BC Technology Startup in Journal Entries!
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Note: All numbers & GST calcs are approximations and tax issues should be discussed with a qualified professional tax advisor!
| Incorporate Business | |
| Dr. Incorporation Costs | $1,000 |
| Cr. Accrued Accounts Payable | $1,000 |
Open bank and put in consideration for founder’s shares and some working capital |
|
| Dr. Bank | $5,000 |
| Cr. Shareholder’s loan | 4,999 |
| Cr. Common shares | 1 |
| Â Go to NCIX or Apple World and buy shwanky computer on credit card. Â Go home and sign up for 30 day free QCDocs and crank out your first expense report using CSV download- Hey nice policy it reminded me to get my mileage and parking in there!!) |
|
| Dr. Computer assets | $3,745 |
| Dr. GST receivable | 210 |
| Cr. Shareholder payables | $3955 |
| Dr. Mileage & Parking expense | $33.65 |
| Dr. GST receivable | 1.35 |
| Cr. Shareholder payables | $35 |
| Â Few weeks later the legal bill for incorporation shows up… dam they never mentioned those Ministry of Finance charges and PST… what’s up with that… lawyers in the States don’t have to put up with that!? |
|
| Dr. Incorpation costs | $250 |
| Dr. Accrued Accounts Payable | 1,000 |
| Dr. GST receivable | 119 |
| Cr. Accounts payable | $1,369 |
| Â Set yourself up with payroll and bootstrap doing SR&ED eligible work for a while making monthly payroll remittances only. |
|
| Dr. R&D wages | $5,000 |
| Dr. Payroll expenses (just CPP if you own more then 40%)) | 233 |
| Cr. Shareholder payable | $3,782 |
| Cr. Due to Receiver General | 1,451 |
| Â Cut a cheque by the 15th of the next month to pay the Receiver General and pay the lawyers tab |
|
| Dr. Due to Receiver General | $1,451 |
| Dr. Accounts payable | 1,369 |
| Cr. Bank Account | $1,451 |
| Cr. Bank Account | 1,369 |
| Â Oh no cash running low better go convince Family, Friends or Angel you met at Bootup Labs to finance your build. |
|
| Dr. Cash | $50,000 |
| Cr. Â Common Shares or Convertible Note (See Top 10 list)? | $50,000 |
| Â Carry on doing development only taking out what you need to live and file your tax return with SR&ED. Â Remember to use QCDocs to track your time for SR&ED and bills/etc. along route so you can get Tandem Accounting to crank out some QB’s financials in a flash and shoot to Rolfe Bensen, Entrust or Strategix to crank out a T2 and T661for you. Â Might call Ed Levinson who sits across from me at Bootup or Nick Arden somewhere along the line to tee up SR&ED writeup! |
|
| Dr. SR&ED Receivable | $22,825 (or there abouts) |
| Cr. Research and Development contra expense | $22,825 |
Get a cheque up to 6 months later if you clear audits, etc. if applicable. |
|
| Dr. Bank Account  $22,825 | |
| Cr. Â Cr. Sr&ED Receivalbe | $22,825 |
Note: if you raise more money and do other stuff like marketing, business planning, etc. you will get the full benefit of the Proxy method for SR&ED and get even more money back! Â Investors will be impressed that you can get extra mileage out of their investments and recommend you to their richer friends and you get more money.
Eventually you build some skookum tech and you get aquired by Google for obseen cash and you and your investors each walk away with at least the minimum $750,000 tax free capital gain for having developed such a successful qualifying small business corporation.
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