Should You Transition to a Paperless Office (and What CRA Has to Say about It)
Imagine having an office without clutter, free from sad looking boxes and filing cabinets filled to the brim, where you don’t have to rifle through unlabeled containers to find a receipt for a computer that you bought three years ago. . An office where you can make Marie Kondo proud by getting rid of (almost) anything that does not bring you joy and surrounding it instead with items that inspire (or at least improve productivity). This is all possible with a few apps, sufficient digital space and a shift in your mindset and processes.
How to customize a Chart of Accounts for optimal financial reporting
A chart of accounts is the structural framework for any business accounting system. It is analogous to a filing system. If you wanted to, you could dump all your documents into one giant file in your filing cabinet (or a file folder on your computer). Of course, if you did do it this way, you would likely have a hard time locating your documents. Alternatively, you could create a series of folders, based on an organization system that makes sense for you and your business. This type of structure would make it much easier and (as long as you remember your system), much more efficient to find what you are looking for. The more precise your system, the more time you save and the easier your documents become to access. Similarly, a chart of accounts is a type of categorization arrangement for your financial data. You slot everything into a category with the ultimate goal of getting financial reports such as your balance sheet and profit-loss statement that provides valuable info to the business owner as well as the other other stakeholders of the business. It should be noted that while each chart of accounts has commonalities and some specific conventions that should be followed, there is no one size fits all. Consequently, it is important to spend some time thinking about a chart of accounts that fits the profile of your business. If you are using Quickbooks Online, you can read this in conjunction with our article on setting up QBO for the first time and watch my video on working with chart of accounts in QuickBooks Online.
Earned Income and Your RRSPs
In honour of Canada day, I thought it would be very exciting to discuss tax concepts that you can then share with your friends and family perhaps at a celebratory barbecue or party (this is particularly effective if you want some alone time:))
The idea of earned income is important largely as it relates to RRSP contribution room and is closely related to active income. RRSPs, as you might know, are the single most effective tax savings vehicle available to Canadians. As such, ideally, you want to maximize the amount that you can contribute each year. This is beneficial, even if you can’t contribute the full amount, as your contribution room is cumulative i.e. anything you don’t contribute gets carried forward to a future year.
How to Account for Bad Debts and Record it in Quickbooks Online and Desktop
One of the more unpleasant aspects of being a business owner is having to chase clients that do not pay. It is frustrating, stressful and disheartening, while attempts to collect are an unproductive use of time and can have a significant impact on cash flow, particularly if you are unprepared. A bad debt, in accounting terms, refers to an amount charged to a customer that is never paid. While the original sale would have been reflected as revenue, the uncollectible bad debt would then have to be written off as a separate line item on the profit and loss statement
Know Your Small Business Tax Deadlines For 2023
Somehow we are almost one month into 2023 (!) and it is time for business owners (and individuals) to start thinking about one of their favourite subjects i.e. taxes. I have compiled a list of the deadlines that all of you should know and also updated my annual business tax deadline calendar.
Sign up to download our free Canada unincorporated business tax deadline calendar for 2023 or Quebec unincorporated small business tax deadline calendar 2023.
What Independent Contractors Should Know About Personal Service Businesses
Many of you leave your full time jobs to become independent contractors. This could be for a variety of reasons: you might decide you want the freedom that comes with self employment, or your company might decide that they no longer want to maintain employees. In some cases, you are laid off and find another opportunity , but the business only offers contract positions.
This type of situation is particularly applicable to people in the IT industry but can also apply to a variety of other types of skill sets. Often, your client will require that you set up a corporation which then contracts with the client to provide services that are very similar to those you would provide if you were an employee. The corporation then bills your client either directly or through a third-party (often a recruiting agency).
Two (and a Half) Options for Claiming Employee Home Office Expenses in 2020
As numerous employees shifted from their offices to their homes, Revenue Canada (CRA) and accountants were deluged with questions about how they could claim home office expenses. To stave off the complaints and questions, CRA decided to introduce a simplified method of claiming a tax deduction. It should be noted that employees have always been allowed to claim expenses relating to their employment as long as their employers completed and signed form T2200. The information from this form would then be entered on Schedule T777. The issue for this year is that filling out the form and completing the schedule is a somewhat tedious process and does not fit all employees’ who worked from home as a result of Covid imposed restrictions.
7 Lesser Know Facts About RRSPs
It is the time of year when everyone adult Canadian should be thinking about investing into their registered retirement savings plan (RRSP) prior to the deadline of March 1st. Many of you might think that you are young and have time or conversely that you are older and it’s too late. The truth is that it is never too early or late to start a RRSP. You simply need to set a goal and start doing it.
The great benefit of investing in RRSPs, which is the single best tax optimization strategy available to all Canadians, is that it reduces the amount of income taxes that you will have to pay. The tax savings is based on your marginal tax rate. Since everyone’s income is allocated to different tax brackets as your income increases, the marginal tax rate represents the highest tax bracket which applies to the top portion of your income.
Why Every Canadian Should File a Personal Tax Return
A friend of mine has been in a nightmare scenario with CRA. She hadn’t filed her tax return in a few years mostly because she had one T4, figured that she didn’t owe any tax and was simply procrastinating on an unenjoyable task. In 2020 she receive a notice of assessment from CRA indicating that she owed several thousand dollars, with no additional details except that they had added $25k to her actual income earned. Over the past year, she has called them numerous times to get an explanation and each time she is told that the file is being escalated and someone will get back to her. To date nobody has gotten back to her. To make matters worse, CRA passed this information i.e. additional income on to Revenue Quebec (without any details) which resulted in a significant assessment from them. She still has no idea why she was assessed this amount and is now in the unenviable position of calling both revenue agencies on a weekly basis to manage the situation.
Information on Filing T4s/RL-1s and T4As for Small Business Owners
When I was employee, I never really gave much thought to the T4 (and the Quebec equivalent RL-1) process. I knew that sometime around February an envelope would appear on my desk with a tax document which I would need to reflect on my tax return. I suppose I thought that someone, somewhere pressed a button and the T4s were generated. When I became a small business accountant, who was now either responsible for preparing this information or providing guidance to my clients, I realized that the process was somewhat more complicated.
Know Your Small Business Tax Deadlines For 2022
With the beginning of a new year upon us, tax submission deadlines for individuals and businesses are starting to loom. Every small business owner must adhere to these deadlines or risk facing penalties for late filing of returns plus interest on any overdue balances. Knowing these deadlines can help you ensure that you don’t simply waste your hard earned money and run afoul of CRA and RQ. I have compiled a list of deadlines for all unincorporated small business owners which includes sole proprietors and self employed individuals.
Note that the usual deadline for sales tax (GST/HST and QST) payments and income tax returns is April 30th. However, since this falls on a Saturday, the deadline is pushed to Monday, May 2nd, 2022.
21 Gift Ideas to Make Any Small Business Owner Happy
Most of us know at least one small business owner or entrepreneur who maintains an unconventional work schedule, is physically attached to their laptop, sees every get together as a networking opportunity and/or enjoys passionate discussions about spreadsheets. For many business owner, gifts that make their working lives easier and workspaces more efficient (and cozier) are often greatly appreciated since so much of their time is often spent immersed in their businesses. The list of gift ideas below, many of which are fairly inexpensive, may help to toggle some inspiration for the small business owner that you know:
How to determine if your business idea Is profitable
I have spoken to and mentored many lovely entrepreneurs who have wonderfully innovative ideas for a new business. But, as any business owner can attest to, starting a new business is hard work. Before even thinking about launching, you need to ensure that the business is actually viable. You do this by assessing your market, reviewing potential demand for your product and analyzing the competition. Once you have done this, you then need to ensure that your business can be profitable.
In order to determine profitability, you need to understand both the pricing of your products and/or services and the relevant costs. This can be difficult to do especially when you don’t have any history. Your only choice is to estimate based on the best information available. In this article, I give you some guidance on the financial information that you need to compile.
Improve Your Small Business Cash Flow with These 10 Tips
One of the biggest challenges for many small business owners, particularly in the initial and growth stage, is ensuring that they maintain sufficient cash flow. Many businesses with great potential have suffered an untimely demise due to their inability to pay their suppliers, employees and revenue agencies. In many cases, this can be prevented through a better understanding of your small business’ cash flow requirements and making sure that you implement relevant processes that can handle cash flow issues as they arise.
3 Tools that allow you to Remotely Connect to your Computer from Anywhere
The past few years, and especially the last year has changed the way many business owners and employees work. There has been a mass adoption of virtual workspaces where people are no longer tethered to their offices. Instead the technology to make working from anywhere has increased and improved significantly and is accessible by anyone who has a working internet connection. Business can be conducted from your home, an airport, a café or (if you are lucky) on the beach.
While many software, apps and programs are available in the cloud and can directly be accessed directly from your computer or smartphone internet browser, there are times when you need access to your actual desktop or another computer so that you can access the programs and data files that reside there. Luckily, there are numerous tools out there that allow small business owners to remotely connect to their computers . Three of these are discussed below: