Well, It’s that stupid time of the year again… the time when we all get to ship off an all-too-large percentage of our income to the government to waste.
Actually, the above is only true for those who are self-employed. If you work for The Man, you typically don’t notice income tax since it’s automatically taken from your paycheck every two weeks.
But for those of you who make your full income off the web like I do, this time of the year really sucks. However, once you start making enough, the government usually wants you to start paying quarterly, in advance. So, I’ve actually already paid my 2008 personal taxes back in 2008 and actually have my first quarterly payment of 2009 due in next week.
In March 2008, one year ago, I founded the corporation Merendi Networks Inc. Therefore, this is the first year that I’ll be reporting my corporate tax income. I didn’t get the bill yet, but I’m told it will cost around $2,000 just to get my basic corporate income tax year-end done. That’s one downside to incorporating, but the 15.5% corporate tax here in BC, Canada definitely makes up for it 🙂
And it’s only getting lower. It will be 13.5% in 2009 and it is set to continue to drop here until 2012 when I believe it will be 11% or 11.5%. For example, if I have $150,000 of taxable income (net) for 2009, I would owe $46,819.76 if it was all personal income. As a corporation, it would only be $20,250. Now, of course it’s not that simple since I have to pay myself in dividends so that I can buy groceries and pay my bills, etc. but you get the idea.
Since I often get a lot of people asking me how I do my taxes, I thought I’d make a little video showing how I prepare them for my accountant. That’s an important note, because what you see in the video is not what I’m sending to the CRA (Canadian Revenue Agency), but just the files I hand over to my accountant’s firm and have them do for me.
I’m currently around 75% done preparing all my documents, but will need to finish soon as I’m meeting with my accountant on Monday. I was given a new guy when I made the appointment over the phone, so I hope he’s good and understands all this web stuff and isn’t really oldschool or anything 🙂
I’ll let you know how things go and what I end up owing in both personal and corporate income taxes. I should be getting a refund from my personal taxes though, since I already prepaid 2008’s taxes which were based off of 2007’s personal income, and since I incorporated this year, my personal income will have been dramatically less than 2007 which means I overpaid and should get a refund.
Anyhow, I’ll keep you guys posted. Wish me luck! I hate taxes!