One Simple Step to Help Streamline your Self Employed Finances

If you are self employed or a small business owner,  you have probably discovered that keeping track of your accounting and finances can be time consuming and occasionally frustrating.  Unless you are an accountant, you’re never really sure if you are doing things correctly.  Consequently, you procrastinate, which really just makes things worse at year end or tax time.  To combat the problem it is important to have tools in place to facilitate the process and make it less painful, which could include  accounting software and/or a bookkeeper as well as a good organization system for your documents, whether it is electronic or paper format.  Another very simple measure that you can take is to have a separate bank account for your business.
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3 Invoicing Options for Small Businesses and Freelancers

If you are running a business of any size, it is essential that you have a system in place that allows you to get paid.   A system can range in sophistication from a handwritten receipt to a software generated invoice which is part of an entity wide CRM system.  To meet this need there are countless invoicing solutions available and many billions of dollars are spent annually on setting up systems to meet each business’ unique needs. 

Almost all accounting software geared to small business owners and freelancers have built-in invoicing modules that integrate with your accounting.  This is very useful when doing your books as you don’t have to worry about entering your invoicing manually and it allows you to track your accounts receivable and deposits into your bank account.  There are also invoicing solutions that are not full-fledged accounting systems; however they usually integrate with the more popular software.

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6 Strategies to Maintain your Sanity during Busy Season

Accountants across the world right now are mired in tax preparation madness, as they try to deal with the myriad of work that needs to be done before tax filing deadlines.  The period between January and April is universally referred to as busy season, a term which inspires dread and tests the mettle of even the most ambitious and hardworking accountants.  Of course busy season is not specific to accountants.  Retailers experience it during the lead up to Christmas while the hospitality industry tends to be busiest in June and July (Montreal’s grand prix weekend is both a boon and a logistical nightmare for hotels and restaurants).  In fact most small business owners have periods when they are swamped, which can be problematic if they are not able to handle it.  In the interest of avoiding premature hair loss and ensuring that your business continues its unabated growth, below are some simple, yet fundamental strategies, to help you cope:
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Accounting and Tax Treatment of Computer Hardware and other Fixed Assets

Investment in capital items such as computers, furniture, equipment and cars can cause confusion for small business owners.  Since these are purchases that affect the cash flow of the business, it seems that they should be accounted for as expenses just as you would reflect office supplies or rent.  There are however special rules for any acquisitions that qualify as “fixed assets”. 

A fixed asset, simply speaking, is an acquisition that provides a long term economic benefit to the business. In other words, any business purchases that has a useful life that extends beyond one year, will usually qualify as a fixed asset. 

From an accounting perspective, fixed assets as their category implies, are reflected as assets on the Balance Sheet.  This means that they when they are initially entered into your accounting system, they will have no immediate impact on your bottom line.  It is only with the passage of time that a portion of these costs become an expense, which requires an assessment regarding the useful life of the asset.  For example you might purchase some computer hardware that you expect to use for about 3 years after which you will need to replace it.   At the end of the 3 years, however, it may still have some value (you may be able to sell it) which is referred to as salvage value.  This too needs to be evaluated.  Once these factors are determined (since you are not psychic, they do not have to be exact – just reasonable) you have enough information to calculate your depreciation expense.  The depreciation expense is the amount by which you reduce your fixed asset value on an annual basis. 

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How to Update Wave Accounting for the 2012 QST Rate Increase

As of January 1st, 2012 the Quebec Sales Tax (QST Rate) which had gone up from 7.5% to 8.5% on January 1, 2011 will now increase to 9.5%.  The effective sales tax in Quebec will go up from 13.925% to 14.975%.  Since QST is calculated on the net amount + GST, the rate is not 14.5% but 14.975% .  In other words the effective QST rate is 9.75%.  Business owners will need to update their invoicing and accounting systems accordingly to ensure that the rate is properly reflected.

If you are using Wave Accounting, the update to the rates is fairly straightforward, with one little quirk.  Since Wave, unlike Quickbooks, does not allow for the QST to be calculated on the GST, the effective rate has to entered manually.  This is done as follows:

To update Quickbooks for the tax rate increase, please see “Updating Quickbooks for the 2011 QST Increase”.  The procedure is essentially identical except for rates.

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