Corporate Tax

Why Your Business Needs To Hire a CPA in Edmonton

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Reasons Why Your Business Needs To Hire a CPA in Edmonton

Running a business involves various decisions and responsibilities, including finances and taxes. As a business owner, it can be challenging to keep up with the complicated rules and regulations surrounding financial and tax processes. To manage these important aspects of your business, you may want to consider hiring a professional, such as a chartered professional accountant (CPA). Let us explore why your business needs to hire a CPA.

Why should you hire a CPA?

Reason 1: CPA’s are accounting experts

CPA’s are highly trained professionals who have expert knowledge in accounting and tax. They undergo rigorous training and have practical experience, which makes them the perfect advisor for any business. By hiring a CPA, you can rest assured that you are hiring an expert in this field.

Reason 2: CPA’s can help you save money on taxes

A certified public accountant can assist you in identifying tax deductions and credits that you may have overlooked. They can also help you develop a tax strategy that is aligned with your business goals. With their help, you can maximize your tax savings and keep more of your hard-earned money.

Reason 3: CPA’s can assist with tax planning

A CPA can help you with tax planning to ensure that your company’s tax situation is optimized, minimizing your tax liability, and ensuring that all tax obligations are being met. They also provide guidance on important financial decisions that may have tax implications, such as investments and acquisitions.

Did you know that our Founders, Angela Richardson, CPA, CGA and Bobi-Rae Miller, CPA, CGA have over 20 years of experience working in public practice with small to medium-sized businesses?

What services can be provided when you hire a CPA?

Service 1: Preparation and filing of tax returns

A CPA can help you prepare and file your tax returns, ensuring thorough compliance with the tax laws of your jurisdiction. They also help you coordinate with the Internal Revenue Service (IRS) on your behalf, minimizing potential disputes over your tax documents.

Service 2: Bookkeeping and financial statement analysis

Before a standard numbering system was developed, ancient accountants used clay tokens to keep track of animals and grain to do their analysis. Now, CPAs provide bookkeeping services and financial statement analysis, which is essential to how you operate your business, make decisions and track performance. These services include the preparation of financial statements, general ledger entry, and complex business transactions.

Service 3: Audits and reviews

CPAs can also conduct audits and reviews. Audits involve a comprehensive analysis of your financial data, ensuring that your business is working according to the laws and regulations that govern you. Reviews are less extensive, but they provide a high level of assurance for potential business partners and lenders.

How do you choose the right CPA for your business?

Tip 1: Look for a CPA with experience in your industry

It is best to hire a CPA with experience in your industry, as this will make them more familiar with the unique factors affecting your business. They can also provide more relevant insights and guidance that can help you achieve your business goals.

Tip 2: Consider the cost of hiring a CPA

The cost of hiring a CPA is an essential factor to consider. You should weigh the cost of hiring a CPA against the business benefits they provide. Some CPAs charge a flat fee, while others charge an hourly rate. Ensure you choose a CPA whose rates you can afford.

Tip 3: Meet with potential CPA’s to discuss your business needs

You need to meet with potential CPAs before choosing to work with them. These interviews are an opportunity to ask questions and get to know the CPA, ensuring they have the right experience and understanding of your business. It’s crucial to feel comfortable working with your CPA, so don’t hesitate to ask for recommendations and credentials.

What are the benefits of hiring a CPA for small business owners?

Benefit 1: CPA’s can help you stay compliant with tax laws

A significant advantage when you hire a CPA is that they keep you up to date with tax laws. They ensure that your business tax returns are prepared and filed accurately and on time, avoiding legal and financial penalties that arise due to non-compliance.

Benefit 2: CPA’s can provide valuable financial advice

A CPA can also provide valuable advice on financial decisions that will advance your business goals. They can help you manage your financial data, perform cost analysis, and develop financial strategies that will benefit your company in the long run.

Benefit 3: CPA’s can save you time and hassle during tax season

Finally, when you hire a CPA it can ease the stress and burden of tax season with their expertise. They perform time-consuming tasks such as gathering and organising tax documents, preparing and filing your tax returns, and responding to any issues that arise during the process, freeing up time that you can use to focus on running your business.

These are some of the reasons it is important to have a professional accountant on your team. It is important to be proactive as a business owner so you do not find yourself in hot water with CRA. At Richardson Miller LLP, we have decades of experience working with business owners and corresponding with CRA.

If you have questions about what your next steps are, contact us today!

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Bookkeeping Year-End Checklist

Do you have a bookkeeper or an in-house accounting team?

RM LLP – In-House Corporate Year End Checklist

Fantastic! This list will give you an idea of the specific things you should review and gather. Every business is unique. We’d be happy to help you tailor your year-end to-do list to specifically suit your company.

There are certain tasks to be done on certain dates.

On your year-end date:

  1. Count your inventory at your year-end date.
    1. A spreadsheet is a great way to aid in your inventory count. You’ll want columns for the item description, the number counted and the cost of the item. The columns can be formatted to calculate your total inventory value easily.
    2. Make notes on any items that may be useless.
    3. Do you have items that are stored in another location? Include those too!
    4. Do you have items that are in transit? Have you already paid for them? Make notes on these special circumstances.

Shortly after your year-end and review with your bookkeeper/accounting team:

  1. Ensure all transactions are entered into your accounting software and the bank and credit card accounts are reconciled.
  2. Review the bank and credit card reconciliations. Are there any old/weird transactions on the list of outstanding items that shouldn’t be there? Make a note of them.
  3. Review your accounts receivable listing. As of your year-end date, were those things still owing to you? Pay special attention to the really old invoices. Are any of them unlikely to be collected? Note any uncollectible accounts or items that don’t appear correct.
  4. Review your accounts payable listing. Did you owe all of these items at your year-end date? Is anything missing? Is there anything that shouldn’t be on the list? Look for Vendors that you typically wouldn’t have an account with. Do you have a payable from a restaurant or retail store? A common error is to record an invoice for something small and accidentally fail to match the payment of that amount. I can’t tell you how many times I’ve seen Booster Juice show up on an accounts payable listing. This is obviously an error of some kind. Make notes on anything out of the ordinary or if there are errors.
  5. Review the payments made in the month following your year-end. Were there any expenses paid that actually related to the previous month? What were they? Make a note of them if they aren’t already included on your accounts payable listing.
  6. Review at the detailed general ledger. Are there any obvious errors? A misallocation of an expense type? Specifically:
    1. Are there any insignificant repairs or supplies classified as equipment purchases?
    2. Are there any expenses that need to be reallocated?
    3. Are there any personal expenses accidentally included in the company expenses?
    4. Are there any significant equipment purchases/deposits accidentally classified in expenses?

Once you’re confident that the bookkeeping is ready to go, here is a list of items to provide to your accountant:

  1. Access to your accounting software
    1. Do you use QBO? Please ensure that Richardson Miller LLP is invited to be the accountant.
    2. Do you have desktop software such as Quickbooks or Sage?
      1. Provide a backup or Accountant copy so that we easily access your detailed information.
      2. Provide any login credentials we need to access your data
  2. Bank statements with reconciliations for each month of your fiscal year
    1. Note any unusual/old items that don’t belong on the outstanding transaction listing.
  3. Credit card statements for each month of the year with related reconciliations. Does your credit card end on a mid-month date? Make sure you include the statement that fully covers your year-end. For example, if your year-end is March 31, and your credit card statement goes to the 14th of the month, include your credit card statement that ends on April 14 so that we can see all of the transactions for the year.
  4. A copy of your accounts receivable listing.
    1. Note any unusual/incorrect or uncollectible amounts.
  5. Do you have Inventory or Supplies on hand at year-end?
    1. Provide your inventory listing and valuation.
  6. Your accounts payable listing
    1. Note any items that may need correction.
    2. Are there any amounts owing that aren’t on this list that should be? Note them.
  7. Did you pay for business expenses personally that isn’t already captured in the bookkeeping?
    1. Please provide those receipts too. Keep them separate so that we know that the company needs to reimburse you for these costs.
    2. Did you drive your personal auto for business purposes? How many kilometres did you drive during the year for business?
    3. Home office expenses? If you operate your business from your home, you can expense a portion of your home costs. These costs may include:
      1. Internet
      2. Mortgage interest
      3. Property taxes
      4. Rent
      5. Utilities
      6. Repairs and maintenance
      7. Security system
      8. Insurance
  8. Do you have loans in your business?
    1. Provide any line of credit or loan statements
    2. Provide the details of any new loans taken by the company. The Loan Agreement will have details on repayment terms and interest rates. We’ll need all of this information.
  9. Did you buy or sell any major equipment/assets?
    1. Please provide any Invoices or Bills of Sale.
    2. Provide any new rental agreements too!
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Year-End Accounting Checklist

Happy Fiscal New Year!

It’s time to prepare your documents so we can complete your year-end filings.

Here is a handy to-do checklist to help you compile your documents. This list is by no means suitable for every business, but it will give you an idea of the typical items required to compile financial statements and a corporate tax return. We are always happy to help you determine what is most appropriate in your unique circumstances.

Do we do your bookkeeping?

RM LLP – Corporate Year End Checklist

We’ll need you to provide a bunch of documents so we can fully capture your corporation’s activities:

  1. Bank statements for each month of your fiscal year
    1. Include any receipts for items that were paid through the bank account. Depending on the number of transactions, a good practice is to keep the receipts WITH the related bank statement.
    2. Did you write any cheques? Do you keep the check stubs for your records? Please include those too. Did you write cheques that didn’t clear the bank by your year-end date? Which ones?
    3. Did you pay anyone by E-transfer? Is it clear who was paid and for what? Provide any notes so that we are able to classify your costs accordingly.
  2. Credit card statements for each month of the year. Does your credit card end on a mid-month date? Make sure you include the statement that fully covers your year-end. For example, if your year-end is March 31, and your credit card statement goes to the 14th of the month, including your credit card statement that ends on April 14 we can capture all of the transactions for the year.
    1. Include any receipts for items paid through the credit card. Using the same technique as with your bank statements, organize your receipts by the statement. Feel free to make notes on the receipt if you think something needs to be clarified.
  3. Invoices for sales for the year. Depending on your business, here are some options on how you may do that:
    1. Include copies of your invoices for the year. It’s a good idea to track when your customers paid you. Write the date you collected the money on your copy of the invoice. Do you have some invoices that haven’t been paid as of your year-end date? Indicate which ones. Do you have some customers that don’t look like they’ll be able to pay your invoice? Which ones?
    2. Maybe you have several invoices were providing individual documents isn’t possible or practical. Do you have a program that tracks your sales revenues? Eg. Square or an industry-specific App? Are you able to provide sales summaries by month or year? We’ll be happy to discuss what types of reports would be most appropriate to provide.
  4. Do you have Inventory or Supplies on hand at year-end?
    1. At your year-end date, count your inventory. Create a spreadsheet that details the item on hand, the number of items and the cost of the items (NOT what YOU sell it for, but what it cost you to obtain). Be sure to include stuff that you’ve paid for but may not yet have received. What is the total amount of inventory on hand at year-end?
    2. Depending on the nature of your operations, we can help you find some practical to track your inventory.
  5. At your year-end date, did you owe people money?
    1. Provide copies of invoices that you hadn’t yet paid. Eg. That phone bill that you paid the week after your year-end? THAT’s exactly what I’m talking about.
  6. Did you pay for business expenses personally?
    1. Please provide those receipts too. Keep them separate so that we know that the company needs to reimburse you for these costs.
    2. Did you drive your personal auto for business purposes? How many kilometres did you drive during the year for business?
    3. Home office expenses? If you operate your business from your home, you can expense a portion of your home costs. These costs may include:
      1. Internet
      2. Mortgage interest
      3. Property taxes
      4. Rent
      5. Utilities
      6. Repairs and maintenance
      7. Security system
      8. Insurance
  7. Do you have loans in your business?
    1. Provide any line of credit or loan statements
    2. Provide the details of any new loans taken by the company. The Loan Agreement will have details on repayment terms and interest rates. We’ll need all of this information.
  8. Did you buy or sell any major equipment/assets?
    1. Please provide any Invoices or Bills of Sale.
    2. Provide any new rental agreements too!
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When Should I Incorporate My Business?

To Incorporate or Not to Incorporate

Should I Incorporate my business… This is a very common question, and the answer isn’t always clear. It depends on your current situation, your future plans, and some best/worst-case scenario analysis. We’ll look at the various factors/benefits and drawbacks.

If you’re not incorporated…

If your business is not incorporated, you report your business income and expenses with a schedule on your personal tax return. The net income is included in your taxable income and you pay tax based on your marginal personal tax rates. On the flip side, if you have a net loss, that amount can be deducted from your other sources of income.

What does it mean to Incorporate?

When you Incorporate a business, you create a separate legal entity. Your business operations occur within this entity.

What are the benefits to incorporating:

  1. Separate legal entity. Corporations can own property, obtain loans, and enter into contracts. If the owner happens to die, the corporation lives on.
  2. Easier access to capital. Corporations can often borrow money at lower rates or more diverse lending options.
  3. Lower tax rates. In Alberta, the small business corporate tax rate is 11%. This rate is considerably less than the marginal personal tax rate of 25%-48% in Alberta. This personal tax rate doesn’t include the Canada Pension Plan payment requirements of up to $6,332.90 (based on 2021 rates).
  4. Limited liability. A corporation can protect you from being personally liable for certain business liabilities.

What are drawbacks of incorporating:

  1. Corporate tax filing requirements. The cost of preparation of a T2 Corporate tax return is often significantly higher than that of a business schedule on a personal tax return.
  2. Record-keeping requirements. In addition to the revenues and expenses, you’ll need to track the assets and liabilities of the corporation. This can add considerable costs in record/bookkeeping.
  3. Other costs. It costs money to incorporate: the basic costs to incorporate, a name search, maintaining your corporate Minute Book, and Annual Return filings.

Should you Incorporate your Business?

Answer: That all depends on your circumstances. The benefits must outweigh the additional costs and filing obligations. Here are some factors to consider when looking at your options:

  1. What are your earnings in your business? Do you earn at least $20,000 more than what you need to live on and would appreciate saving on personal tax? This is the point where the benefits start to make sense when considering the cost of incorporation. If you have net business losses in the start-up phase of your business, it may be beneficial to NOT incorporate and use the losses to offset your earnings from other sources. In the same way, if your business earns approximately what you require to live on, there are generally very few tax savings to warrant the costs and efforts involved in incorporating.
  2. Do you have other business partners or a need to raise money? Incorporating can add flexibility in how owners are compensated. Corporations also have more flexibility in obtaining financing from lenders or raising capital through investors.
  3. What sort of risks is inherent to your business? Can someone sue you? What is the likelihood of a lawsuit? If there is a chance that you could have uninsurable losses, you may wish to consider incorporating. The corporate entity could shield personal assets from lawsuits or unforeseen business operation losses.
  4. Do you have other needs? Do you require the appearance of being a little more established or sophisticated in the business world? Will potential customers/clients respect you more if you’re incorporated? Perhaps you simply won’t qualify to obtain a sales contract if you’re not incorporated.

Let’s take a look at some real-life examples.

Scenario 1:

Dylan is a fantastic artist and his friends have convinced him to sell his works online. He works at building this dream in his spare evenings and weekends. He’s using his savings and day job earnings to fund the start-up costs for his new business. It’ll take time to establish his brand, build his website, and perfect his product before sales start to increase.

Dylan should probably NOT incorporate. He will likely have a net loss from his first year or two of operations. These losses can be used to reduce his other forms of taxable income on his personal tax return. He’s better off avoiding the excess costs to incorporate and enjoy the personal tax savings writing off his business losses.

Scenario 2:

Casey is a real estate agent. Casey has been reporting their net business income on their personal tax returns for years. Over the last few years, Casey has found that the earnings from business activities are quite a bit more than what they require to comfortably live on.

Casey could likely benefit from incorporation. When net business income is at least $20,000 more than what is required for living, earning money through a corporation (and benefiting from small business tax rates) can be a fantastic way to defer some tax. Casey would draw from the corporation when they need to live on and report the related compensation (salary and/or dividends) on their personal taxes. Excess earnings remain in the corporation and are not taxed personally. The greater the earnings over the living requirements, the greater the tax deferral. A business owner earning a net $400,000 while only requiring $90,000 can see tremendous tax savings from incorporation making it well worth the costs to incorporate.

Scenario 3:

Ava, Marissa and Lauren are Engineers. They want to combine their efforts and offer consulting and design services. Marissa is only able to work half-time as she has demanding family obligations. They wish to take advantage of as many research grants as possible.

This Engineering company would benefit from Incorporation for a number of reasons:

  • A separate entity would allow for flexibility in allocating compensation to its various owners. All three can be equal owners of the corporation, but their wages can be determined based on their efforts.
  • Many grants require that businesses be incorporated in order to receive funds. The company may also require bank financing for projects/equipment.n incorporated company may appear more sophisticated to potential customers/clients/collaborative partners. There is a strong chance that certain contracts may require the company to be incorporated.

Scenario 4:

Martin has worked as a truck driver for years. He’s always dreamed of owning his own rig and being his own boss. He has finally saved enough for a down payment on a truck and has lined up fairly steady work allowing him to quit his day job.

Martin may wish to consider incorporating. With his line of work, there is potential for accidents. Should the unthinkable happen and insurance not fully cover the fallout, his personal assets could be exposed to this liability. The separate corporate entity would allow him to declare bankruptcy within the corporation and walk away from the liabilities.

Keep in mind that situations can always change in your business. If it doesn’t look like now is the right time to incorporate, it’s fairly simple to incorporate at a later date. Talk to your experienced, qualified Chartered Professional Accountant about the right path for you. If you don’t yet have a trusted advisor, we’d be happy to help!

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Corporate Tax Strategy Considerations

Behind every small to medium enterprise is a person. Does your corporate tax strategy consider the person that is the entrepreneur?

A tax strategy should consider both the corporate tax AND personal tax implications.

What mix puts the most dollars in your jeans at the end of the day?

Open and honest communication with your accountant is critical.

Does your accountant know YOU as well as your business?

Knowing YOU is a critical factor in deciding on the best solution for owner compensation. Without a full understanding of your situation, the wrong compensation plan can cost you big bucks.

What do you have going on in your household for tax purposes?

  1. Do you have a spouse? What is their income level?
  2. Do you have other sources of income? Giant expenses to deduct this year?
  3. Significant life changes planned in the next year or two? A new house, children, a marriage, a divorce? Retirement plans?
  4. What is your five-year plan?
  5. What about children? How old are they? Plans for post-secondary education?
  6. Does anyone in your household have medical issues or disabilities?

I’ve often said that the more I know about my clients, the more opportunities for tax savings. A corporate tax strategy that fails to consider these factors isn’t much of a plan.

The corporate tax strategy should be pro-active.

  1. AVOID PERSONAL TAX SURPRISES. Based on your corporate activities, what is your personal tax bill going to be? What are some opportunities to mitigate that personal tax hit? RRSPs? Donations? (One of my favorite clients has me calculate how many charitable donations are required to eliminate his personal tax bill each year. That guy makes my heart smile.)
  2. TAKE ADVANTAGE OF LOWER TAX BRACKETS. Perhaps your personal income is low this year, but you are planning on buying a house next year. You were planning on drawing significantly more out of your corporation for the down payment. It’s likely a terrible idea to have personal income in 2020 of $20,000 and $200,000 in 2021. Smooth this out over the two years so that you’re taking full advantage of the pleasant tax brackets in 2020 and avoiding the ugly brackets in 2021. Think about bumping up your income to $120,000 in 2020 and buying an RRSP to take advantage of the Home Buyers Plan for that down payment (if you qualify).
  3. INCOME SPLITTING OPPORTUNITIES. In a family business, everyone pitches in at some point or another. Should you consider paying your spouse a wage? Can you justify putting your children on the payroll? ***NOT YOUR TODDLER*** Perhaps your older child helps clean up the shop or organize paperwork. Pay them a reasonable and justifiable wage instead of an allowance. From there, they can pay for their own expenses or college savings.
  4. DO NOT PROCRASTINATE. The longer you wait to supply your year-end to your accountant, the fewer tax planning opportunities there are. Keep on top of things and get your corporate documents to your accountant within a month or two of your year-end. I picture my October year-end guy that brings his year-end to me in April. There is very little I can recommend for him to reduce the corporate tax bill or his personal tax bill. To further rub salt in those tax bill wounds, he typically has to pay interest and penalties for late remittances.

Do you think you have a “one strategy for all” accountant? I’d be happy to provide a second opinion in a complimentary consultation. Contact Richardson Miller LLP today!

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Salary versus Dividends

The ongoing discussion of Salary versus Dividends has got to be one of the oldest debates since the dawn of complex taxation. Over the years, I’ve heard many people (accountants included) preach that dividends are the way to go. I cringe at these “one size fits all” solutions.

Salary versus Dividends – how to choose

The increasing Canada Pension Plan (CPP) rates make a dividend only compensation strategy tempting, but consider this:

  1. Childcare costs can only be deducted against employment (or self-employment) income. If you have dividend-only income, those daycare receipts could be worthless at personal tax time.
  2. Did you move during the year? Moving expenses can only be deducted against employment income.
  3. Do you have a health spending account in your corporation? This is only deductible in your corporation if you are an employee of your corporation. You are not an employee if you are only paid a dividend.
  4. Dividends are grossed up on your personal taxes. This means that your taxable income is essentially inflated for calculating credits and programs that are income-dependent. Dividends will mean reduced Child Tax Benefits or GST credits. For older entrepreneurs, it can mean clawed back Old Age Security benefits.

Perhaps dividends are the most cost-effective method of compensation for you. Consider taking a tiny wage from your corporation so that you are technically an employee and can access benefits and tax credits aimed at people who report T4 income.

Be aware of the consequences of dividend-only compensation.

  1. No (or reduced) CPP benefits. Think retirement plan and disability payments. Consider taking those employer and employee CPP savings and locking them into a long-term investment plan to save for the lost future benefits.
  2. No accumulation of RRSP contribution room.

The answer isn’t simple and each individual situation needs to be evaluated separately. Depending on the various taxation policies at provincial and federal levels of government, the ideal compensation strategy can flip flop annually. Make sure your accountant is aware of any changes in your household and personal plans.

Richardson Miller LLP is here to help you with all of your Accounting needs. Contact us today.

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Get Paid Faster – Tips on Quick Accounts Receivable Collections

Getting paid should be easy.

Many entrepreneurs struggle with cash flow and wish they had more money in the bank. One of the most significant keys maintaining a healthy cash balance is collecting accounts receivable in a timely manner.

Here are some tips and tricks to ensure you’re collecting your accounts receivables as fast as possible.

Stay on top of your invoicing.

Picture the entrepreneur that is too busy doing the work to invoice his customer. Most people would agree that there is very little point to working in your business if you never receive any money. Hire staff/contractors to help you with this if you are too busy.

    • Invoice for work completed as soon as possible. If your customer typically takes 30 days to pay your invoice, the extra time that the paper sits on your desk equals added extra days before that money lands in your bank account.
    • After delivery of the invoice, consider following up with your customer to ensure that they have received your invoice as well as any other documents and information required for payment. This may include PO numbers, proof of delivery, etc. Missing information can add days/weeks or more to your collection time.
    • Consider automating your internal processes to save time in paper processing.
    • Ensure that your staff are aware that invoicing is a priority and that you have the manpower to get the task done on time.

Call and ask for the money.

Don’t be too busy to remember to call and collect from your customers. The money doesn’t land in your bank account any faster by sitting, hoping and waiting.

    • As time passes, consider simply picking up the phone and calling the customer. If your customer normally pays within 30 days and its day 35. Perhaps a gentle reminder is all that they need. Perhaps there are other circumstances.
    • It’s important that your customer be aware that they have bills to pay. Be the squeaky wheel. If they are in a tight cash flow position, when there is cash available for payments, you want your invoice to be on the top of the list.
    • Often calling and collecting money ends up on the bottom of the priority list for busy staff. Ensure that staff know that collection activities are a priority and consider hiring help as required.

Offer quick and easy payment options.

    • Do you accept electronic payments? E-transfers? Credit cards? While the merchant fees on credit card payments can cut into your profit, so can paying interest on your operating line of credit… or not being paid at all. There are many mobile debit and credit card processing options. If your customer is the general public, strongly consider some of these immediate payment alternatives.
    • Electronic and card payments can eliminate the old “the check is in the mail” excuse. Mailing payment can add an additional week to your collection time. Mention your electronic payment options so that your customer can also save money on postage

Offer discounts on quick payments or charge interest.

    • Does it make sense to offer your customers a few percent off of their bill if they pay immediately or within 15 days?
    • Alternatively, consider charging interest on late payments. Often people will delay paying you simply because there is no consequence to not paying you.

Evaluate your policies for granting credit.

    • Who are you offering goods and services to without knowing of their ability to pay?
    • Do your customers have to fill out a credit application?
    • Do you obtain their credit history?
    • Do you have internal controls that prevent sales staff to extend additional credit when previous invoices have not been paid?
    • Consider obtaining a retainer or deposit.

Know your legal rights.

    • If your customer is delaying payment, can you place a lien on a property? Make sure you are aware of your options and any applicable deadlines to register such liens.
    • What are your options with small claims court?
    • What are your rights to collect on invoices outstanding for over a year or two?
    • Develop a relationship with a good collection agent to assist with difficult cases.

Stay current on your record keeping.

You don’t know what you don’t know. Get meaningful financial reporting on a timely basis.

    • Current financial records will indicate exactly who still owes you money. Keep on top of bookkeeping and reconciling your bank account. Review your accounts receivable listing regularly.
    • Become immediately aware of any NSF payments by your customers.
    • If you take your box of records to a bookkeeper quarterly or annually, you may not realize that your customers invoice over 60 days old. Perhaps monthly bookkeeping options would be better for your operations.
    • Even with very simple operations with very few customers, it’s easy to forget that an invoice is outstanding.

Need assistance with bookkeeping or automating your invoicing processes? Send me an email angela@rmllp.ca.

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How To Choose a Corporate Year End

Is your choice of Corporate Year-End timing critical?

You’ve incorporated… did you know that you can CHOOSE when your year-end can be?  It’s true! You do not have to have a December 31 year-end. This is a very common misconception.

Deadlines to keep in mind:

For most small to medium businesses in Canada:

  • Your corporate taxes are due within 3 months of your year-end.
  • You need to file your corporate tax return within 6 months of your year-end.
  • T4s and T5s for any wages and dividends paid must be filed by February 28.

Imagine how busy the professional accountants would during the months of January and February!

The virtues of a non-December 31 year-end:

  1. Your accountant will have more time/energies to devote to your year-end.

This is a sad, but true fact.  Many professional accountants are crazy busy during January through to the end of April.  You’re likely going to get slightly better customer service during slower times of the year.

  1. Opportunities for tax planning and deferrals.

If you’ve got a December 31 year-end, this means that your personal tax year-end equals your corporate year-end.  Any funds drawn for your corporation MUST be reported on your personal taxes in that year (unless repayment plans are in place). These numbers must be reported as part of your tax return when you file your corporate tax returns.

Any other year-end date allows for so much more flexibility with respect to when these funds were drawn and repaid.

How to choose a year-end:

  1. Approximately 12 months after you incorporate.

This option gives you the most bang for your accounting dollar with 12 months included in your corporate tax return filing.  For example, you incorporate on April 17.

Without other considerations, a March 31 year-end would be a reasonable choice.  Why would you have financial statements and a corporate tax return prepared for December 31 when you can postpone it until March 31?

Do you have questions on how to get started? Let’s get connected!

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