Posted November 28th, 2012 by Lisa Patrick with 3 Comments
If you are a bookkeeper looking for new clients, a good approach is to provide them reason why they should hire you. Let them know if they are starting a small business it is important to keep expenses to a minimum. Profits will happen eventually but often not within the first few months. Some business owners will try to cut costs by not hiring a bookkeeper. Instead they will get admin staff to manage the financial records. Although expenses are reduced in the short term this could be a mistake.
Off-the-shelf accounting software may be easy to buy but it isn’t necessarily easy to use – properly. By hiring a good bookkeeper you will avoid some mistakes listed below.
1. Invoicing Incorrectly
Incorrect invoicing may entail a lot of extra time reconciling your products sold or services rendered, thus resulting in inability to collect from your customers on time. Also, if not done on time, invoicing can strain your cash flow.
A good bookkeeper will ensure that invoices are correct and prepared in a timely manner. They can also monitor “aging of accounts” to make sure that receivables are collected from customers on time.
2. Unknowingly Missing Deadlines
There are specific dates for filing your taxes and other requirements to the government. Missing a date,
no matter how unintentional, can cost you penalties and other charges. With a good bookkeeper, the
only thing that you have to worry about is getting all the pertinent information to them on time. They’ll
take care of the rest.
3. Incorrectly Classifying Items for Taxation Purposes
Tax laws are revised and updated periodically. What is classified as an item under a particular tax
bracket or rule may change.
A good bookkeeper is always abreast with the latest tax rules. They also have a clear understanding of
items that may be tax deductible for your business. Trust your bookkeeper and take advantage of their
knowledge. In the long run you will save money and headaches.
4. Lack of Know-How in Using Accounting Software
Inaccuracies in handling the accounting side of the business can potentially lead to more losses than you
think – Not to mention government penalties. It sounds obvious, but accounting software works best if
the correct data is inputted. What you put into the system, is proportionate to the output.
A good bookkeeper understands this perfectly. The advantage for your client is that they don’t have to worry at the end of your fiscal year.
Ensuring proper handling of your client’s company’s bookkeeping needs is paramount to your business success. Utilizing services and tools that will increase your efficiency and standardize your client’s bookkeeping needs provides you further credibility as a bookkeeper. C2online provides a free trial to their proven tools used in a bookkeeping office for the past 20 years. Other companies out there like Odotrack provide tools that ensure that your client’s expenses are recorded and tracked and make your bookkeeping tasks easier.
Learn more tips to take your bookkeeping to the next level !
Posted July 5th, 2012 by Bill Kelsall with 1 Comment
I would assume that most of us have run up against the question of whether or not a person is an employee or is a self-employed sub-contractor. This question frequently arises in the construction industry but does occur across the entire spectrum of businesses we deal with every day.
To determine a person’s status, it is recommended that we follow a two- step approach.
Step 1 – We must determine what the parties intended when they entered into their relationship. Did they enter into a contract of service (employer-employee) or did they intend to engage in a contract for service (business relationship). Sometimes the intent is obvious, as in a written agreement and sometimes there is no common intent. Workers and payers may set up their affairs as they see fit, but they must ensure that the status they have chosen reflects the actual terms and conditions of the employment.
Step 2 – The following questions will help you determine the working relationship and whether the intent of the parties is reflected in the facts:
· The level of control the payer has over the worker’s activities. Control is the right of the payer to exercise control over a worker concerning the manner in which the work is done and what work will be done. Obviously the more control the payer has over the worker the more the relationship takes on the aspics of an employer-employee situation. Such things as the degree of control held by each party and the payers right to exercise control (whether it is actually exercised or not) come into play. This issue can be clouded when dealing with professionals who have specific skill sets not held by the payer and require little or no direction in their daily activities.
Some situations which might indicate the payer is in control are: direction of how and when the work is performed; determination of the amount of pay (although negotiations do occur in an employee-employer relationship); availability of the worker to be employed by other payers while still engaged by one employer; ability of the payer to prioritize the payee’s time; ability of the payer to determine what work will be done; the overall work environment is one of subordination; even though the payer listens to the payee’s suggestions, the payer has the final word.
Conditions which indicate the payee is self- employed include: The payee works independently without control or supervision; The payee may provide services to more than one payer at a time; The payee can accept or refuse work from the payer; The working relationship does not have an high degree of continuity, loyalty, security, subordination or integration.
· A higher degree of ownership of tools and equipment required to do the job may indicate that the payee is self- employed. However, the courts have ruled that the mere requirement to supply tools and equipment does not, in itself, denote self-employment because many employees, such as auto mechanics, are required to supply their own tools.
Conditions suggesting an individual might be an employee would be: The payer supplies the tools and equipment required by the payee and is responsible for the repair, replacement and insurance costs associated with the tools and equipment.; The worker supplies the tools and equipment for the job and the payer reimburses the payee for them; the payer retains the right of use over the tools and equipment provided to the worker.
Conditions indicating an individual might be self- employed are: the payee provides the tools and equipment and also retains the responsibility for the repairs, maintenance and Insurance on these assets; The worker has a significant investment in the tools and equipment and retains the right over the use of them; The worker supplies the workspace from which the job is performed and is responsible for the upkeep of the workspace.
· Subcontractors and Assistants – If the worker has the right to hire or fire subcontractors or assistants, this would indicate that by doing so he is put into a position of occurring profit or loss and is therefore self- employed.
· Financial Risk – If there are ongoing fixed costs assumed by the payee or any costs for which he or she is not reimbursed or if he or she is financially responsible if the contract for which they are hired is not fulfilled, this would indicate the worker is a sub–contractor.
· Chance of Profit – If the payee has an overall chance of profit or loss arising from the performance of his duties, he or she is most likely self-employed. This is because he or she can pursue contracts and negotiate prices. Although employees may have expenses associated with their employment, these expenses would not exceed their pay and there would be no risk of loss.
The above is, by no means an exhaustive review of this subject and readers are cautioned that the points made may not apply in the Province of Quebec.
A payer or payee may request a ruling on their status through My Business Account by using “Request a CPP/EI ruling” service at www.cra.gc.ca/mybusinessaccount. A registered representative may request a ruling at www.cra.gc.ca/representatives.
A payer or worker may also request a ruling by writing a letter or completing form CPT1 and sending it to their Tax Services Office. More information is available by calling 1-800-959-2221.
This commentary is meant for general information only. Specific instances should be referred to you own tax consultant.
Writing articles on Income Tax is a rather daunting task. If you have suggestions on what you would like to see in future issues or have questions in regard to this subject, please contact me at www.taxnstuff.com.
Your indulgence is appreciated.
Posted May 1st, 2012 by Gordon Skillen with 392 Comments
For many years, I have coached bookkeepers from across Canada on subjects as varied as personal development, marketing to best business practises. One of the most debilitating discussions is on the subject of not getting paid. In many cases, a letter of agreement or engagement is never used. Even in situations where there is a tight case and an opportunity for a lawsuit, most people could not be bothered. The Canadian Anti Fraud Centre tells us that fully 95% of fraud cases are never reported. It takes a lot of time in court, in lawyer meetings and time away from their core business, as well as lot of very negative energy. In many cases, it might very well be the best things to do and just walk away and chalk it up to experience.
Checking out your clients before you do business with them is good advice. Check with the local Better Business Bureau, learn as much as you can about the client before agreeing to work for them. Our due diligence report will help you with some ideas. Now, you can even order a litigation report from iHonest. This report tells you of every court case where your client has been sued or has sued someone else. It will certainly give you some insight into the past behaviour of your potential client. The best predictor of future behavior is past behaviour. If you find that your potential client has been sued by every Tom, Dick and Harry, you might consider why you want to work with this person. Obviously if it is a few hours a month client, you might take a chance, but any more than that, well, do you enjoy working for free? I recall one of our members calling me in tears. Her client, who she thought she knew well, asked her to drop her rate during his slow season and that he would catch up at a later date. By the time she called me, she was owed over $14,000 and felt that she might never get paid. Almost every person who runs any sort of business has been ripped off.
If you have been ripped off and are still carrying around the bitterness of being treated so poorly, I want you to read Kiss that Frog by Brian Tracy and his daughter Christina Tracy Stein. I had the unfortunate experience of meeting a low life person a number of years ago who robbed me of over $182,000. Because he was affiliated with our industry and I thought, a respected person, I stupidly trusted him and his associates and ended up on the losing end of a battle that saw reputations ruined, money lost and a whole lot of negative energy being tossed around. I learned some time ago how to do investigations and quite frankly, I investigate everyone before I do business with them now. For over a year, I carried around a ton of bitterness. Just recently, I was able to release the negative energy, thanks to the book Kiss that Frog. The future is looking very bright, and in the near future, I will be announcing some special news. If you are a bookkeeper or an accountant, now is the time to join iHonest. I’ll tell you why later. With members all across Canada, we are in for some exciting times and increased revenues for you!
Posted February 13th, 2012 by Lisa Patrick with 610 Comments
“Cash is King”, how many times as an Entrepreneur have you heard that? It is true, when you run out of cash – you are out of business. You can make sure that your business survives by strategizing to ensure you are maximizing on all the corporate income tax deductions available and ensuring that you are aggressively monitoring and allocating your cash flow appropriately to grow that pile.
Many sole proprietors and partnerships use the strategy to incorporate their businesses because of the tax advantages that an incorporation will provide when their business has grown large enough for the incorporation to be worthwhile. The best known of these tax advantages is the Small Business Tax Deduction. Income of a Canadian corporation is taxed at a special “reduced” rate. The small business Corporate net tax rate is 11%. Other types of corporations that don’t qualify for the small business rate are taxed at 19.5%.
When is it worthwhile to incorporate? When you have a significant income that offsets the costs or expenses of the corporation, BUT you need to leave enough cash/revenue of your earnings to benefit from the corporate tax deferral. Secondly, in order for businesses to strategize and ensure that they have all their tax advantages available to them – below are some opportunities to maximize on deductions for consideration:
Home based businesses can utilize the business use of home deduction and deduct a portion of many home related expenses, your property and your mortgage interest by comparing the time you spend in your home as an office and the amount of space that you utilize in that time.
Collect ALL your receipts that you spend money on – this includes the parking meter, the bag of coffee, the 10 pencils you bought, all those little things will add up at the end of the year. Account for ALL the money you spend on purchases that are business related. Ensure that you have the appropriate receipts to record and file to maximize on your business income tax deductions.
Your vehicle is viable to your business. Without vehicles you and your employees would have a hard time getting to work and your business might not be able to function. By planning ahead and preparing a strategy for your vehicles you will ensure that you are maximizing on the deduction and ensuring you increase your pile of cash. Remember to record your receipts and your kilometers so your bookkeeper & your accountant have all the information they require.
A convention provides you the opportunity to work on your business in an environment where you are not caught in the day-to-day life of managing your business. Critical aspects of your business are overlooked and you could be missing out on tax-deductible savings you could be enjoying. In fact, if you don’t take the time to analyze your business you could be missing out on thousands of dollars in business tax deductions and the opportunity to increase that pile of cash.
Revenue Canada states that you can attend 2 conventions a year. What if I don’t have the opportunity to attend an organized convention? Now you can. Your intent must be business and you need to create an itinerary based on the needs of your business. Follow your itinerary; use pre-designed convention agendas for the different departments and needs of your business. Analyze, strategize and problem solve those areas of your business and you will ensure that you are not missing out on thousands of dollars in business tax deductions while you create a new perspective and strategy for your business.
Bookkeeping is often overlooked as an opportunity to maximize on business tax deductions. Why? Bookkeeping management of finances is more than merely harmonizing the bank accounting. The objective of any small business owner is to achieve success in both the marketplace as well at a financial level. However as easy as it may sound, it isn’t a task each one of you may be competent to accomplish. Your bookkeeper must ask the right questions from you, be able to communicate to you and your tax accountant, and understand their job description to ensure they are providing tax compliant bookkeeping. If you are looking for a referral to an honest bookkeeper, please contact Gordon Skillen.
For more information and tools to analyze your business, ensure proper bookkeeping and maximize on your business deductions to ensure your pile of cash keeps growing and you are the King, contact us today.
Posted December 6th, 2011 by Nathan Skillen with 1,220 Comments
Toss aside for a moment all your ideas about marketing, operations, technology and other parts of your business and think just about the core product or service you offer and how consistently and reliably you deliver it. Think then about all the other businesses that everyone regards as the most “reliable” brand in that market. These reliable brands are known to be trustworthy because they reliably deliver a quality product or service that meets your expectations without any issues. This really is the basis of any business, and everything else should be built on top of that.
The problem is that you’re self-employed, an entrepreneur running your own show and the stage isn’t very sturdy. There’s a few bumps here and there. In fact, it’s more like a roller coaster. Some days you’re on the top of the world and other days you’re one step from jumping off it. Cameron Herold talks about this emotional roller coaster for entrepreneurs and uses this video as an example of what it’s like to be on it:
Making important decisions can be very difficult while riding the entrepreneur’s emotional roller coaster, but even reliably delivery your core product or service can seem arduous and fraught with problems and setbacks. Here are some tips to help you deliver consistent results while on the roller coaster:
» Compartmentalize the work: Schedule distraction-free focused time to work on delivering your core product or service and don’t let anything distract you or steer you away from it until the work is complete or your scheduled time is up. You can think about the difficult decisions and other things you worry about at a different time — not now.
» Be accountable: You should already be accountable to your clients or customers for delivering your product. This should be your motivator to focus and deliver a great product or service. Also try being accountable to a business partner or a mentor or coach. Measuring, tracking and being accountable to others will help you understand if you’re delivering consistently great results or not.
» Under promise and over deliver: This is a great axiom that not enough people follow, but is especially useful when you have lots of stress and other projects on the go. Leave yourself extra time in case problems come up. In many cases you can over deliver and make your customer’s happier than they expected. Extra thanks and recognition from your customers can go a long way to giving you the motivation to get through the tough challenges you face in other areas of your business.
Have any other ideas? I’d love to hear them or any experiences you can share in the comments below.