Archive of ‘Small Business’ category

Tax Time: Hiring a Tax Professional

| Bookkeeping, Budget, Finances, Small Business, Taxes

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Does the date April 30th, give you the hives? Are you allergic to filling out tax forms? Scared of what you’ll find in the numbers? If you’ve read my last post about filing your taxes yourself and broke out into a cold sweat, have no fear, because this week I’m focusing on hiring a tax professional to do your taxes for you.

If on the other hand, if you want to file your own taxes, take a look at last week’s post for how to go about it in a calm and timely manner. And while there are many similarities between the U.S. and Canada on how to hire a tax professional, this post is focused on how to go about it in Canada. Let’s get started!

While hiring someone to do your taxes can be a stress relief, you still want to do your due diligence when hiring a tax professional. You’ll need have your 2014 bookkeeping closed out and you’ll need to be prepared to answer questions about your business activities.

If you have a bookkeeper already, they are a great place to start in terms of looking for a tax professional. More than likely they are willing and able to file your taxes for you. After all, they already know the ins and outs of your finances and it could make the process a whole lot smoother.

If you don’t have a bookkeeper, a great place to start looking for a tax professional is via your friends. Ask for referrals from people you know. Chances are your friends have a tax professional they trust. You can also inquire of your business peers who they use to file their taxes. This is another great place to get a trusted referral and more than likely one who already understands your type of industry which can be a boon when discussing business activities.

When you hire a tax professional, you will be paying for a service, so keep this in mind and within your budget. You want to make sure that the person you are hiring is reputable and knowledgeable. You don’t want to have your Grandma or Uncle Phi file your taxes because they’ll do it for cheap.

You’ll also need to start looking for a tax professional as early as possible. You don’t want to wait until April to try and find someone. If you do, it will be much harder as April is a very busy time and they may not have room in their schedule to fit a new client in. You may also end up having to spend more money since April is right up on the filing deadline.

It’s best to start looking for someone at in February and no later than March. If you weren’t able to get a referral from a friend or business colleague you can look online or in your phone book for tax preparers. You’ll need to make sure that the tax preparer has a tax filer number, which means they are registered with the government and are allowed to do this type of work and every tax preparer in Canada needs to be registered for E-file to file taxes.

You may want to inquire of their schooling and look for an accounting diploma, but know that even H&R Block preparers may not have a specialized accounting diploma. They will have had extensive training though and be certified through their company.

You will also need to know what type of relationship you will want with your tax preparer. Will you want an ongoing relationship? Then you may want someone who you’ll meet with one on one and know that they will be doing the work. On the other hand, a service center such as H&R Block will have a handful of people trained in tax preparation, but you may not know who actually performs the data entry.

Compare price vs services. Do you need more than just tax data entry? For example, do you have a business to report? Do you also want advanced tax planning? You need to know what you need as some tax preparers only do just that, prepare taxes. You must ask if they will also advise you on tax deductions if you need that type of service. You’ll also need to look for a preparer that will be able to do business taxes, as not all preparers will be knowledgeable about business taxes.

Once you find a tax preparer that you like, you’ll need to come into your meetings with them prepared. Have all papers ready, like your T4’s, RRSPs, investment income, rental costs, and Statement of Business Activities if applicable. Most tax centres and possibly some tax preparers will have a form to fill out with questions about your situation, and have suggestions on which forms to bring. You’ll also need to know about your previous year’s filings. If they don’t ask about your previous tax year, that is a red flag.

You may have several meetings when you hire a tax professional. You’ll make an initial appointment to go over all your documents. Then another meeting once the tax has been prepared. You’ll have to go in to sign and file the final forms. Your tax preparer will explain your tax return process and they’ll file your return in front of you.  If you’ve picked a professional for their advanced tax planning services, they will advise you on your retirement calculator and discuss any further tax planning for next year and possibly beyond.

Your tax preparer will be able to send your return electronically, via E-file. But you always have the option to take the return papers yourself, and mail them to the government. Keep in mind though, that refunds are generally received a lot sooner if filed electronically. You will also be able to receive a refund quicker if you have applied for Direct Deposit!

Once everything has been signed and sent off to the government, you should receive a Notice of Assessment, which will have your limits for RRSP deductions, and the assessment of the return itself. The government will determine if your return was prepared properly and whether a refund or balance due was declared.

Don’t forget! You must also keep all your papers for 6 years after filing. The papers for your current taxes don’t get sent through Efile, so keep those handy in case the government asks for them. Your tax preparer will only keep a copy of the return – so you should keep all of paperwork, including a copy of your return.

Hopefully the process of finding and filing your taxes with a tax professional is smooth and easy. Keep up the good work by getting a jump start on tax planning for 2015. In next week’s post I’ll go over some deductions that you should be taking advantage of.

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Tax Time: Filing Yourself

| Bookkeeping, Budget, Business, Creatives, Finances, Small Business, Taxes

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It’s almost that time of year again: tax time. Instead of making it one of stress and pain, let’s try and see it in a positive light. You’ve done all your bookkeeping from 2014, so that means you’re in good shape to power through completing and filing your taxes. Your books should be up to date as of December 31, 2014, if your fiscal year is the calendar year. If you’re still completing your 2014 books, you should do that first before moving forward with filing your taxes.

If you need a refresher on how to close out your books for 2014, I recommend going through all of the End of the Year Wrap Up posts to catch up.

Next you’ll need to decide if you’re going to do your taxes yourself using an online software like H&R Block or uFile, or if you are going to hire a tax professional to do your taxes for you.

In this post, I’m going to focus on how to do your taxes yourself. In the next post, I’ll go over how best to hire someone to do your taxes for you. I should also note, that this post is going to talk about filing taxes in Canada. While there are many similarities to the U.S. process, I’m going to cover my country only.

To get started doing your taxes yourself, you’ll need to decide which software you want to use to file electronically. You could choose H&R Block or uFile. uFile is the system that I prefer. You are able to file your taxes using the paperwork that is available at most Canada Post outlets, but lets save the trees eh?

Once you decide which software you will be using, you will need to gather a couple of things. First, have all of your bookkeeping from 2014 handy. You are going to be referring to the numbers here. You will also need to fill out form T2125 “Statement of Business or Professional Activities.” If you are on payroll from other work, you will also need all of your T4 slips, which will be mailed to you by your employer. And lastly, you will need your RRSP or Retirement Registered Saving Pension receipts, mailed from your participating bank or fund.

Now that you have everything, the software will guide you through your taxes. Follow step by step entering the information the software asks for including your employment or business income, personal activity numbers and any other information the program requests.

At the end of the program it will check for errors and will give you a chance to correct them before you send. Once you’ve done this, you will need to tell it to submit your taxes to the appropriate government (Canada or Quebec if applicable). The transmission via Netfile will verify that it was received as accepted or not.

You won’t need to submit any physical paperwork, unless asked but it is important to keep all your records for at least 6 years.

At this point, if you haven’t already, you should go online and register for “My Account.” It will let you know the status of your taxes. You will also receive a Notice of Assessment stating the status of your return. Here is where you will also see if there are discrepancies between your calculations and their calculations. See “How to obtain a copy of your notice of assessment or reassessment” You will also be able to see how much money you will receive as a refund or the amount that is due. My Account is also where you can see your RRSP limits. You don’t want to go over the amount you are allowed, otherwise you will owe more money.

If you do end up owing money, it behooves you to pay right away (by April 30th). If you don’t, the government will add interest on any unpaid balance. So you want to pay off your tax burden as soon as possible.

If you are expecting a refund, it will take a while to receive unless you apply for direct deposit which will come in under four weeks. It can take six weeks or longer if you opt to receive your refund by check.

If you are due a refund, congratulations. Now it’s time to think about what it is you want to do or get for your business that you’ve been holding off on. This is a great time to invest back in your business or take a vacation. I usually get the one thing I’ve been saving for all year and a tax refund is the perfect way to go about it.

Do you have any tax preparation questions? Let me know in the comments.

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3 Ways Hiring a Bookkeeper Will Save You Money

| Bookkeeping, Business, Creatives, Finances, Small Business, Tutorial

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If you’re like most small businesses, cash flow is tight and if you’re just starting out, it’s easy to think you need to do all the administrative work yourself. This line of reasoning is especially true if you’re from the handmade community. The urge to DIY can be so strong, it wipes any notion of extra help from your mind. Because hiring a bookkeeper is an expense you think you don’t have.

So you sign yourself up for what looks like the easiest software and make half-hearted attempts to keep track of expenses. Perhaps you keep your receipts in a shoebox. Or forget to keep them at all. Maybe you check in on your software once or twice a year. Everything looks like its working?  Maybe you don’t even look.

Then comes tax time when you have to really look at your accounts and records. Surprise! It’s a mess. Maybe the software stopped working. Maybe there are double entries you have to fix. Perhaps you find lots of expenses miscategorized. You’re not sure how much money you made or what expenses you can claim.

That’s time and money out the window you weren’t expecting to spend to clean up the mess.

Here’s how hiring a bookkeeper will save you from this headache and save you money to boot!

1. Help Set up a System

A bookkeeper will help find the right accounting software for you. Be it desktop or app, a bookkeeper will train you on how to use it and when and how to input your account information, expenses, and invoices. If you’re a small business you don’t need the biggest or most powerful system; you need one suited to your individual needs and a bookkeeper will do just that.

A bookkeeper will also train you on how and where to save your receipts. One way to organize your receipts is to use Receipt Bank. This app allows you to quickly take a picture of your receipt and it helps track your expenses.

By having an accounting system in place and the knowledge on how to use it, you’ll be better prepared to keep track of your incoming and outgoing money.

2. Prepared at Tax Time

Imagine tax time as a stress-free time. If you’ve set up that system with your bookkeeper, it can be. A bookkeeper can help keep you organized and on track with your accounting system throughout the year, so this dream can be a reality.

Instead of scrambling for lost receipts and unpaid invoices, a bookkeeper will have helped you reconcile your accounts, (where you match your bank statements to your transactions), and remind you of your unpaid invoices and help ensure that there are no unaccounted expenses.

This is beneficial for quarterly or annual sales tax filing, as well as income taxes. Your nicely organized files can simply be downloaded and sent to your tax preparer, stress-free.

3. Saves you Time

Time is money. If you keep on top of your accounting system and do a little bit throughout the year, it adds up to big-time savings. For you and for your bookkeeper. If you don’t, disaster can happen.

After vacation one year, I came back to a client’s year-end where you reconcile accounts for the year. I quickly learned that their files weren’t up to date. I spent a month to get the work done. Not only did it cost the client more because of the extra time I had to put in, but it was super stressful for the both of us.

Hiring a bookkeeper to help you set up a system and working with them throughout the year to keep your files organized helps save you money in the long run.

It may seem like a big expense, but it will be an even bigger expense to hire one during the busy seasons to tidy up a big accounting mess.

Free Bookkeeping Assessment

Worried you may be losing money because of your accounting set up? Not sure if your system is running properly? Let me review it. I’d like to offer you a free assessment of your current accounting systems.

Contact me today for your FREE assessment

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New Year, New Business

| Bookkeeping, Business, Small Business

Happy New Year Business Folks. I hope you were able to enjoy a day of rest from business planning, but if not, let’s get back to work.

If you are looking back and seeing all the things that are wrong and looking forward with anxiety, you aren’t alone. I would say that January is a very stressful month just because we’re all thinking about our impending tax returns and worrying about how our business didn’t quite reach our goals.

Take a breathe. You can organize yourself to make your business and life easier.

Step 1:

Starting this year, signup to a file sharing system like Drop Box. This will keep your important files backed up in case of hard drive failure.

Step 2:

Organize your file system to make sense FOR YOU. I happen to keep separate folders per month and I name them as “1-Jan 2014″. Call it a pet peeve, but I hate to look at a bunch of folders in alphabetical order when I really want to see the files in order by month.

Step 3:

Get yourself a professional accounting system. I can’t say this enough times. My favorites to refer is Wave Apps, and Xero. Wave Apps is free forever, and Xero has a 6 month free trial. There are certain cases to use one over the other, but you can’t go wrong with trying them BOTH for six months.

So those are my tips for a brighter business. And yes, I’ve followed my own advice for a whole year and I’m not bombarded with my ziploc baggies of receipts to enter before taxes are due. True story.

Like this? Subscribe to my email list and get your FREE Wave Apps start up ebook!

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What The Heck Is A Debit Anyway?

| Bookkeeping, Finances, Small Business

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When I was younger, say 20- I didn’t know what a debit is. I’d get confused when I went across the border and I was asked if I was paying with cash or credit. Everyone over on my side asked for débit (say it with a french accent) and I knew that once I used it, it would take money out of my bank account directly. I thought of my debit card as a money-sucker.

I was oblivious and most people are.

Now that I am a business owner, it has a new meaning. Debit is no longer just a drain of my money, but a way to organize balances.

Accounts with a DEBIT balance are your expenses, assets, and draws.

Expenses

Expenses are anything you purchase to run, manage, and maintain your business. For example, Etsy fees, Paypal fees, supplies of materials, website hosting, house utilities, advertising.

Assets

Assets are objects with monetary value. For example, cash, office furniture, car, building, account receivables (amounts owed to you).

Draws

Draws are the amounts that a business owner takes out of the business to use for personal reasons. This is equivalent to a paycheck from an employer. Congrats to you if you can pay yourself a wage!

Now lets apply this to your bookkeeping.

I bought $100 worth of yarn for last month. Old-Style, it would look similar to this:

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Debit- yarn supplies account

Credit- paypal (more on this later!)

In Wave apps it would look like this:

First click on “add expense”

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In Wave Apps, the  “account” field automatically enters your money account, taking the first one listed. My money accounts are “Cash on Hand”, “Paypal” and “Paypal USD”, so I chose “paypal”, and then I have to determine what type of account( (or category, in this case) that my expense goes under. In the drop menu of category, I can choose from a list of expenses, or make my own, which I did, and called it Yarn Supplies. Simple right?

My Yarn Supplies account now has a debit balance(increase) of $100, and my paypal account has credit balance(decrease).

I purchased yarn, and I have an increase?? It sounds ironic right? In this case, like I said at the beginning, an expense account has a regular debit balance. Then it follows that because I debited the account with $100, it has increased and my total expenses to date is $100.

Most people are accustomed to only using and tracking their bank account. In Wave Apps, each purchase that you now make has TWO accounts. When you buy supplies, you make a supply account. When you buy advertising, you make an advertising account. When you hire someone to do your taxes, you make a tax expense account. You can call them whatever you like, but the point is to be consistent so that you can track all these accounts and be able to judge whether you are spending too much on advertising, or on materials, whatever the case.

Next time I’ll go over the second part of this, which is Credit. And no, not your credit cards ;)

Do you have an expense that you don’t know how to categories/label? Let me know in the comments below!

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Welcome To My Bookkeeping Practice!

| Bookkeeping, Creatives, Finances, Small Business

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I am super excited to start this new branch of my life! My experiences with my online shop has been leading up to this, and I’ll explain why I’m changing gears.

Let me start at the beginning…

Back in 2007, I had one child and was expecting another. I was working full time, but I needed a career change. So I enrolled into an accounting course, and was able to graduate a few months before my second child was born.

I was lucky enough to be able to take a full year off of work before returning, but I decided early on that I wouldn’t return to my full time job, and instead I would look for jobs related to accounting.

That didn’t happen either, because I developed my skills for knitting and learned all I can about online business. Having an online business really helped my bookkeeping skills; it was something that I enjoyed doing, even when I didn’t have sales in my shop. (In case you are wondering, I am using Sage 50 (formally Simply Accounting) software to track my business)

Having an online shop was fun, especially when my kids were younger, but now they are bigger and I’m like any other House Wife of Canada, where I’m getting more involved in the school system and after school activities, and I took a look at my life and I wasn’t sure if we could sustain ourselves the way we do right now. We made some major changes to make it possible for me to stay home and it can be really easy to deviate and fall in the red. Like overspending on Christmas presents- but how can I NOT get every Stars Wars Lego Set??

So that’s where my thoughts went back to my formal training and education, and what better position could I be in? I’ve learned about business and what it takes to be successful, and I’ve done bookkeeping for the fun of it.

I am ready to be a professional bookkeeper, and I’ve taken steps to make it official by joining the Institute of Professional Bookkeepers of Canada, where I’ll be taking a test to be able to use Certified Professional Bookkeeper Designation after my name. I can also further my education by doing courses – which are required to maintain a membership at IPBC.

Now you may be wondering where I want to focus… and the answer is online businesses like Etsy. My experiences in business started with Etsy and I want to work with creative people. They’ve helped me over the years and now it’s my turn to help them.

Book Your Apointment Today 

and get clear on your finances by:

  • Setting up an account on Wave Apps, an official app that syncs your Etsy account and Paypal account.
  • Going through the basics of the program.
  • Finding a bookkeeping schedule that works for YOU.

 Let’s Get Started!!

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