Now that you have a Personal Real Estate Corporation (PREC), it’s essential to understand that this is just the beginning of strategic tax planning. By considering all these factors, realtors can make informed decisions that will benefit their financial future.

To truly maximize the benefits of incorporation and minimize your tax liability, it is crucial to have a holistic view of both your business and personal financial situation.

It’s a common misconception among realtors that incorporating a PREC will automatically provide nearly all the benefits of tax planning. However, simply hoping for tax planning goals won’t cut it; you need to put in the work, especially when dealing with complex issues such as GST/HST returns and remuneration planning.

Based on our experience, we’ve observed that many realtors often find themselves overwhelmed and frustrated due to their inability to handle certain details, such as:

• Inadequate bookkeeping practices, systems, and/or bookkeepers.
• Confusion regarding the legal and tax relationships between individuals and corporations, as well as the responsibility of paying and filing taxes, including GST/HST payable.
• Difficulty in keeping track of tax requirements, deadlines, and cash flow needs Uncertainty in managing regular GST/HST reporting.
• Failure to budget for future taxes and tax instalments from an income tax and GST/HST perspective.
• Getting lost in the details when determining the best way to remunerate the owner and/or their family.

What you should expect from your Accountant:

Business Management

• Monitoring the business
• Strategic direction of administration and operations

Bookkeeping and Accounting

• Setting up a corporate bank account
• Budgeting and cash flow planning
• Adequate record-keeping for the CRA GST/HST calculation and filing
• Potential payroll
• Annual filings for remuneration (T4 and T5 reporting requirements)
• Payment of tax instalments, when required

Tax Planning, Preparation, and Filing

• Annual tax return for your corporation and financial statements.
• Annual tax return for yourself and your family
• Potential transfer of business tax elections, GST/HST considerations, business valuation
• Periodic tax planning discussions with your accountant

Final Words

It’s essential to understand that bookkeeping and tax planning are two distinct processes that require different levels of expertise and attention to detail. Accurate bookkeeping is the foundation of effective tax planning, including the correct application of the GST/HST quick method. However, it’s important to take a holistic view to minimize your tax liability and take maximum advantage of incorporation. Tax planning can be complex and varies depending on individual circumstances, such as capital gains reserve. Therefore, it’s crucial to seek professional advice to ensure compliance with all applicable tax laws.

Partnering with Xceed Accounting to establish a highly effective system eliminates complications and gives you the confidence to concentrate on your business while saving a significant amount in taxes, penalties, and interest.