Internet has revolutionized how entrepreneurs and business owners focus on the issues that actually impact their business. There was once a time when bookkeeping consisted of a pencil and piece of paper. Now more advanced, this process still involves hours of your time — time that you should spend focusing on things that matter most.
Even though the "official" deadline is tomorrow, April 30 has come and gone and another tax season has come to an end. For those of you who left it until the last minute you technically have until May 2nd to file and pay your taxes without penalties and interest.
This season was well planned out so there wasn't a huge rush at the end, which felt so nice. It really showed how important planning is and by being proactive and starting early makes a difference. We even finished early.
Tomorrow you will find me relaxing in the sun, having a glass of wine, and creating some content for the months to come.
While it may not seem like at first, it's extremely important to keep separate accounts for business and personal transactions. In fact, it's recommended that you open a small business account before opening your doors to the public.
A business checking account is simple to open. Many financial institutions have affordable minimum deposit requirements, in the $25 to $50 range. This helps to ensure that there won't be any "money mix-ups" in the future. Keep reading to learn more about why it's best to maintain separate accounts.
We are down to the last couple of weeks for tax season and lately I have been getting a ton of questions regarding the deadline for taxes and how to pay the government.
In Canada, the deadline to file and pay your personal taxes is April 30.
Produced by Shannon Brunning
Everyone makes mistakes, no matter how diligent they are. It's all part of being human. According to the Small Business Administration, over 50 percent of small businesses fail within the first five years of opening their doors. The two main reasons for this are poor financial management and lack of proper bookkeeping.
The following seven mistakes are among the most common errors that cause small businesses to eventually fail. A few of them may surprise you.
Business records come in all shapes and sizes. As an accountant I have seen it all, from clients who bring their receipts crumpled into balls in grocery bags to nice, neat accounting files with images of the receipts saved to each transaction. Some may say organization isn't for everyone and it doesn't matter what the records look like, but I am here to tell you it does matter as it can save time, money and stress.
Today I wanted to talk about the choices we have for business structures in Canada. I have noticed that there is a strong presence of sole proprietors in the female online community and not many corporations. I don't want it to be because of a lack of information because incorporating in Canada isn't hard and it can provide some great opportunities.
Your businesses has grown and now it's time to hire your first employee. Congrats, this is a big step in owning your business, but it can be a bit intimidating if you don't know where to start. As an employer you have some responsibilities to ensure you are compliant with Canada Revenue Agency (CRA) so I wanted to share with you some of those requirements.
Today I want to bring some awareness to a scam that drives me a bit crazy. Over the past year or so Canadian taxpayers have been receiving phone calls and emails from someone claiming to be Canada Revenue Agency(CRA). The caller claims that the taxpayer owes taxes and if they do not pay right now the cops are coming over to arrest them or seize their assets. The emails usually say you have a refund and you need to enter your banking information in order for them to send it to you. These are 100% a scam and it is shocking how many people are getting these calls.
Normally when I hear about a scam I don't pay much attention to it, but this one has me fired up since I deal with CRA every day and know they do not treat people like this. In my opinion, people are so easily duped by these people because the thought of owing tax or being in debt to CRA can be scary. Taxes are a subject that a lot of people don't fully understand and therefore they also do not know how CRA operates. Therefore when they are threatened with police or seizure of their assets by a government agency some people will believe it. Yes, CRA collects our taxes (even though we don't want to pay them) but they are not jerks. If you owe taxes they will always send you a formal letter explaining why and how to pay it.
So what do you watch out for?
We all need to be aware of Identity Theft so please view my 1-minute video on tips to protect yourself and your family.
So you started your business but are a bit lost in regards to what you need to keep track of all that money coming in and out. Here are a couple of tips to help you stay on track for when tax time comes around.
Tip # 1 Open up a separate bank account for your business, even if you are a sole proprietor. A separate bank account will help you keep track of all your business transactions and keep them separate from your personal. Your company bank account should be used only for business transactions and not to buy personal items. If you are a corporation, any money you spend out of the company for personal reasons will be taxed personally. If you need money out of the company, the easiest way to track it is to write yourself a cheque or transfer the money to your personal account.
Tip # 2 Keep all your receipts! Yes, it is important because Canada Revenue Agency can deny the expense if you have no backup. You can keep the original paper copy or an electronic version as long as it is accessible and readable. These days you can simply scan or take a picture of your receipt and save it to your computer or in an online storage system.
It is super important to keep all of your documents so when it comes to tax season you are prepared and have everything. I have seen Canada Revenue Agency flat out deny expenses simply because the business owner didn't have a receipt to back it up. This can occur even though you can see the payments coming right out the company bank account with dates and names on it. It is also important to keep track of all of your invoices and when they get paid. This is going to help ensure you are getting paid in a reasonable amount of time. Just sending out invoices and not tracking the payments could mean there is money you are owed and your business is not going to grow.
Tip # 3 Choose an accounting software if you decide to do your own bookkeeping. There are a lot of really good software packages out there for all different price ranges. As an online accountant, I have a bias towards online products, especially Quickbooks online, but here is a small list a couple of different software I have personally used and think are worth considering.
- Quickbooks - I recommend this to all my clients
- Wave - this is free
- Sage - not my favourite, but I know some people who like it.
A number of small business owners try to do their bookkeeping in excel, but I don't recommend that. Excel is a great program for projecting and budgeting, but when it comes to doing your bookkeeping stay away. The amount of time I spend fixing client excel spread sheets is not worth it, especially when there are so many great products out there that are free and do a much better job.
Tip # 4 Find an accountant. It is okay to do you own bookkeeping, but I recommend hiring a professional to handle your taxes, especially if you are a corporation. When taxes are done properly, it means less errors and less likely that the government will come in and review your records. Also, a professional accountant will help you with tax planning, payroll and GST/HST.
When you are just starting out there is no need to hire an accountant at a big firm as their fees are much higher and your local/online firm will provide the same services. A good way to find an accountant is to ask friends and family for a referral. Remember, if you aren't happy with your accountant you aren't stuck. Another accountant can easily pick up where things were left off.
Tip # 5 Schedule time to do your bookkeeping and review the numbers. Knowledge is power and having your bookkeeping done on a monthly basis is going to show you your performance and where you can improve. Don't forget if you hate doing it or don't have the time, just hire someone to do it. Just get it done. Your accounting is something that HAS to get done every year so don't wait until the last minute. Being proactive will reduce stress and keep you informed about your business. Schedule the time to do it on a regular basis.