Starting a small business
in Business, Accounting & Taxes ·
HERE’S THE DEAL:
Every single small business owner—and I mean ALL of them—HAS TO include the R-2 designation. It’s how you identify yourselves as being part of the income tax system. The only exception? Profitable corporations—they use the R-1 tag instead.
Just to be clear, the R-2 label is mandatory for everyone, regardless of whether you're registered for sales tax or not. If you aren't in the sales tax system, you simply have to state, "Not registered per Section XX of the Sales Tax Act." Simple as that.
Otherwise, if an invoice lacks either the R-1 or R-2 tag, it’s effectively useless.☕
Even if you skip the customer's Tax ID on the invoice, you’re asking for trouble during an IRS audit when they start demanding your ledger entries and copies of every single receipt.
I’m speaking from experience here!😉 That’s really all there is to it. Honestly, it would be wise to actually read the Sales Tax Act—it outlines exactly what elements every invoice must contain, whether you're registered or not.
Best regards,😉
Every single small business owner—and I mean ALL of them—HAS TO include the R-2 designation. It’s how you identify yourselves as being part of the income tax system. The only exception? Profitable corporations—they use the R-1 tag instead.
Just to be clear, the R-2 label is mandatory for everyone, regardless of whether you're registered for sales tax or not. If you aren't in the sales tax system, you simply have to state, "Not registered per Section XX of the Sales Tax Act." Simple as that.
Otherwise, if an invoice lacks either the R-1 or R-2 tag, it’s effectively useless.☕
Even if you skip the customer's Tax ID on the invoice, you’re asking for trouble during an IRS audit when they start demanding your ledger entries and copies of every single receipt.
I’m speaking from experience here!😉 That’s really all there is to it. Honestly, it would be wise to actually read the Sales Tax Act—it outlines exactly what elements every invoice must contain, whether you're registered or not.
Best regards,😉