talk about nexus, it simply refers to your presence in one area or state and can be classified as physical and economic.
A physical nexus is composed of employees, contractors, and warehouses. If you are a remote seller and you have an employee, contractor, or warehouse in a different state, it means that you have a physical nexus on that specific area.
You can have an economic nexus when you attain a minimum amount of annual sales in a state. Your annual sale is measured using your sales revenue and the number of valid transactions. Currently, 28 out of 50 states require sales tax upon reaching the $100,000-mark or 200 transactions.
The nexus works differently in Canada. In case you are a non-resident who has business in Canada, you need to register for GST/HST purposes once your business exceeds the $30,000 annual threshold. You have to register for PST if you have a physical presence in the form of a third-party warehouse in Canada.
For example, if you sell your product for $60 and when that product ships 200 times or more within a year to customers in Indiana, congratulations because you reached the economic nexus in the state of Indiana.
Keep in mind that as a remote seller who has a physical or economic nexus in a state, you are already required to collect sales tax. When collecting sales taxes, you don't need to worry about collecting the correct rate for every sale. There are applications available that contain all the tax jurisdictions you need for your business.
Does Amazon charge sales tax on purchases? Technically speaking, Amazon does not have the power to charge taxes because only the government can exercise such authority. However, Amazon has a user setting where a business owner can set up tax collection depending on the state or location.
Here are the steps you need to follow to collect taxes:
TIP: You can easily find the right code for whatever you are selling when selecting a category code for Default Product Tax Code. If you're not sure or your product is not on the selection, select A_GEN_TAX since it is a generic product tax code.
REMINDER: You can apply the same steps above if you need to collect GST/HST in Canada. All you need to do is go to Tax Settings and select the province where you need to collect the tax.
Now that you know how to set up tax charges and add states using Seller Central, it is very important for you to familiarize yourself with where to file your sales tax report. You can hire a bookkeeping business like Unloop, which is partnered with TaxJar—a leading technology solution for business owners to manage their sales tax. You may also file your sales tax report online by simply logging into your account and then filling out the forms required.
If somebody asks you the question: Does amazon charge sales tax on purchases? You already know the answer. It is clear that Amazon does not charge tax, but business owners can collect sales tax using Amazon. Having a sophisticated program, Amazon makes it easier for its users to compute sales tax by providing options and the correct tax rules for each location. Remember, even if Amazon is remitting the sales tax on your behalf, you are still responsible for filing the return. You can also hire accounting firms that are experts in eCommerce sales tax compliance.Are you looking for better ways to spend your profit? Then read Businesses In Ontario After-Tax Income: 5 Brilliant Ideas On How To Spend Your Profit and do the right things for your hard-earned money.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
When you purchase items on Amazon, you might see an additional tax in the amount you need to pay on your receipt. Amazon is an eCommerce site, and it is no different when you buy goods in grocery stores or dine-in restaurants, and you need to pay for value-added tax (VAT) or sales tax. Just like other stores, the government mandates Amazon to collect taxes on its behalf.
Amazon created internal settings connected to collecting taxes that made it easier for business owners to remit sales tax to the government. Does Amazon charge taxes, and how does it work? Dig deeper, and let’s answer this million-dollar question.
A sales tax, particularly in the United States, is when the state and local governments such as counties, districts, or cities collect a percentage of the sale of a commodity from business to customer. The charge is a portion of the item's price, and there could also be charges on transfer costs. In Canada, sales tax is equivalent to goods and services taxes (GST).
Remember that income tax differs from sales tax or GST—income tax is a portion paid by the seller from their income, while sales tax or GST is a percentage of the retail price paid by the buyer. The government collects both taxes. An entrepreneur must know what items are subjected to tax and where to send the tax money. Here are the following steps you can apply to collect taxes on the goods or services you sell:
STEP 1: You have to register your business in states where you must collect sales tax.
STEP 2: Collect sales tax when customers buy your products or services.
STEP 3: File your sales report to the relevant state and turnover those sales taxes to each state.
Another thing you need to keep in mind is that you do not have to pay sales tax when buying goods to resell them. You can register for tax redemption status with retail companies such as Target, which allows you to increase your profit by removing the sales tax—this is known as Amazon arbitrage. Every state has its own unique sales tax rates and rules. If you fail to pay for sales tax, local governments can find ways to ruin your business.
Sales tax is regulated locally, not nationwide or globally—this is either by city, county, or state. When a sales tax is collected in multiple levels, it is now called the combined rate. Each of the 50 states and non-state United States territories, such as the District of Columbia, formulated their own sales tax laws independently from one another. Alaska, Delaware, Montana, New Hampshire, and Oregon are the five states that don't collect taxes.
You also need to remember that sales tax may vary from product to product. Clothes come at a lower rate of 0.50%, while restaurant foods are at a higher rate of 4.20%.
If you are selling in Amazon, you are considered a remote seller—an entrepreneur located in one area but ships products to customers in another area. A remote seller can collect sales tax if the seller has a nexus in the recipient’s state. When we talk about nexus, it simply refers to your presence in one area or state and can be classified as physical and economic.
A physical nexus is composed of employees, contractors, and warehouses. If you are a remote seller and you have an employee, contractor, or warehouse in a different state, it means that you have a physical nexus on that specific area.
You can have an economic nexus when you attain a minimum amount of annual sales in a state. Your annual sale is measured using your sales revenue and the number of valid transactions. Currently, 28 out of 50 states require sales tax upon reaching the $100,000-mark or 200 transactions.
The nexus works differently in Canada. In case you are a non-resident who has business in Canada, you need to register for GST/HST purposes once your business exceeds the $30,000 annual threshold. You have to register for PST if you have a physical presence in the form of a third-party warehouse in Canada.
For example, if you sell your product for $60 and when that product ships 200 times or more within a year to customers in Indiana, congratulations because you reached the economic nexus in the state of Indiana.
Keep in mind that as a remote seller who has a physical or economic nexus in a state, you are already required to collect sales tax. When collecting sales taxes, you don't need to worry about collecting the correct rate for every sale. There are applications available that contain all the tax jurisdictions you need for your business.
Does Amazon charge sales tax on purchases? Technically speaking, Amazon does not have the power to charge taxes because only the government can exercise such authority. However, Amazon has a user setting where a business owner can set up tax collection depending on the state or location.
Here are the steps you need to follow to collect taxes:
TIP: You can easily find the right code for whatever you are selling when selecting a category code for Default Product Tax Code. If you're not sure or your product is not on the selection, select A_GEN_TAX since it is a generic product tax code.
REMINDER: You can apply the same steps above if you need to collect GST/HST in Canada. All you need to do is go to Tax Settings and select the province where you need to collect the tax.
Now that you know how to set up tax charges and add states using Seller Central, it is very important for you to familiarize yourself with where to file your sales tax report. You can hire a bookkeeping business like Unloop, which is partnered with TaxJar—a leading technology solution for business owners to manage their sales tax. You may also file your sales tax report online by simply logging into your account and then filling out the forms required.
If somebody asks you the question: Does amazon charge sales tax on purchases? You already know the answer. It is clear that Amazon does not charge tax, but business owners can collect sales tax using Amazon. Having a sophisticated program, Amazon makes it easier for its users to compute sales tax by providing options and the correct tax rules for each location. Remember, even if Amazon is remitting the sales tax on your behalf, you are still responsible for filing the return. You can also hire accounting firms that are experts in eCommerce sales tax compliance.Are you looking for better ways to spend your profit? Then read Businesses In Ontario After-Tax Income: 5 Brilliant Ideas On How To Spend Your Profit and do the right things for your hard-earned money.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Since 2019, Amazon has seen a lot of success as the world’s largest eCommerce retailer. The company has made many strides since it was founded in 1994, but its most recent accomplishment may be just as major for small businesses across North America and Europe. The pandemic only made Amazon a safe haven for business owners by catering their products to continuously produce profits. New health protocols forced people around the globe to depend on online services to avoid physical contact, which is vital in containing the spread.
Aside from ecommerce, Amazon has other services like shipping, digital streaming, artificial intelligence, and even Amazon sales tax collection on behalf of third-party sellers, too! Read here and explore how an eCommerce giant manages to collect taxes in North America and Europe.
Sales tax or consumption tax is a percentage of the final selling price of a product. It is collected by the seller and remitted to the right tax authorities. Sales tax can be paid directly or indirectly by the consumer when they make a product purchase. The sales tax is incorporated in the final price of the products, and you can validate it with your official receipt.
Depending on the country, sales tax has different variations. For example, if you are selling in the United States, the added tax value of the product is called sales tax. In Canada, they call it goods and services taxes or GST for short. And in the United Kingdom, the Brits call it value-added tax or VAT.
Amazon has to follow a set of rules when collecting taxes. There are different laws, jurisdictions, and rates that Amazon must include in its sophisticated tax algorithm.
The United States of America has 50 states, and the percentage of sales tax in eCommerce varies between each state. The good news is that five states don't collect sales tax, such as Alaska, Delaware, Montana, New Hampshire, and Oregon. You are eligible to collect taxes if you have a sales tax nexus in a state. A nexus is a connection between a seller and a state wherein the seller must register to collect and remit sales tax to the state legally.
A nexus can be classified into two—the physical and the economic nexus. You have a physical nexus if you sell in a particular state or have a satellite office, warehouse, employee, or contractor in that state. You have an economic nexus once you collect and remit sales tax because you successfully reach the required threshold of that state. Even when you sell on Amazon before, you collect and remit sales tax. Today, Amazon collects and remits sales tax for all states where they have fulfilment centers.
Amazon charges consumers in Canada with GST, and it has a standard rate of 5%. Some Canadian provinces charge PST or province-specific tax. You need to pay a harmonized sales tax (HST) once PST is applied together with GST. All in all, Amazon collects between 5% to 15% HST from Canadian consumers.
The formula for calculating HST is: GST + PST = HST.
VAT is a flat national rate and relevant for most European countries. If you have a business registered in a European country, an annual threshold of sales is applicable. For example, the United Kingdom has an annual threshold of £85,000. If your annual sales are less than that threshold, you don't need to register and collect VAT. You can only collect VAT if you reach or exceed £85,000.
There are other unique quirks with VAT in Europe reserved for US sellers, and one of them is the distance selling threshold. It works if you sell in the UK or other European countries to use the European Fulfillment network. If your annual sale is less than €35,000, you are not required to VAT registration. You only need to register when you hit €35,000 and more.
Please refer to the table below for the VAT threshold and rates in Europe.
| Country | VAT Threshold | Standard VAT Rate (%) |
| Austria (AT) | €30,000 | 20 |
| Belgium (BE) | €25,000 | 21 |
| Czech Republic (CZ) | €38,960 | 21 |
| Denmark (DK) | €6,700 | 25 |
| Estonia (EE) | €40,000 | 20 |
| Finland (FI) | €10,000 | 24 |
| France (FR) | €82,800 | 20 |
| Germany (DE) | €17,500 | 19 |
| Greece (GR) | €10,000 | 24 |
| Hungary (HU) | €24,600 | 27 |
| Ireland (IE) | €75,000 | 21 |
| Italy (IT) | €65,000 | 27 |
| Latvia (LV) | €40,000 | 21 |
| Lithuania (LT) | €45,000 | 21 |
| Luxembourg (LU) | €30,000 | 17 |
| Netherlands (NL)* | €1,345 | 21 |
| Poland (PL) | €46,980 | 23 |
| Portugal (PT) | €10,000 | 23 |
| Slovakia (SK) | €49,790 | 20 |
| Slovenia (SI) | €50,000 | 22 |
| Spain (ES) | None | 21 |
| Sweden (SE) | €2,870 | 25 |
| United Kingdom (GB) | €96,840 | 20 |
VAT and GST have higher percentages compared to their sales tax counterparts in the United States. It also means that VAT and GST put more pressure on profit margins.
Amazon is still evolving, and as a retail giant, it ensures that it has the finest algorithms to cater to the needs not only of its customers but also the demands of governments. Managing Amazon's sales tax revenue is a tedious task, and Amazon has created a well-organized method to satisfy tax authorities.
Do you want to venture into other eCommerce platforms aside from Amazon? Then, take time to read Where to Start With Shopify Accounting: An Inclusive Guide to the Dos and Don'ts and learn more about Shopify accounting.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Since 2019, Amazon has seen a lot of success as the world’s largest eCommerce retailer. The company has made many strides since it was founded in 1994, but its most recent accomplishment may be just as major for small businesses across North America and Europe. The pandemic only made Amazon a safe haven for business owners by catering their products to continuously produce profits. New health protocols forced people around the globe to depend on online services to avoid physical contact, which is vital in containing the spread.
Aside from ecommerce, Amazon has other services like shipping, digital streaming, artificial intelligence, and even Amazon sales tax collection on behalf of third-party sellers, too! Read here and explore how an eCommerce giant manages to collect taxes in North America and Europe.
Sales tax or consumption tax is a percentage of the final selling price of a product. It is collected by the seller and remitted to the right tax authorities. Sales tax can be paid directly or indirectly by the consumer when they make a product purchase. The sales tax is incorporated in the final price of the products, and you can validate it with your official receipt.
Depending on the country, sales tax has different variations. For example, if you are selling in the United States, the added tax value of the product is called sales tax. In Canada, they call it goods and services taxes or GST for short. And in the United Kingdom, the Brits call it value-added tax or VAT.
Amazon has to follow a set of rules when collecting taxes. There are different laws, jurisdictions, and rates that Amazon must include in its sophisticated tax algorithm.
The United States of America has 50 states, and the percentage of sales tax in eCommerce varies between each state. The good news is that five states don't collect sales tax, such as Alaska, Delaware, Montana, New Hampshire, and Oregon. You are eligible to collect taxes if you have a sales tax nexus in a state. A nexus is a connection between a seller and a state wherein the seller must register to collect and remit sales tax to the state legally.
A nexus can be classified into two—the physical and the economic nexus. You have a physical nexus if you sell in a particular state or have a satellite office, warehouse, employee, or contractor in that state. You have an economic nexus once you collect and remit sales tax because you successfully reach the required threshold of that state. Even when you sell on Amazon before, you collect and remit sales tax. Today, Amazon collects and remits sales tax for all states where they have fulfilment centers.
Amazon charges consumers in Canada with GST, and it has a standard rate of 5%. Some Canadian provinces charge PST or province-specific tax. You need to pay a harmonized sales tax (HST) once PST is applied together with GST. All in all, Amazon collects between 5% to 15% HST from Canadian consumers.
The formula for calculating HST is: GST + PST = HST.
VAT is a flat national rate and relevant for most European countries. If you have a business registered in a European country, an annual threshold of sales is applicable. For example, the United Kingdom has an annual threshold of £85,000. If your annual sales are less than that threshold, you don't need to register and collect VAT. You can only collect VAT if you reach or exceed £85,000.
There are other unique quirks with VAT in Europe reserved for US sellers, and one of them is the distance selling threshold. It works if you sell in the UK or other European countries to use the European Fulfillment network. If your annual sale is less than €35,000, you are not required to VAT registration. You only need to register when you hit €35,000 and more.
Please refer to the table below for the VAT threshold and rates in Europe.
| Country | VAT Threshold | Standard VAT Rate (%) |
| Austria (AT) | €30,000 | 20 |
| Belgium (BE) | €25,000 | 21 |
| Czech Republic (CZ) | €38,960 | 21 |
| Denmark (DK) | €6,700 | 25 |
| Estonia (EE) | €40,000 | 20 |
| Finland (FI) | €10,000 | 24 |
| France (FR) | €82,800 | 20 |
| Germany (DE) | €17,500 | 19 |
| Greece (GR) | €10,000 | 24 |
| Hungary (HU) | €24,600 | 27 |
| Ireland (IE) | €75,000 | 21 |
| Italy (IT) | €65,000 | 27 |
| Latvia (LV) | €40,000 | 21 |
| Lithuania (LT) | €45,000 | 21 |
| Luxembourg (LU) | €30,000 | 17 |
| Netherlands (NL)* | €1,345 | 21 |
| Poland (PL) | €46,980 | 23 |
| Portugal (PT) | €10,000 | 23 |
| Slovakia (SK) | €49,790 | 20 |
| Slovenia (SI) | €50,000 | 22 |
| Spain (ES) | None | 21 |
| Sweden (SE) | €2,870 | 25 |
| United Kingdom (GB) | €96,840 | 20 |
VAT and GST have higher percentages compared to their sales tax counterparts in the United States. It also means that VAT and GST put more pressure on profit margins.
Amazon is still evolving, and as a retail giant, it ensures that it has the finest algorithms to cater to the needs not only of its customers but also the demands of governments. Managing Amazon's sales tax revenue is a tedious task, and Amazon has created a well-organized method to satisfy tax authorities.
Do you want to venture into other eCommerce platforms aside from Amazon? Then, take time to read Where to Start With Shopify Accounting: An Inclusive Guide to the Dos and Don'ts and learn more about Shopify accounting.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
For many first-time business owners, everything about taxes can be quite confusing from the start. Before you can finally launch your business, you need to prepare several documents and required permits. Preparing the legal documents can take a longer process than actually preparing for your opening launch.
The process of filing income tax returns can be tedious and complicated. If you find it confusing, you can hire a tax professional to do the paperwork for you. But before you get lost in the messy world of taxes, let’s break down frequently asked questions on income tax returns and help you file them.
Income tax returns refer to the mandatory forms filed by an income-earning individual or corporation at the end of each financial year. The return forms summarize the taxable income, taxable credit, or other matters related to the latter from January to December of the previous year.
Income tax filing aids the government in determining the correct amount of tax an individual or a business should pay. The Canada Revenue Agency (CRA) also uses your return form to determine if you are eligible for a tax refund for the tax you have paid for the year or when an amount is due to be paid.
Whether you live in Canada permanently, temporarily, or as a newcomer, knowing if you need to file your tax returns and when is essential to avoid legal problems. First, in the list, all income-earning residents of Canada, including immigrants, should file their income tax returns and pay their taxes to continue enjoying benefits and receive credits.
The list also includes income-earning residents of Canada that are temporarily away in another country, whether for work, school, vacation, or medical purposes. As long as you have ties in the country, you are to file a tax return. Federal employees stationed abroad and indigenous people are also required to file their tax returns to the CRA.
Which types of income should I report on my tax returns?
As previously said, all residents who earn must file their tax returns. Your tax returns are essentially a summary of all the money you have accumulated in the previous year. For individuals and income tax return-filing businesses with different income sources, which of those sources are you allowed or have to declare?
Ensure to disclose all your income sources in the tax return to know if you are eligible for a refund (to be determined by the government) or have existing dues to be paid. There are also non-taxable incomes that are not necessary for the tax returns. Check them out to file your taxes smoothly and easier.
Income tax returns should be filed and paid on or before April 30 of every year. In case the 30th falls on a weekend, the deadline is moved to the next business day. But, if you are self-employed, Canada Revenue Agency gives more time for such individuals. They can file their returns until June 15.
Furthermore, the CRA applies penalties for late filing to encourage people to file their tax returns on time. When you get past the due date, you are charged with a 5% penalty and an additional 1% for every month that passes. So, if in case you filed five months late, you will be paying the whole amount of your taxes plus a 10% penalty fee.
Some instances can be too big to pay in one go. The CRA allows installment payments of easy completion of the amount due. You can pay the installment on the 15th of March, June, September, and December of the tax year.
There are different ways where you can file your income tax returns:
The initial role of a tax professional is to help individuals and organizations manage their taxes. These people have expertise in taxation laws, tax planning, and compliance. Big organizations usually hire consultants for their businesses for long-term tax optimization.
If all of these are still confusing to you, you can hire accounting professionals to avoid incurring penalties and tax liabilities every year.
As previously mentioned, late filing will give you penalties for your dues — 5% for the late file and an additional 1% for every month you fail to report your income tax returns. You can go up to 10 years without filing a tax return. But if the CRA finds out that you are deliberately avoiding paying taxes, you can be charged with tax evasion cases and imprisoned for up to 5 years.
The longer you put aside your tax return filing, the higher amount you will pay. To avoid these types of inconvenience and possible criminal charges, be responsible for filing your tax returns.
You don’t have to be an expert for income tax return filing to do yours. Paying your taxes and declaring them is your obligation to your government as well as your fellow countrymen. All people who earn give back and contribute to the betterment of their country by paying their taxes. So do your part and be a responsible adult and citizen.
There are always law and tax experts to help manage your tax returns. Please don't wait for your bills to balloon before finally deciding it's time to file your tax returns.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
For many first-time business owners, everything about taxes can be quite confusing from the start. Before you can finally launch your business, you need to prepare several documents and required permits. Preparing the legal documents can take a longer process than actually preparing for your opening launch.
The process of filing income tax returns can be tedious and complicated. If you find it confusing, you can hire a tax professional to do the paperwork for you. But before you get lost in the messy world of taxes, let’s break down frequently asked questions on income tax returns and help you file them.
Income tax returns refer to the mandatory forms filed by an income-earning individual or corporation at the end of each financial year. The return forms summarize the taxable income, taxable credit, or other matters related to the latter from January to December of the previous year.
Income tax filing aids the government in determining the correct amount of tax an individual or a business should pay. The Canada Revenue Agency (CRA) also uses your return form to determine if you are eligible for a tax refund for the tax you have paid for the year or when an amount is due to be paid.
Whether you live in Canada permanently, temporarily, or as a newcomer, knowing if you need to file your tax returns and when is essential to avoid legal problems. First, in the list, all income-earning residents of Canada, including immigrants, should file their income tax returns and pay their taxes to continue enjoying benefits and receive credits.
The list also includes income-earning residents of Canada that are temporarily away in another country, whether for work, school, vacation, or medical purposes. As long as you have ties in the country, you are to file a tax return. Federal employees stationed abroad and indigenous people are also required to file their tax returns to the CRA.
Which types of income should I report on my tax returns?
As previously said, all residents who earn must file their tax returns. Your tax returns are essentially a summary of all the money you have accumulated in the previous year. For individuals and income tax return-filing businesses with different income sources, which of those sources are you allowed or have to declare?
Ensure to disclose all your income sources in the tax return to know if you are eligible for a refund (to be determined by the government) or have existing dues to be paid. There are also non-taxable incomes that are not necessary for the tax returns. Check them out to file your taxes smoothly and easier.
Income tax returns should be filed and paid on or before April 30 of every year. In case the 30th falls on a weekend, the deadline is moved to the next business day. But, if you are self-employed, Canada Revenue Agency gives more time for such individuals. They can file their returns until June 15.
Furthermore, the CRA applies penalties for late filing to encourage people to file their tax returns on time. When you get past the due date, you are charged with a 5% penalty and an additional 1% for every month that passes. So, if in case you filed five months late, you will be paying the whole amount of your taxes plus a 10% penalty fee.
Some instances can be too big to pay in one go. The CRA allows installment payments of easy completion of the amount due. You can pay the installment on the 15th of March, June, September, and December of the tax year.
There are different ways where you can file your income tax returns:
The initial role of a tax professional is to help individuals and organizations manage their taxes. These people have expertise in taxation laws, tax planning, and compliance. Big organizations usually hire consultants for their businesses for long-term tax optimization.
If all of these are still confusing to you, you can hire accounting professionals to avoid incurring penalties and tax liabilities every year.
As previously mentioned, late filing will give you penalties for your dues — 5% for the late file and an additional 1% for every month you fail to report your income tax returns. You can go up to 10 years without filing a tax return. But if the CRA finds out that you are deliberately avoiding paying taxes, you can be charged with tax evasion cases and imprisoned for up to 5 years.
The longer you put aside your tax return filing, the higher amount you will pay. To avoid these types of inconvenience and possible criminal charges, be responsible for filing your tax returns.
You don’t have to be an expert for income tax return filing to do yours. Paying your taxes and declaring them is your obligation to your government as well as your fellow countrymen. All people who earn give back and contribute to the betterment of their country by paying their taxes. So do your part and be a responsible adult and citizen.
There are always law and tax experts to help manage your tax returns. Please don't wait for your bills to balloon before finally deciding it's time to file your tax returns.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
The revenue from e-commerce retail sales in Canada has seen an upward trend since 2017. According to Statista, from $21.975 billion in 2017, it rose to $32.442 billion in 2021. The data company forecasts this upward trend to continue until 2025, with predicted revenue of $40.352 billion.
Behind these numbers are millions of eCommerce sellers like you who have ventured into the industry and opened businesses to fellow Canadians and clients worldwide. If you have just begun selling online, you have plenty of tasks on your plate, but one thing you should prioritize is taxation.
Let us help you make your workload lighter by providing you with knowledge about Canada's online sales tax for businesses.
To avoid getting lost, familiarize yourself with the different terms for Canadian taxes. You need to remember four: Goods and Services Tax (GST), Provincial Sales Tax (PST), Harmonized Sales Tax (HST), and Quebec Sales Tax (QST).
Let’s check their definitions one by one.
GST is Canada’s federal tax applied to almost all products sold in physical stores and online. Only those tagged as zero-rate are exempted from this taxation.
Prepare to charge this sales tax if your buyers are from Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Saskatchewan, Quebec, and Yukon. All these provinces have GST either independently or together with PST or QST.
GST sales tax is at 5%, and the rate will still increase when PST or QST is added.
As the name suggests, this is the additional tax imposed by provinces like British Columbia, Manitoba, and Saskatchewan. The tax rate varies per province.
So when computing the sales tax, adding the 5% GST to the given PST rates results in the following final rates:
An example transaction goes like this: let’s say you sold a pair of rubber shoes at $29.99 to a customer living in British Columbia. For this sale, you have to charge a 12% sales tax.
$29.99 × 0.12 = $3.60
Collect the $3.60 sales tax, and remit it during tax season.
To skip the hassle of computing federal and provincial taxes separately, lawmakers have passed the harmonization of the two through HST. Five provinces, namely, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, follow this taxation system, and the rates vary per province.
When you make sales from these provinces, you do not need to look for the GST and PST rates; simply apply the HST rate.
In Quebec, the sales tax consists of the GST and QST, with the QST at 9.975% and GST still at 5%. However, you do not have to remit QST if you satisfy any of the following conditions:
For instance, a nonresident supplier operates in Ontario and does not have a physical store in Quebec. However, they supply to Quebec businesses. In this case, the only tax they should charge the customers is the 5% GST. On the other hand, for individual orders delivered to Quebec residents, sellers need to charge both GST and QST.
Did the different sales tax classifications confuse you? Here are some reminders to help you know how much to pass onto your client or whether to charge them at all. Also, get to know the department where you need to submit the sales tax you collected.
The first step is to determine the buyer’s address. Remember that the basis of sales tax is not where the package came from but where it is going. For instance, an order coming from Ontario will be delivered to a customer in Manitoba. The sales tax rate to follow is Manitoba’s 12% sales tax rate.
The standard procedure in British Columbia, Manitoba, and Saskatchewan is that orders sent to residents of these provinces should be taxed accordingly. However, specific rules on who should pay taxes and who are exempted differ. If you deliver in these locations, it is best to get into the specifics of the local tax regulations.
While almost all goods have sales tax and some individuals have to pay additional tax for their purchases, some products are zero-rated. These are the goods you can buy without paying any sales tax.
These specific groups are also not required to pay sales taxes.
If you sell these goods or to these groups, remember not to apply sales tax.
For individual orders, it is clear that sales tax is based on the location of the buyer. But what if you are a raw materials manufacturer and sell not to end users but to product developers? Should you also charge sales tax to your customers?
The levels of resales are a common scenario in the production of goods. A resale certificate will save the business buying your raw materials from paying sales tax as they are not the end user of the final product.
In Canada, Internet sales tax regulations state that online sellers are required to charge sales tax on their orders. With that, there is no confusion about whether you should be collecting taxes from your buyers or not. Regardless if you’re selling in a mall, a stand-alone boutique, or online, sales tax applies if you made a taxable sale to a Canadian customer.
However, as mentioned earlier, it’s best to know the specific ecommerce sales tax rules per province to understand and abide by them correctly.
In Canada, you should be familiar with these two offices to pay your taxes: Revenu Quebec for the province of Quebec and the Canadian Revenue Agency (CRA) for the rest of the country.
These two offices implement tax laws and handle all tax-related transactions, from income tax, value-added tax, and excise tax to sales tax. After collecting the sales tax, you need to remit all the sales tax you collected to these agencies.
Everyone says taxation is a complicated task, but it is relatively easy when done right. Here are the steps to guide you.
Included in your order slips’ delivery details is the specific location where you need to send the package. Use this information to determine the applicable sales tax rate.
Apply the sales tax rate according to the package’s destination, and collect the tax charged. Make sure not to spend these taxes for your business as you need to remit them to the government.
Set the frequency of sales tax remittance with the CRA. You can send the collected sales tax on a monthly, quarterly, or annual basis either physically or online.
You can do your sales tax on your own if you are still beginning your business, but can you imagine the increase in the workload when your sales boom? Ecommerce sales tax solutions make your business processes more efficient and lessen your work. Here are some of them!
Rely on sales tax software like QuickBooks, Xero, A2X, and Hubdoc. They collate sales transaction details and compute sales tax per order. They also store all transactions in the system, so you can run reports to check how much sales tax you’ve collected and other key performance indicators that will help you in decision-making.
Doing the bookkeeping yourself is still manageable at the beginning of your business. Still, you need to delegate this complex task to a trained bookkeeper to ensure the proper tracking and categorization of all transactions.
You can also be sure of data accuracy because one team member focuses on this task only. Meanwhile, you can focus on business operations, product quality checks, and customer service with more free time.
Taxation is an essential task that can determine your business's success or failure, especially if you do not know how it works. Thus, it is best to have someone well-versed in tax laws and regulations—an ecommerce sales tax accountant.
Your accountant will check your sales tax compliance and create reports from the information gathered by the bookkeeper. Let them take care of tax management and payment on your business too.
As a business owner, you are now one of the millions of Canadian ecommerce sellers contributing to the growth of the industry in the country and worldwide. Thus, you should know that the Canadian government requires all physical and digital businesses to charge sales tax on their products.
Depending on the province or territory you send the orders to, different tax rates may apply. To avoid fines for not complying with these regulations, it’s essential to know precisely what types of taxes apply where and how to remit them on time.
We at Unloop offer bookkeeping business solutions. Our team of experienced bookkeepers will help you track and prepare your sales tax information before tax season. Delegate the task to us so that you can focus on scaling your business.
Give us a call now at 877-421-7270. We’d love to hear from you!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
The revenue from e-commerce retail sales in Canada has seen an upward trend since 2017. According to Statista, from $21.975 billion in 2017, it rose to $32.442 billion in 2021. The data company forecasts this upward trend to continue until 2025, with predicted revenue of $40.352 billion.
Behind these numbers are millions of eCommerce sellers like you who have ventured into the industry and opened businesses to fellow Canadians and clients worldwide. If you have just begun selling online, you have plenty of tasks on your plate, but one thing you should prioritize is taxation.
Let us help you make your workload lighter by providing you with knowledge about Canada's online sales tax for businesses.
To avoid getting lost, familiarize yourself with the different terms for Canadian taxes. You need to remember four: Goods and Services Tax (GST), Provincial Sales Tax (PST), Harmonized Sales Tax (HST), and Quebec Sales Tax (QST).
Let’s check their definitions one by one.
GST is Canada’s federal tax applied to almost all products sold in physical stores and online. Only those tagged as zero-rate are exempted from this taxation.
Prepare to charge this sales tax if your buyers are from Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Saskatchewan, Quebec, and Yukon. All these provinces have GST either independently or together with PST or QST.
GST sales tax is at 5%, and the rate will still increase when PST or QST is added.
As the name suggests, this is the additional tax imposed by provinces like British Columbia, Manitoba, and Saskatchewan. The tax rate varies per province.
So when computing the sales tax, adding the 5% GST to the given PST rates results in the following final rates:
An example transaction goes like this: let’s say you sold a pair of rubber shoes at $29.99 to a customer living in British Columbia. For this sale, you have to charge a 12% sales tax.
$29.99 × 0.12 = $3.60
Collect the $3.60 sales tax, and remit it during tax season.
To skip the hassle of computing federal and provincial taxes separately, lawmakers have passed the harmonization of the two through HST. Five provinces, namely, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, follow this taxation system, and the rates vary per province.
When you make sales from these provinces, you do not need to look for the GST and PST rates; simply apply the HST rate.
In Quebec, the sales tax consists of the GST and QST, with the QST at 9.975% and GST still at 5%. However, you do not have to remit QST if you satisfy any of the following conditions:
For instance, a nonresident supplier operates in Ontario and does not have a physical store in Quebec. However, they supply to Quebec businesses. In this case, the only tax they should charge the customers is the 5% GST. On the other hand, for individual orders delivered to Quebec residents, sellers need to charge both GST and QST.
Did the different sales tax classifications confuse you? Here are some reminders to help you know how much to pass onto your client or whether to charge them at all. Also, get to know the department where you need to submit the sales tax you collected.
The first step is to determine the buyer’s address. Remember that the basis of sales tax is not where the package came from but where it is going. For instance, an order coming from Ontario will be delivered to a customer in Manitoba. The sales tax rate to follow is Manitoba’s 12% sales tax rate.
The standard procedure in British Columbia, Manitoba, and Saskatchewan is that orders sent to residents of these provinces should be taxed accordingly. However, specific rules on who should pay taxes and who are exempted differ. If you deliver in these locations, it is best to get into the specifics of the local tax regulations.
While almost all goods have sales tax and some individuals have to pay additional tax for their purchases, some products are zero-rated. These are the goods you can buy without paying any sales tax.
These specific groups are also not required to pay sales taxes.
If you sell these goods or to these groups, remember not to apply sales tax.
For individual orders, it is clear that sales tax is based on the location of the buyer. But what if you are a raw materials manufacturer and sell not to end users but to product developers? Should you also charge sales tax to your customers?
The levels of resales are a common scenario in the production of goods. A resale certificate will save the business buying your raw materials from paying sales tax as they are not the end user of the final product.
In Canada, Internet sales tax regulations state that online sellers are required to charge sales tax on their orders. With that, there is no confusion about whether you should be collecting taxes from your buyers or not. Regardless if you’re selling in a mall, a stand-alone boutique, or online, sales tax applies if you made a taxable sale to a Canadian customer.
However, as mentioned earlier, it’s best to know the specific ecommerce sales tax rules per province to understand and abide by them correctly.
In Canada, you should be familiar with these two offices to pay your taxes: Revenu Quebec for the province of Quebec and the Canadian Revenue Agency (CRA) for the rest of the country.
These two offices implement tax laws and handle all tax-related transactions, from income tax, value-added tax, and excise tax to sales tax. After collecting the sales tax, you need to remit all the sales tax you collected to these agencies.
Everyone says taxation is a complicated task, but it is relatively easy when done right. Here are the steps to guide you.
Included in your order slips’ delivery details is the specific location where you need to send the package. Use this information to determine the applicable sales tax rate.
Apply the sales tax rate according to the package’s destination, and collect the tax charged. Make sure not to spend these taxes for your business as you need to remit them to the government.
Set the frequency of sales tax remittance with the CRA. You can send the collected sales tax on a monthly, quarterly, or annual basis either physically or online.
You can do your sales tax on your own if you are still beginning your business, but can you imagine the increase in the workload when your sales boom? Ecommerce sales tax solutions make your business processes more efficient and lessen your work. Here are some of them!
Rely on sales tax software like QuickBooks, Xero, A2X, and Hubdoc. They collate sales transaction details and compute sales tax per order. They also store all transactions in the system, so you can run reports to check how much sales tax you’ve collected and other key performance indicators that will help you in decision-making.
Doing the bookkeeping yourself is still manageable at the beginning of your business. Still, you need to delegate this complex task to a trained bookkeeper to ensure the proper tracking and categorization of all transactions.
You can also be sure of data accuracy because one team member focuses on this task only. Meanwhile, you can focus on business operations, product quality checks, and customer service with more free time.
Taxation is an essential task that can determine your business's success or failure, especially if you do not know how it works. Thus, it is best to have someone well-versed in tax laws and regulations—an ecommerce sales tax accountant.
Your accountant will check your sales tax compliance and create reports from the information gathered by the bookkeeper. Let them take care of tax management and payment on your business too.
As a business owner, you are now one of the millions of Canadian ecommerce sellers contributing to the growth of the industry in the country and worldwide. Thus, you should know that the Canadian government requires all physical and digital businesses to charge sales tax on their products.
Depending on the province or territory you send the orders to, different tax rates may apply. To avoid fines for not complying with these regulations, it’s essential to know precisely what types of taxes apply where and how to remit them on time.
We at Unloop offer bookkeeping business solutions. Our team of experienced bookkeepers will help you track and prepare your sales tax information before tax season. Delegate the task to us so that you can focus on scaling your business.
Give us a call now at 877-421-7270. We’d love to hear from you!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Ecommerce is a popular business model for those who want to work from home and control their own time. It's also an excellent way to grow your existing small businesses, as you're able to reach more customers around the world with ease. However, it’s not just about selling your products and making people buy from you. Certain key processes happen in the back end, but they’re just as important—one such process is accounting. So, if you want to get a headstart in the game, keep reading!
This blog post will teach online entrepreneurs about the basics of accounting, including some valuable dos and don’ts. Accounting can be daunting, especially for beginners, but we’ll help you get through this phase and teach you what you should and should not do.
When done with the correct practices, any activity can be easy and can create the right results. So keep this to-do list in mind to make the rather tedious accounting task manageable. These are essential yet can be done even by rookies in the ecommerce business. Let’s take a look:
Know the difference between a bookkeeper and an accountant, so you know what help you can expect once you hire them. You can look for freelancers or an ecommerce accounting firm that specializes in accounting for Amazon sellers and other online vendors.
Bookkeeper: A bookkeeper serves as the scribe taking note of all transactions and categorizing all data accordingly. All documents, receipts, and invoices are kept neat and safely stored physically and, most times, in the cloud.
Accountant: You can rely on your accountant to help you make sense of all the data and transactions gathered by a bookkeeper. They create different reports and present them to you studied and analyzed. If you need financial insights for your business decisions, they are also the go-to experts.
We are already in the era of accounting software, where everything is automated, and data is stored safely in the cloud. Some of the most common accounting tools are Quickbooks, Xero, and Sage50, and here are the services you can enjoy from them:
There are various software you can manage on your own as a freelancer or a startup business. Still, it is best to let bookkeepers and accountants take this task from you when your business grows.
Make sure that the money for your business is used exclusively for company transactions. It would be best to have a different bank account for your personal money and another for your business. It will make bank transaction tracking easier as it will reflect only ecommerce-related income and expenses.
There are two basic types of accounting—cash-based and accrual accounting. Cash-based accounting records money as they come in and out of your bank account. This is usually used by ecommerce businesses with fewer transactions each month. Through it, you’ll have a real-time view of your income and expenses.
On the other hand, accrual accounting considers money you haven't earned yet but is scheduled to come into your account and the costs that haven’t been out of the bank account but are expected to pay. These two are called accounts receivable and accounts payable in your accrual accounting sheet.
Accrual accounting is the best type to use if you plan to scale your business because you foresee a month’s income and expenses right away.
Reports are essential to businesses, and they are even more critical for startup businesses. Getting reports will allow you to view your business financial status and check whether your business plan is working or needs adjustments. Some of the accounting reports you may want to get regularly are the following:
To get comprehensive and accurate reports, you should constantly update your books, so you’ll have a real-time view of your financial status.
After knowing the must-dos, here are the practices you should stop or never do at all. It will save you time and make your business processes more efficient. Moving away from these practices also allows you more time to do what you must and have smoother operations.
Cash-based accounting entails the tracking of cash that comes in and out of your business in real-time. This practice may work if you only have a few monthly transactions. But the accounting process cannot cope with your growing income and expenses.
With that, begin with accrual accounting which tracks all business transactions using accounts receivable and accounts payable.
Accounts receivable: The money you have yet to receive
Accounts payable: The money you have yet to pay
With accrual accounting, you can plan your business budget monthly and get a view of your financial status on a monthly view.
Unless you are a trained bookkeeper or accountant, it is best to delegate these tasks to experts for accuracy and avoidance of tax-related problems when paying season comes. Many business owners take crash courses on bookkeeping and accounting in the hopes of acquiring the skills they need to do the job on their own and save money.
Yet, hiring an accountant and bookkeeper is still worth the investment because a bookkeeper can keep your books updated so that you can generate up-to-date reports. Meanwhile, rely on an accountant for reports to give you insights into the financial impact of your business plans. With professionals working on your finances, you can focus on your business operations.
Despite the advanced choices, some businesses still rely on traditional hard copy books and excel sheets, which have a lot of disadvantages. Data on paper is most prone to damage because of changing seasons, humidity, and even paper mites. On the other hand, Excel sheets are just stored on your desktop, which may be prone to file corruption and security breaches.
In both methods, the risk of inaccuracy is higher compared with software because of the increased reliance on human input and formula creation. You can acquire little to no automation with paper books and excel sheets compared with automated software.
Taxes are already difficult to handle as it is, but it gets even more burdensome when you have to cram it days before the tax deadline. Doing so means you would have to backtrack all the data you could not track for the past business year. While backtracking is a common task of bookkeepers, the lack of time can cause output inaccuracy or an incomplete report. The challenge heightens when you just hired a virtual assistant who does not know anything about your business. They may accomplish the bookkeeping, but their insights are not as reliable as someone well-versed in your industry.
There is nothing wrong with being optimistic and making all your plans happen against all odds—as long as they are within your company’s financial capacity. If you continue expanding your business without the funding or budgeting, you can end up with debt or wasted money. But if you maximize the data your bookkeeper and accountant acquired in forecasting cash flow, you can see where your money goes and make necessary adjustments that will not endanger your finances.
Unloop can assist you with your bookkeeping needs and take care of all your day-to-day tasks to have more time to work on other aspects of running the business. In addition, Unloop has invested in cloud-based accounting software like Quickbooks, A2X, and Hubdoc to keep everything automated and safe.
Starting a business is an exciting endeavor, but it can also be overwhelming. To help you better understand the basics of accounting for an ecommerce business and what to do with your finances as your company grows, remember these dos and don'ts for accounting.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Ecommerce is a popular business model for those who want to work from home and control their own time. It's also an excellent way to grow your existing small businesses, as you're able to reach more customers around the world with ease. However, it’s not just about selling your products and making people buy from you. Certain key processes happen in the back end, but they’re just as important—one such process is accounting. So, if you want to get a headstart in the game, keep reading!
This blog post will teach online entrepreneurs about the basics of accounting, including some valuable dos and don’ts. Accounting can be daunting, especially for beginners, but we’ll help you get through this phase and teach you what you should and should not do.
When done with the correct practices, any activity can be easy and can create the right results. So keep this to-do list in mind to make the rather tedious accounting task manageable. These are essential yet can be done even by rookies in the ecommerce business. Let’s take a look:
Know the difference between a bookkeeper and an accountant, so you know what help you can expect once you hire them. You can look for freelancers or an ecommerce accounting firm that specializes in accounting for Amazon sellers and other online vendors.
Bookkeeper: A bookkeeper serves as the scribe taking note of all transactions and categorizing all data accordingly. All documents, receipts, and invoices are kept neat and safely stored physically and, most times, in the cloud.
Accountant: You can rely on your accountant to help you make sense of all the data and transactions gathered by a bookkeeper. They create different reports and present them to you studied and analyzed. If you need financial insights for your business decisions, they are also the go-to experts.
We are already in the era of accounting software, where everything is automated, and data is stored safely in the cloud. Some of the most common accounting tools are Quickbooks, Xero, and Sage50, and here are the services you can enjoy from them:
There are various software you can manage on your own as a freelancer or a startup business. Still, it is best to let bookkeepers and accountants take this task from you when your business grows.
Make sure that the money for your business is used exclusively for company transactions. It would be best to have a different bank account for your personal money and another for your business. It will make bank transaction tracking easier as it will reflect only ecommerce-related income and expenses.
There are two basic types of accounting—cash-based and accrual accounting. Cash-based accounting records money as they come in and out of your bank account. This is usually used by ecommerce businesses with fewer transactions each month. Through it, you’ll have a real-time view of your income and expenses.
On the other hand, accrual accounting considers money you haven't earned yet but is scheduled to come into your account and the costs that haven’t been out of the bank account but are expected to pay. These two are called accounts receivable and accounts payable in your accrual accounting sheet.
Accrual accounting is the best type to use if you plan to scale your business because you foresee a month’s income and expenses right away.
Reports are essential to businesses, and they are even more critical for startup businesses. Getting reports will allow you to view your business financial status and check whether your business plan is working or needs adjustments. Some of the accounting reports you may want to get regularly are the following:
To get comprehensive and accurate reports, you should constantly update your books, so you’ll have a real-time view of your financial status.
After knowing the must-dos, here are the practices you should stop or never do at all. It will save you time and make your business processes more efficient. Moving away from these practices also allows you more time to do what you must and have smoother operations.
Cash-based accounting entails the tracking of cash that comes in and out of your business in real-time. This practice may work if you only have a few monthly transactions. But the accounting process cannot cope with your growing income and expenses.
With that, begin with accrual accounting which tracks all business transactions using accounts receivable and accounts payable.
Accounts receivable: The money you have yet to receive
Accounts payable: The money you have yet to pay
With accrual accounting, you can plan your business budget monthly and get a view of your financial status on a monthly view.
Unless you are a trained bookkeeper or accountant, it is best to delegate these tasks to experts for accuracy and avoidance of tax-related problems when paying season comes. Many business owners take crash courses on bookkeeping and accounting in the hopes of acquiring the skills they need to do the job on their own and save money.
Yet, hiring an accountant and bookkeeper is still worth the investment because a bookkeeper can keep your books updated so that you can generate up-to-date reports. Meanwhile, rely on an accountant for reports to give you insights into the financial impact of your business plans. With professionals working on your finances, you can focus on your business operations.
Despite the advanced choices, some businesses still rely on traditional hard copy books and excel sheets, which have a lot of disadvantages. Data on paper is most prone to damage because of changing seasons, humidity, and even paper mites. On the other hand, Excel sheets are just stored on your desktop, which may be prone to file corruption and security breaches.
In both methods, the risk of inaccuracy is higher compared with software because of the increased reliance on human input and formula creation. You can acquire little to no automation with paper books and excel sheets compared with automated software.
Taxes are already difficult to handle as it is, but it gets even more burdensome when you have to cram it days before the tax deadline. Doing so means you would have to backtrack all the data you could not track for the past business year. While backtracking is a common task of bookkeepers, the lack of time can cause output inaccuracy or an incomplete report. The challenge heightens when you just hired a virtual assistant who does not know anything about your business. They may accomplish the bookkeeping, but their insights are not as reliable as someone well-versed in your industry.
There is nothing wrong with being optimistic and making all your plans happen against all odds—as long as they are within your company’s financial capacity. If you continue expanding your business without the funding or budgeting, you can end up with debt or wasted money. But if you maximize the data your bookkeeper and accountant acquired in forecasting cash flow, you can see where your money goes and make necessary adjustments that will not endanger your finances.
Unloop can assist you with your bookkeeping needs and take care of all your day-to-day tasks to have more time to work on other aspects of running the business. In addition, Unloop has invested in cloud-based accounting software like Quickbooks, A2X, and Hubdoc to keep everything automated and safe.
Starting a business is an exciting endeavor, but it can also be overwhelming. To help you better understand the basics of accounting for an ecommerce business and what to do with your finances as your company grows, remember these dos and don'ts for accounting.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
As an entrepreneur, you know that a part of the business is paying taxes. If you're still starting out, you may have applied for a couple of tax exemptions to get you off the hook of calculating sales taxes. But as your business gains traction, the concern of remitting state sales tax becomes more pressing. Until eventually, you'll have to pay what is due.
Taxes are an obligation that we must pay sooner or later. But, if you've been putting off calculating your sales tax on the back burner for some time, it's time to put it front and center. So, here's a quick article that will help you sit down and think about your sales taxes and how to properly calculate and pay them before you actually have to. Because when it comes to taxes, it's better to be prepared.
Sales tax is an amount levied by the government for each product bought and consumed by the end-user. In the context of you being an Amazon seller, you should take into account your product pricing sales taxes. This is so your customer pays it as part of the price.
Including the Amazon sales tax is an integral part of your Amazon pricing structure. If you don't allocate a percentage to a sales tax rate, it will eat your profit margin once Amazon collects it on your behalf.
So, what exactly is the Amazon sales tax rate? It depends on a lot of factors. But Amazon does have its own system that identifies the right sales tax rates to charge the end consumer. This depends on the product or location. Once you have an economic nexus in a State you sell your goods from, you are eligible to register for a permit to collect tax. Then you can let Amazon collect it for you. Amazon's sales tax collection charges 2.9% per each transaction it collects sales tax from.
It is your obligation to remit taxes. It’s also your obligation to learn how to calculate sales tax on the Amazon marketplace so you can be compliant and remit taxes accurately.
The problem is you're a busy person, and if your e-commerce business sells to multiple locations within the United States and outside, it can be challenging to calculate how much sales tax on Amazon is supposed to be charged. In addition, learning the ropes of calculating sales tax is a process that needs a lot of expertise. The awesome thing is that you have options.
The Amazon Tax Calculation Service Teams
As mentioned above, there’s an Amazon sales tax calculator team composed of a well-oiled system of processes and teams that will do the computing and charging for you. You can get this service for a fee of 2.9% per transaction. This ensures that you charge the appropriate sales tax percentage on each product you sell online.
On the other hand, availing of this service from Amazon doesn't absolve you of all sales tax responsibilities. For instance, before you can enrol yourself in this program, you'll have to provide them with state jurisdictions where you have to calculate and pay sales taxes.
Amazon will also not pay your sales taxes on your behalf. They only put systems and teams in place to help you in the collection process. Then, they will remit the amount to you based on their schedule so you can then remit it to the government.
Bear in mind, however, that documentation, tax-refund requests from customers, and tax obligations in states not covered by Amazon and countries out of U.S. soil will not be covered by the Tax Calculation Service.
No service can give you everything you want. Even Amazon, despite its extensive sales tax service, has limitations. To fill the service gap, you can choose to outsource a trustworthy bookkeeping company that will handle your small business e-commerce sales tax, particularly for some areas where Amazon cannot assist.Sellers in Canada who have to remit taxes but do business in the United States through Amazon will need a different type of service. Consult with Unloop today and know about their bookkeeping and accounting services that are specific for Amazon sellers. Unloop provides sales tax support for Canadian and United States eCommerce businesses to ensure you are registered and eligible to collect and remit sales taxes.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
As an entrepreneur, you know that a part of the business is paying taxes. If you're still starting out, you may have applied for a couple of tax exemptions to get you off the hook of calculating sales taxes. But as your business gains traction, the concern of remitting state sales tax becomes more pressing. Until eventually, you'll have to pay what is due.
Taxes are an obligation that we must pay sooner or later. But, if you've been putting off calculating your sales tax on the back burner for some time, it's time to put it front and center. So, here's a quick article that will help you sit down and think about your sales taxes and how to properly calculate and pay them before you actually have to. Because when it comes to taxes, it's better to be prepared.
Sales tax is an amount levied by the government for each product bought and consumed by the end-user. In the context of you being an Amazon seller, you should take into account your product pricing sales taxes. This is so your customer pays it as part of the price.
Including the Amazon sales tax is an integral part of your Amazon pricing structure. If you don't allocate a percentage to a sales tax rate, it will eat your profit margin once Amazon collects it on your behalf.
So, what exactly is the Amazon sales tax rate? It depends on a lot of factors. But Amazon does have its own system that identifies the right sales tax rates to charge the end consumer. This depends on the product or location. Once you have an economic nexus in a State you sell your goods from, you are eligible to register for a permit to collect tax. Then you can let Amazon collect it for you. Amazon's sales tax collection charges 2.9% per each transaction it collects sales tax from.
It is your obligation to remit taxes. It’s also your obligation to learn how to calculate sales tax on the Amazon marketplace so you can be compliant and remit taxes accurately.
The problem is you're a busy person, and if your e-commerce business sells to multiple locations within the United States and outside, it can be challenging to calculate how much sales tax on Amazon is supposed to be charged. In addition, learning the ropes of calculating sales tax is a process that needs a lot of expertise. The awesome thing is that you have options.
The Amazon Tax Calculation Service Teams
As mentioned above, there’s an Amazon sales tax calculator team composed of a well-oiled system of processes and teams that will do the computing and charging for you. You can get this service for a fee of 2.9% per transaction. This ensures that you charge the appropriate sales tax percentage on each product you sell online.
On the other hand, availing of this service from Amazon doesn't absolve you of all sales tax responsibilities. For instance, before you can enrol yourself in this program, you'll have to provide them with state jurisdictions where you have to calculate and pay sales taxes.
Amazon will also not pay your sales taxes on your behalf. They only put systems and teams in place to help you in the collection process. Then, they will remit the amount to you based on their schedule so you can then remit it to the government.
Bear in mind, however, that documentation, tax-refund requests from customers, and tax obligations in states not covered by Amazon and countries out of U.S. soil will not be covered by the Tax Calculation Service.
No service can give you everything you want. Even Amazon, despite its extensive sales tax service, has limitations. To fill the service gap, you can choose to outsource a trustworthy bookkeeping company that will handle your small business e-commerce sales tax, particularly for some areas where Amazon cannot assist.Sellers in Canada who have to remit taxes but do business in the United States through Amazon will need a different type of service. Consult with Unloop today and know about their bookkeeping and accounting services that are specific for Amazon sellers. Unloop provides sales tax support for Canadian and United States eCommerce businesses to ensure you are registered and eligible to collect and remit sales taxes.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
If you're ever thinking about creating your own bookkeeping system, you'll need the fundamental knowledge first. And there's no other accounting knowledge more fundamental than full-cycle accounting.
Before we introduce the concept of the accounting cycle, there's one thing you need to determine as your first order of business in the accounting facet of your business.
Before setting up any bookkeeping or accounting system for your business, you must first determine your preferred accounting reporting period.
The accounting period spans twelve months in which business transactions are recorded. You have two options when choosing an accounting period.
Calendar - Your accounting period follows the year's calendar in chronological order. That means you start recording on January 1 and then finish the recording period on December 31. The calendar method is the default method used if you have no preferences.
Fiscal - Your accounting period is based on your preferred month. For example, If you choose your accounting period to start on April 1 of the current year, the ending period would be March 31 of next year. Big businesses and public accounting firms commonly use the fiscal year.
The chosen starting month can be arbitrary, or it can be based on multiple factors. For example, some choose their starting month strategically so that the ending month period would fall on a lean period. That way, they can focus more on the accounting part while the business is slow.
An accounting firm makes it their best practice to choose a fiscal period when the ending month falls on the tax-payment period, hitting two birds in one stone—create financial statements and pay appropriate taxes in one effort.
If you're not sure how your business behaves, it's okay to stick to the calendar period. Accounting periods can be changed in the future depending on your state's policy. Be sure to check with them if they will allow it. Either way, you must choose wisely. Accounting period changes may involve considerable paperwork.
Once you've determined your preferred accounting period, you'll need to know how the accounting cycle works. This is especially true if you're going to be the one doing your own books. You'll need to know that you're doing it accurately from start to finish, so you get a clear picture of how your business is doing. This fundamental knowledge will help you gain insights into how others work on your books in the long run. In addition, you'll be able to converse with them using the same accounting knowledge because you know how it works.
The accounting or bookkeeping cycle is a repeating process composed of several steps. Bookkeepers up to top accounting firms use it, no exceptions. It is a cycle because you will have to close the books at the end of your accounting period, open another one the following month, and start the process again. That said, the accounting cycle is composed of these steps:
You will have to determine each transaction that your business can potentially conduct. Normally, your business transactions revolve around a few basic activities, such as sales and revenue, purchases of assets, business expenses, and accounts receivable—money owed to you. Then, you can create an "account" in your books that represent each transaction based on these transactions. For example, for sale, you'll have to create a "Sales" account to represent the amount you need to record as a sale. This is what is called your chart of accounts.
Once you've determined what's to be included in your chart of accounts, you can then proceed to record your business transactions using the double-entry method. A double-entry method records one transaction under two accounts - a debit account and a credit account. These transactions are what you call journal entries, or in simple terms, amount coming in and amount going out. This is important to get right as this will affect other accounting cycle steps.
You will have another book apart from your bookkeeping journal, and it's called a general ledger. This serves as a tool to break down the amount that went in and out of a specific account. Like a journal, it also has debit and credit but is organized under the account rather than the transaction to see the total net value of each line item on the chart of accounts.
At the end of the accounting period, or once a financial statement is needed, the accounting process moves to this step. First, you examine each of the accounts on the ledger and get the difference by subtracting the debit side to the credit side of each account. Then, you will record the net amount in a line item that represents it. Once all ledger accounts are calculated and recorded, the expected result should be equal amounts for both the debit and credit sides. If both sides have the same amount, there's no need for adjusting. Otherwise, you'll have to do the next step.
You'll have to comb through the worksheet to find any discrepancies whenever a trial balance doesn't “balance.” This is equivalent to finding lost pennies.
Once you've determined where the error occurred and what transaction was misrecorded or unrecorded, you'll have to go back to your journal.
You'll have to enter the adjusting entries on your journal by creating an accounting transaction that balances the account in question on the accounting ledger. The transaction will have debit and credit amounts that would impact at least two accounts and should even out both sides of the trial balance.
Once you have recorded all adjusting entries, you will have to do another trial balance to ensure everything is in the proper place. That means going over the ledgers again and checking if all amounts are correct on both the debit and credit sides. Then, sum all the amounts on both sides. The net total should be balanced at this point.
Once everything is balanced, you'll have to determine which accounts are classified as "Balance Sheet" accounts and which ones are "Income Statement" accounts. Again, this is in preparation for creating your financial statements for reporting purposes.
Once every account for each financial statement type is determined, it’s time to close the books. Basically, when closing the books, you'll have to change temporary accounts, also known as your "income statement" accounts, into something permanent that will reflect the balance sheet. In the new book, you will record these converted accounts as your first journal entry, so any ending amounts per account are carried over to the next accounting period.
Accounting can be a tough concept, especially if you don't have time to put your one hundred per cent into learning it. This article will serve as your refresher or even your introduction to the full accounting cycle.
But if these accounting concepts create a loop of confusion, Unloop is here to help. Give us a call, and we'll help you with your bookkeeping needs, so you don't have to think too much about completing the accounting cycle.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
If you're ever thinking about creating your own bookkeeping system, you'll need the fundamental knowledge first. And there's no other accounting knowledge more fundamental than full-cycle accounting.
Before we introduce the concept of the accounting cycle, there's one thing you need to determine as your first order of business in the accounting facet of your business.
Before setting up any bookkeeping or accounting system for your business, you must first determine your preferred accounting reporting period.
The accounting period spans twelve months in which business transactions are recorded. You have two options when choosing an accounting period.
Calendar - Your accounting period follows the year's calendar in chronological order. That means you start recording on January 1 and then finish the recording period on December 31. The calendar method is the default method used if you have no preferences.
Fiscal - Your accounting period is based on your preferred month. For example, If you choose your accounting period to start on April 1 of the current year, the ending period would be March 31 of next year. Big businesses and public accounting firms commonly use the fiscal year.
The chosen starting month can be arbitrary, or it can be based on multiple factors. For example, some choose their starting month strategically so that the ending month period would fall on a lean period. That way, they can focus more on the accounting part while the business is slow.
An accounting firm makes it their best practice to choose a fiscal period when the ending month falls on the tax-payment period, hitting two birds in one stone—create financial statements and pay appropriate taxes in one effort.
If you're not sure how your business behaves, it's okay to stick to the calendar period. Accounting periods can be changed in the future depending on your state's policy. Be sure to check with them if they will allow it. Either way, you must choose wisely. Accounting period changes may involve considerable paperwork.
Once you've determined your preferred accounting period, you'll need to know how the accounting cycle works. This is especially true if you're going to be the one doing your own books. You'll need to know that you're doing it accurately from start to finish, so you get a clear picture of how your business is doing. This fundamental knowledge will help you gain insights into how others work on your books in the long run. In addition, you'll be able to converse with them using the same accounting knowledge because you know how it works.
The accounting or bookkeeping cycle is a repeating process composed of several steps. Bookkeepers up to top accounting firms use it, no exceptions. It is a cycle because you will have to close the books at the end of your accounting period, open another one the following month, and start the process again. That said, the accounting cycle is composed of these steps:
You will have to determine each transaction that your business can potentially conduct. Normally, your business transactions revolve around a few basic activities, such as sales and revenue, purchases of assets, business expenses, and accounts receivable—money owed to you. Then, you can create an "account" in your books that represent each transaction based on these transactions. For example, for sale, you'll have to create a "Sales" account to represent the amount you need to record as a sale. This is what is called your chart of accounts.
Once you've determined what's to be included in your chart of accounts, you can then proceed to record your business transactions using the double-entry method. A double-entry method records one transaction under two accounts - a debit account and a credit account. These transactions are what you call journal entries, or in simple terms, amount coming in and amount going out. This is important to get right as this will affect other accounting cycle steps.
You will have another book apart from your bookkeeping journal, and it's called a general ledger. This serves as a tool to break down the amount that went in and out of a specific account. Like a journal, it also has debit and credit but is organized under the account rather than the transaction to see the total net value of each line item on the chart of accounts.
At the end of the accounting period, or once a financial statement is needed, the accounting process moves to this step. First, you examine each of the accounts on the ledger and get the difference by subtracting the debit side to the credit side of each account. Then, you will record the net amount in a line item that represents it. Once all ledger accounts are calculated and recorded, the expected result should be equal amounts for both the debit and credit sides. If both sides have the same amount, there's no need for adjusting. Otherwise, you'll have to do the next step.
You'll have to comb through the worksheet to find any discrepancies whenever a trial balance doesn't “balance.” This is equivalent to finding lost pennies.
Once you've determined where the error occurred and what transaction was misrecorded or unrecorded, you'll have to go back to your journal.
You'll have to enter the adjusting entries on your journal by creating an accounting transaction that balances the account in question on the accounting ledger. The transaction will have debit and credit amounts that would impact at least two accounts and should even out both sides of the trial balance.
Once you have recorded all adjusting entries, you will have to do another trial balance to ensure everything is in the proper place. That means going over the ledgers again and checking if all amounts are correct on both the debit and credit sides. Then, sum all the amounts on both sides. The net total should be balanced at this point.
Once everything is balanced, you'll have to determine which accounts are classified as "Balance Sheet" accounts and which ones are "Income Statement" accounts. Again, this is in preparation for creating your financial statements for reporting purposes.
Once every account for each financial statement type is determined, it’s time to close the books. Basically, when closing the books, you'll have to change temporary accounts, also known as your "income statement" accounts, into something permanent that will reflect the balance sheet. In the new book, you will record these converted accounts as your first journal entry, so any ending amounts per account are carried over to the next accounting period.
Accounting can be a tough concept, especially if you don't have time to put your one hundred per cent into learning it. This article will serve as your refresher or even your introduction to the full accounting cycle.
But if these accounting concepts create a loop of confusion, Unloop is here to help. Give us a call, and we'll help you with your bookkeeping needs, so you don't have to think too much about completing the accounting cycle.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Predicting the future of your business is no random fortune-telling with a pretty crystal ball. Instead, it requires lots of accurate data to envision the best possible results and apply effective methods to achieve them. In accounting, this is a crucial part of the whole process and is officially called forecasting.
Accounting forecasts use historical and current cost data to estimate and plan future costs and strategies. In the eCommerce sphere, this has become increasingly difficult with the rise of multiple online shopping platforms and social media marketing data.
Fortunately, there are appropriate accounting eCommerce practices that can help you take a realistic stab at what will happen to your sales and profits over the next year or so. This article will discuss some examples of forecasting practices and how they can help you plan for success.
Financial forecasting is an accuracy tool. It helps you know where your business stands and which empty or incorrect areas should be filled and improved for growth. Moreover, it's very handy when coming up with critical company decisions, such as business expansion and hiring.
It has to be accurate, otherwise, there won't be much point in doing it. Plus, it can cause financial damage to your company and stockholders, and we don't want that to happen. To help you minimize and avoid financial risks, here are the seven best practices you can do for accurate and impactful financial forecasting.
Aiming for an optimistic future doesn't necessarily mean you only have to forecast the positive side of things. Instead, you should be aware of uncertain to worst-case business scenarios to forecast the best possible growth for your eCommerce business.
Try to use at least two or more forecasts: one with an optimistic point of view and another with a cautious or worst-case approach. We understand that it can be stressful to go over multiple estimates, but it's an ideal way of projecting realistic goals for your business.
Time is a crucial factor in your forecasting data. Historical and current costs play a significant role in creating your financial projections. Therefore, ensure that you know the period of each data you collect to analyze it from a proper perspective.
If you're having difficulty organizing the data based on their time periods, it's time to level up your collecting system. For instance, use automated eCommerce accounting tools or hire a bookkeeping team to manage these details for you. That way, you won't have much trouble gathering them for forecasting.
In each time period, there's always a strong and weak point that drives the results. To plan better strategies moving forward, determine which approach has the biggest influence from the previous periods. Then, re-evaluate it and enhance it into a new and reliable forecasting strategy.
Find which key points have the greatest impact and recognize the forecast method you used. Were they able to drive sufficient positive results to the company's current financial health? Or do you need to adjust the forecast method for further improvement? What else is missing in your current strategy?
All departments of an organization should coordinate their level of understanding regarding forecasting as it affects all areas of business. Therefore, you should maintain open communication at all times to minimize operational setbacks. For instance, ask for roadmaps or other types of strategic plans from a certain department.
These plans will serve as their response to potential changes in operations or policies. It's important to ensure they understand why adjustments are necessary, evaluate their solutions, and suggest improvements until you come up with an agreement.
Last but not least, keep in mind that forecasts shouldn't be static. They continuously change and improve, depending on your evaluation. Therefore, it's important to revisit and keep track of your forecasts regularly. It will help you prevent potential risks before they become bigger concerns in the future.
Check whether your forecasts still reflect a positive impact on your finances or not. Second, ensure that information is always up-to-date. Lastly, keep improving your forecasting skills; analyze your previous mistakes, improve them, and be more confident with your next projections.
If financial management is not your expertise, you may need to get some professional aid. For example, a financial reporting analyst can help you with forecasting. They look at the big picture of a company's finances and plan strategies to ensure good results.
At the same, you may also seek help from bookkeepers and accountants. Before the analyst does a forecast, they need to gather important data first. Most of these are found in the reports and documents generated by bookkeepers and accountants.
Nothing comes easy with accounting for an eCommerce business, especially financial forecasting. It takes a lot of work, from the data you need to analyze to keeping track and monitoring the effectiveness and accuracy of your forecasts.
But with good forecasting practices, your efforts will eventually pay off. If you're unsure how to go about this and have to start from scratch, consider outsourcing eCommerce bookkeeping or accounting services. The Unloop team can help you understand and organize your financial duties properly.
Our bookkeeping package includes the organization of financial statements as well as expert support and analysis for eCommerce companies. Moreover, we work with partner accounting firms to ensure your books are up-to-date, compliant with the requirements, and reliable in financial forecasts. Allow us to help you grow and maintain profitability in the ever-changing eCommerce market.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Predicting the future of your business is no random fortune-telling with a pretty crystal ball. Instead, it requires lots of accurate data to envision the best possible results and apply effective methods to achieve them. In accounting, this is a crucial part of the whole process and is officially called forecasting.
Accounting forecasts use historical and current cost data to estimate and plan future costs and strategies. In the eCommerce sphere, this has become increasingly difficult with the rise of multiple online shopping platforms and social media marketing data.
Fortunately, there are appropriate accounting eCommerce practices that can help you take a realistic stab at what will happen to your sales and profits over the next year or so. This article will discuss some examples of forecasting practices and how they can help you plan for success.
Financial forecasting is an accuracy tool. It helps you know where your business stands and which empty or incorrect areas should be filled and improved for growth. Moreover, it's very handy when coming up with critical company decisions, such as business expansion and hiring.
It has to be accurate, otherwise, there won't be much point in doing it. Plus, it can cause financial damage to your company and stockholders, and we don't want that to happen. To help you minimize and avoid financial risks, here are the seven best practices you can do for accurate and impactful financial forecasting.
Aiming for an optimistic future doesn't necessarily mean you only have to forecast the positive side of things. Instead, you should be aware of uncertain to worst-case business scenarios to forecast the best possible growth for your eCommerce business.
Try to use at least two or more forecasts: one with an optimistic point of view and another with a cautious or worst-case approach. We understand that it can be stressful to go over multiple estimates, but it's an ideal way of projecting realistic goals for your business.
Time is a crucial factor in your forecasting data. Historical and current costs play a significant role in creating your financial projections. Therefore, ensure that you know the period of each data you collect to analyze it from a proper perspective.
If you're having difficulty organizing the data based on their time periods, it's time to level up your collecting system. For instance, use automated eCommerce accounting tools or hire a bookkeeping team to manage these details for you. That way, you won't have much trouble gathering them for forecasting.
In each time period, there's always a strong and weak point that drives the results. To plan better strategies moving forward, determine which approach has the biggest influence from the previous periods. Then, re-evaluate it and enhance it into a new and reliable forecasting strategy.
Find which key points have the greatest impact and recognize the forecast method you used. Were they able to drive sufficient positive results to the company's current financial health? Or do you need to adjust the forecast method for further improvement? What else is missing in your current strategy?
All departments of an organization should coordinate their level of understanding regarding forecasting as it affects all areas of business. Therefore, you should maintain open communication at all times to minimize operational setbacks. For instance, ask for roadmaps or other types of strategic plans from a certain department.
These plans will serve as their response to potential changes in operations or policies. It's important to ensure they understand why adjustments are necessary, evaluate their solutions, and suggest improvements until you come up with an agreement.
Last but not least, keep in mind that forecasts shouldn't be static. They continuously change and improve, depending on your evaluation. Therefore, it's important to revisit and keep track of your forecasts regularly. It will help you prevent potential risks before they become bigger concerns in the future.
Check whether your forecasts still reflect a positive impact on your finances or not. Second, ensure that information is always up-to-date. Lastly, keep improving your forecasting skills; analyze your previous mistakes, improve them, and be more confident with your next projections.
If financial management is not your expertise, you may need to get some professional aid. For example, a financial reporting analyst can help you with forecasting. They look at the big picture of a company's finances and plan strategies to ensure good results.
At the same, you may also seek help from bookkeepers and accountants. Before the analyst does a forecast, they need to gather important data first. Most of these are found in the reports and documents generated by bookkeepers and accountants.
Nothing comes easy with accounting for an eCommerce business, especially financial forecasting. It takes a lot of work, from the data you need to analyze to keeping track and monitoring the effectiveness and accuracy of your forecasts.
But with good forecasting practices, your efforts will eventually pay off. If you're unsure how to go about this and have to start from scratch, consider outsourcing eCommerce bookkeeping or accounting services. The Unloop team can help you understand and organize your financial duties properly.
Our bookkeeping package includes the organization of financial statements as well as expert support and analysis for eCommerce companies. Moreover, we work with partner accounting firms to ensure your books are up-to-date, compliant with the requirements, and reliable in financial forecasts. Allow us to help you grow and maintain profitability in the ever-changing eCommerce market.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Income tax is something that everyone must deal with at some point in their lives. Still, many people don’t fully understand how it works in Canada. All we know is that taxes are a necessary evil. We have to pay them every year, and they seem to take more from us each time we do it. But what if you could understand how the system works? What if you knew how your money is spent? Wouldn't that make paying taxes a little easier? We are here to answer this question: How does income tax return work in Canada? Let's get started!
Income tax is the percentage acquired by the government from groups’ or individuals’ income, and it has the following classifications:
After payment, the government computes and gives back an income tax return for any excess fees you paid throughout the year.
The CRA is Canada’s tax-collecting agency that ensures all tax laws are implemented and followed accordingly. Individual, corporate, and trust income taxes along with Goods and Services Tax (GST) and Harmonized Sales Tax (HST) are all registered, processed, and paid in this office. If you are running a company, you need to create your business number registration so that if you have several employees, you can create an account to report and send income deductions you make from your workers to the CRA.
If you are eligible for the Child and Family Benefits, you can also get payments from this office. It also handles Pension Plans for retirement, savings, registered education, and disability benefits.
Charging customs duties like excise duties, excise taxes, tariff, fuel, and security charges are also under CRA’s jurisdiction.
Generally, all residents and workers in Canada are required to pay income tax returns. However, you still have to check the full guidelines set by the CRA to know where your situation falls in these categories:
All these have specific income tax return payment requirements. For instance, for “factual residents” who are Canadian residents but live in another country for most of the year, the tax requirement of a regular Canadian resident still applies. To ensure that you are following tax laws, inquire with the CRA about your situation.
Birthdays, anniversaries, and holidays—there are a lot of dates to remember in a year, and one of them should be the deadline for your taxes! Mark these dates: it is best to pay ahead rather than late.
April 30: For regular individual taxes, corporate income tax returns, and for GST/HST
June 15: For self-employed individuals and their spouses
April 30 or six months after death date: Taxes of deceased taxpayer to be paid by the surviving spouse
June 30 the following year: Tax filing of Canada non-residents
Because of the pandemic, you may follow a prolonged tax deadline, depending on the CRA. So keep yourself updated. If you pay beyond the deadline, it will still be accepted, but you must prepare for additional late filing charges. Heavier repercussions are given to individuals who do not pay taxes at all.
Make it a habit to settle your taxes before the tax deadline and be prepared with the following details in your income report:
In paying taxes, finding, and claiming deductions, credits, and expenses, get copies of the necessary forms such as T3, T4, T5, and T2202 slips online and accomplish them fully.
It is best to create a direct deposit account for the faster processing of payments and refunds. Then, always make sure that your record on the CRA is up-to-date and accurate. Settle your taxes and file for tax returns, and make sure to check your payment status afterward to ensure your profile is updated.
Check the Canadian tax brackets to know how much exactly you need to pay. Keep in mind that you need to pay both federal tax plus provincial and territorial tax.
These are the federal tax rates for 2021 you need to remember.
| Tax Rate | Taxable income bracket |
| 15% | on the first $49,020 of taxable income |
| 20.5% | on the next $49,020 of taxable income/49,020 up to $98,040 |
| 26% | on the next $53,939 of taxable income/$98,040 up to $151,978 |
| 29% | on the next $64,533 of taxable income/151,978 up to $216,511 |
| 33% | taxable income over $216,511 |
You will be charged for provincial and territorial taxes depending on your status: single, married filing jointly, married filing separately, and head of household. Tax rates range from 10%, 12%, 22%, 24%, 32%, 35%, to 37%.
After all the hard work you put into tax computation, you can pay your total income tax (Canada) through the following methods conveniently.
After sending your payment, do not forget to confirm if the money has been received. For tax debts, you can set up a meeting with a CRA member or give them a call to determine how much you need to pay and how often. Although the payment computation differs, you can use the same payment methods mentioned above to pay the tax debt.
It is fine to know what happens if you do not pay taxes so that the repercussions will always drive you to pay on time. Some individuals think that they can run off without the CRA, but this could actually cause more losses. The CRA will come after you, and here are the possible repercussions if you do not pay your taxes:
These regulations are tough, but despite that, the CRA is still open to negotiations and hearing the taxpayer’s side. So with that, individuals with tax debt can set up a meeting with the CRA to find out what happened and lay out a payment plan without putting that person’s ability to live a comfortable life at risk.
The Government acquires taxes from constituents to fund different projects. In Canada, if you ever wonder where your taxes go, here they are:
Aside from enjoying these services, you also allow other members of the community to have a better life.
Taxes seem to be a considerable task when you are prepared for it, but when done right, you’ll see that it is as easy as 1,2,3. Let us help you make the next tax season better through these tips.
Be aware of tax laws: It is best to familiarize yourself with the Income Tax Act, but if you can’t, at least know your responsibilities on paying taxes—when and how to pay.
Use bookkeeping and accounting software: if you have just begun your business, you can use different accounting and bookkeeping software for your data storage. When your business expands, you can let trained accountants and bookkeepers continue the task for you.
Hire a bookkeeper and accountant: A whole year of income and expenses with tons of documentation and receipts are difficult to backtrack and cram weeks before the tax deadline. Having a bookkeeper to help you track and record everything as they happen will be of great help. An accountant, on the other hand, enables you to make sense of data and numbers. They can give you insights and help you in your next business steps.
Here at Unloop, we have bookkeeping services to assist you in tracking your income and expenses, so when tax season comes, computation and filing will be more straightforward. We use Quickbooks, A2X, and Hubdoc to make everything automated and your document protected. If there are any questions left unanswered, get in touch with us. We will be happy to answer them for you!Taxes are a necessary evil. But, you can make it an easy job for yourself if you know what to do. We hope that we’ve answered your question, “How does income tax in Canada work?” and everything in between so that your tax filing is as stress-free as possible.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Income tax is something that everyone must deal with at some point in their lives. Still, many people don’t fully understand how it works in Canada. All we know is that taxes are a necessary evil. We have to pay them every year, and they seem to take more from us each time we do it. But what if you could understand how the system works? What if you knew how your money is spent? Wouldn't that make paying taxes a little easier? We are here to answer this question: How does income tax return work in Canada? Let's get started!
Income tax is the percentage acquired by the government from groups’ or individuals’ income, and it has the following classifications:
After payment, the government computes and gives back an income tax return for any excess fees you paid throughout the year.
The CRA is Canada’s tax-collecting agency that ensures all tax laws are implemented and followed accordingly. Individual, corporate, and trust income taxes along with Goods and Services Tax (GST) and Harmonized Sales Tax (HST) are all registered, processed, and paid in this office. If you are running a company, you need to create your business number registration so that if you have several employees, you can create an account to report and send income deductions you make from your workers to the CRA.
If you are eligible for the Child and Family Benefits, you can also get payments from this office. It also handles Pension Plans for retirement, savings, registered education, and disability benefits.
Charging customs duties like excise duties, excise taxes, tariff, fuel, and security charges are also under CRA’s jurisdiction.
Generally, all residents and workers in Canada are required to pay income tax returns. However, you still have to check the full guidelines set by the CRA to know where your situation falls in these categories:
All these have specific income tax return payment requirements. For instance, for “factual residents” who are Canadian residents but live in another country for most of the year, the tax requirement of a regular Canadian resident still applies. To ensure that you are following tax laws, inquire with the CRA about your situation.
Birthdays, anniversaries, and holidays—there are a lot of dates to remember in a year, and one of them should be the deadline for your taxes! Mark these dates: it is best to pay ahead rather than late.
April 30: For regular individual taxes, corporate income tax returns, and for GST/HST
June 15: For self-employed individuals and their spouses
April 30 or six months after death date: Taxes of deceased taxpayer to be paid by the surviving spouse
June 30 the following year: Tax filing of Canada non-residents
Because of the pandemic, you may follow a prolonged tax deadline, depending on the CRA. So keep yourself updated. If you pay beyond the deadline, it will still be accepted, but you must prepare for additional late filing charges. Heavier repercussions are given to individuals who do not pay taxes at all.
Make it a habit to settle your taxes before the tax deadline and be prepared with the following details in your income report:
In paying taxes, finding, and claiming deductions, credits, and expenses, get copies of the necessary forms such as T3, T4, T5, and T2202 slips online and accomplish them fully.
It is best to create a direct deposit account for the faster processing of payments and refunds. Then, always make sure that your record on the CRA is up-to-date and accurate. Settle your taxes and file for tax returns, and make sure to check your payment status afterward to ensure your profile is updated.
Check the Canadian tax brackets to know how much exactly you need to pay. Keep in mind that you need to pay both federal tax plus provincial and territorial tax.
These are the federal tax rates for 2021 you need to remember.
| Tax Rate | Taxable income bracket |
| 15% | on the first $49,020 of taxable income |
| 20.5% | on the next $49,020 of taxable income/49,020 up to $98,040 |
| 26% | on the next $53,939 of taxable income/$98,040 up to $151,978 |
| 29% | on the next $64,533 of taxable income/151,978 up to $216,511 |
| 33% | taxable income over $216,511 |
You will be charged for provincial and territorial taxes depending on your status: single, married filing jointly, married filing separately, and head of household. Tax rates range from 10%, 12%, 22%, 24%, 32%, 35%, to 37%.
After all the hard work you put into tax computation, you can pay your total income tax (Canada) through the following methods conveniently.
After sending your payment, do not forget to confirm if the money has been received. For tax debts, you can set up a meeting with a CRA member or give them a call to determine how much you need to pay and how often. Although the payment computation differs, you can use the same payment methods mentioned above to pay the tax debt.
It is fine to know what happens if you do not pay taxes so that the repercussions will always drive you to pay on time. Some individuals think that they can run off without the CRA, but this could actually cause more losses. The CRA will come after you, and here are the possible repercussions if you do not pay your taxes:
These regulations are tough, but despite that, the CRA is still open to negotiations and hearing the taxpayer’s side. So with that, individuals with tax debt can set up a meeting with the CRA to find out what happened and lay out a payment plan without putting that person’s ability to live a comfortable life at risk.
The Government acquires taxes from constituents to fund different projects. In Canada, if you ever wonder where your taxes go, here they are:
Aside from enjoying these services, you also allow other members of the community to have a better life.
Taxes seem to be a considerable task when you are prepared for it, but when done right, you’ll see that it is as easy as 1,2,3. Let us help you make the next tax season better through these tips.
Be aware of tax laws: It is best to familiarize yourself with the Income Tax Act, but if you can’t, at least know your responsibilities on paying taxes—when and how to pay.
Use bookkeeping and accounting software: if you have just begun your business, you can use different accounting and bookkeeping software for your data storage. When your business expands, you can let trained accountants and bookkeepers continue the task for you.
Hire a bookkeeper and accountant: A whole year of income and expenses with tons of documentation and receipts are difficult to backtrack and cram weeks before the tax deadline. Having a bookkeeper to help you track and record everything as they happen will be of great help. An accountant, on the other hand, enables you to make sense of data and numbers. They can give you insights and help you in your next business steps.
Here at Unloop, we have bookkeeping services to assist you in tracking your income and expenses, so when tax season comes, computation and filing will be more straightforward. We use Quickbooks, A2X, and Hubdoc to make everything automated and your document protected. If there are any questions left unanswered, get in touch with us. We will be happy to answer them for you!Taxes are a necessary evil. But, you can make it an easy job for yourself if you know what to do. We hope that we’ve answered your question, “How does income tax in Canada work?” and everything in between so that your tax filing is as stress-free as possible.
Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting.. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.
