Guidance on Deducting Home Office Expenses

One of the benefits of having a home based business (for freelancers, self employed contractors and small business owners) is that you can deduct the expenses relating to the space that you use to work.  This can result in a significant reduction in your tax bill for costs that you would incur regardless, giving you one more reason to love being your own boss.  

Criteria for Deductibility:

For home office expenses to be deductible, they have to meet the following criteria: 

  • It has to be your principal place of business i.e. you cannot deduct home office expenses if you have another office that relates to your business, elsewhere, even if you work 22 hours a day or you check your blackberry in bed.
  • The space designated as your home office is used to earn business income and/or you meet clients or customers on a regular basis.  You can deduct expenses relating to the workspace in your garage which is used for home improvement projects.
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How to Update Quickbooks for the 2011 QST Rate Increase

On January 1st, 2010, Revenue Quebec will be in increasing the QST rate to 8.5% (yay!), bring the effective rate of QST to 8.925% and  total sales taxes (GST and QST) to 13.925%, since the QST is actually charged on the net price + GST.  This will affect anyone who charges QST including small businesses and self employed individuals.  More info on the rate increase can be found at Revenue Quebec QST Rate Increase page.

For those of you using Quickbooks you will need to update the QST being charged on both sales and purchases.  The goal is to make a copy of the already existing QST on Sales and QST on purchases items, which will maintain the old rate.  Once this is done the existing "items" should be updated with the new rate.  This will automatically feed into and update the sales tax codes, so that you do not have to re-create them.  Keep in mind that this should be done on January 1st, 2011 or first day back after the holidays, so that transactions prior to 2011 are not affected.  The following are the steps required to make the change:

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Excel for Small Business Owners

This is incredibly geeky, but there is something about large amounts of data, in a neatly organized table, that I find somewhat exciting .  I suppose it has something to do with an affinity for organization combined with a love of numbers.   As an accountant and financial consultant, I am constantly faced with the task of organizing and analysing data.  And although good accounting software is absolutely necessary for any small business owner, almost all of my financial reporting and analysis is done using excel.

Excel, for my purposes, is somewhat magical.  (Just to be clear, I have no connection to Microsoft. I will eventually write a post on how much I despise Word).  I actually like manipulating data in excel, just so that I can discover new features and find more efficient ways of doing thngs.  This, of course, often ends up taking twice as long as if I had just done it using the more manual, tried and tested methods.  What, continues to impress me, however, is that there is an easier way to do almost everything  in excel (involving data – unfortunately it will not cook you dinner).  And this does not even include macros.

If you are planning to updgrade to excel 2007 or 2010, keep in mind that the interface is quite different.  This takes a while to get used to, and can be quite frustrating in the beginning.  However once you have become familiar with the new structure, excel 2007/10 is vastly superior to 2003.

Excel is especially helpful for small business owners and employees who do not have customized financial reporting or accounting software but are interested in disseminating their data.  Below are some ways in which excel can add value:

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Guidance on Working from Home

Having a home based business has many advantages -  there's no soul sucking commute to and from work, waking up hours are flexible and it allows us to work when we are at our most productive or creative.  Also, it is tax deductible.  It can, however, also present a unique set of challenges.  Given the proximity of distractions including our beds, fridge and tv, even our primary work tool i.e. our computers, it requires a great deal of discipline and focus to actually get any work done. Below are three articles that provide guidance on having a home office:

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