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Thread: Shared Tyme business account and tax

  1. #1
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    Question Shared Tyme business account and tax

    Hi everyone,

    My wife and I would like to create a Tyme bank business account (Sole proprietor) with the purpose of keeping house expenses (running expenses) and future income (rentals) in one separate account for easier management and tracking (keep transactions out of personal accounts).

    However, we are unclear on the following:

    1) If we are both funding the account monthly, how does this work with regards to tax? Similarly, how would this work when we start generating income from rentals?
    2) Apparently female (and married?) persons are taxed less - is this true and would this apply here? The account will be opened in my name, though I am currently earning a higher salary than my wife. Should the account then rather be opened in her name?
    3) Overall, is this a good solution to having a separate household account - or is there a better way to go about it?



    Any advice will be super appreciated!

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    Sole means only one
    The bigger question is are you married in or out of community of property? Net rental income is usually split between spouses when they are married in community of property. The other side of the coin is who owns the property that is to be leased?

    The answer to your question number (2) is simply "No". All of it.

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    Site Caretaker Dave A's Avatar
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    The main trick is to keep business transactions in one account and personal transactions in another account. In trying to explain "business transactions" in the simplest way, these will be income for the business venture, and expenditure spent in the generation of income for the business venture.

    If you have not incorporated the venture (into a company or closed corporation), the "business" will be either a sole proprietorship (one owner), or a partnership (multiple owners).

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    Diamond Member adrianh's Avatar
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    @Dave - I have some questions regarding the operation of a business as a Sole Proprietor

    1. If you are operating the business from your own property wouldn't you be able to claim some of the expenses as business expenses?
    2. If one is able to claim aspects of the household expenses as business expenses doesn't that mean that the allocation of expenditure is a bookkeeping exercise rather than a brick n mortar real world separation?

    I ask these questions because I am considering shutting the CC down and operating as a Sole Proprietor.
    “Why, sometimes I've believed as many as six impossible things before breakfast.”
    ― Lewis Carroll, Alice in Wonderland

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    Site Caretaker Dave A's Avatar
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    I suggest members with considerably more tax expertise than I have, such as Andromeda are the best people for advice in this regard. So what I have put down below are my "opinions" and I defer to any correction the tax experts may have.

    Quote Originally Posted by adrianh View Post
    1. If you are operating the business from your own property wouldn't you be able to claim some of the expenses as business expenses?
    My understanding is you can claim some portion of the property expenses as deductible expenses.

    Quote Originally Posted by adrianh View Post
    2. If one is able to claim aspects of the household expenses as business expenses doesn't that mean that the allocation of expenditure is a bookkeeping exercise rather than a brick n mortar real world separation?
    I would agree with that point of view. My point is the separation between business and personal is easier to manage and prove if the business transactions are conducted in one bank account and the personal transactions are conducted in another.

    Quote Originally Posted by adrianh View Post
    I ask these questions because I am considering shutting the CC down and operating as a Sole Proprietor.
    I am not sure if that will affect what you can claim in the way of deductible expenses. However, there may be significant consequences i.r.o. income tax.

    Some other thoughts:
    I strongly recommend that if there has to be a VAT registration, do not do this as a sole proprietor.
    And the sole proprietor isn't covered by Workman's Compensation, just the sole proprietor's employees.

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