Tax strategy

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When Bob’s Trucking Inc. started experiencing cash flow problems, Bob found his company was unable to pay all of its bills. He decided to use the money the company did have to pay for fuel and employees to continue operations because without fuel in the trucks or employees to drive the trucks, there was no business. At this point, he stopped paying the company’s GST and source deductions to CRA. He thought that if the trucking company ended up going bankrupt, the business debt to CRA would be taken care of through bankruptcy…WRONG!

Am I personally responsible for my business debts to Canada Revenue Agency?

When a business collects GST from customers or withholds source deductions from employees, it is acting as an agent on behalf of CRA. The company now has an obligation to remit these amounts collected to CRA. If Bob’s Trucking cannot meet this obligation in full, CRA will start arranging payment plans with the company. If this is still unsuccessful, CRA will pursue legal action against Bob’s Trucking Inc. to collect these amounts.

If CRA is still unsuccessful in collecting from the company, they can and they will go after the director of the company to try to collect these amounts. Here is where Bob’s personal bank accounts and assets are now at risk!

It is a slightly different story when Bob’s Trucking Inc. owes corporate income taxes to CRA. Since these amounts have not been collected by a third party on behalf of CRA, the company is not acting as an agent. The same collection process will be followed by CRA to try to collect these amounts from the company. But, if that is unsuccessful, Bob’s personal assets may or may not be at risk.

If Bob’s Trucking Inc. paid Bob dividends, then CRA can go after Bob personally for corporate income taxes owing up to the amount of the dividends he received. The logic behind this is if the company did not have sufficient money to meet its corporate tax obligations, how did it have sufficient money to pay dividends?

No business owner wants to find themselves getting behind with filing or payments with CRA.

When this does happen, most owners put their heads in the sand and try to avoid CRA’s phone calls and correspondence. This is a big mistake! CRA is willing to work with businesses to arrange payment plans to avoid pursuing legal action. But you MUST communicate with CRA.

This is one 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.

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!

You are officially caught on CRA’s radar…

  • CRA is auditing or reviewing your information
  • Your filings have been arbitrarily re-assessed
  • The collections department is harassing you

No matter what the reason, dealing with the Canada Revenue Agency (CRA) can be extremely stressful.

Here are some tips to help ease that CRA audit pain.

What are your responsibilities?

By law, you have to keep adequate books and records to determine your tax obligations and your entitlements. Generally, books and records must be kept for a minimum of six years.

If you use a computer for your accounting records, you must keep your books and records in an electronically readable format, even if you also keep them on paper. Using the services of a tax professional does not relieve you of your responsibilities.

For an audit, you must make available to the auditor all of your relevant records (both paper and electronic) and supporting documents, and provide complete and timely explanations to the auditor’s questions. Failure to provide required books and records is an offence under the law.

Source: canada.ca

1. Do NOT Ignore them.

The problem will not go away. Keep the lines of communication open. Return phone calls even if the only thing you have to say is “I’m working on it”.

2. Deal with any requests or incorrect assessments ASAP as they are often very time-sensitive.

If you ignore requests and CRA re-assesses you, it can take several months to correct AND if you ignore them long enough, the problem may become unfixable.

CRA Audit Client Examples

a. I had a trucking company referred to me. He was behind on GST filings and CRA Factually assessed him. The client had opted to bury his head in the sand. The returns became statute-barred and CRA refused to reassess them. I luckily found a reasonable auditor to re-open the files and managed to save my (very happy) client $80,000.

CRA Factually assessed – If you don’t file your GST file on time, the CRA can arbitrarily access you and send you a bill.

b. In another case, (again, before he was my client) an automotive mechanic shop company underwent a payroll audit. The business owner and (non-CPA) accountant at the time didn’t respond properly to queries. CRA incorrectly assessed over $100,000 owing in source deductions. They were referred to me. It took over a year of fighting with CRA to have them amend their assessment to the correct balance owing of only $4,000. In the meantime, their corporate bank accounts were seized. Again, if it would have been dealt with properly in the first place, it would have never been an issue.

3. Enlist your Chartered Professional Accountant in dealing with CRA.

Generally, I’m the one who responds to my client’s CRA queries. If the client is preparing the response, I review it before it is sent in. In the case of an on-site audit, I prefer to gather the records and host the auditor in my own boardroom. This eliminates any intimidation factor.

Quite often, the accountant will know exactly what the auditor is looking for and be able to provide the facts and only the facts to get the issue resolved as efficiently as possible. The last thing you want is a simple review request for payroll to turn into a GST audit, personal benefit assessments, disallowed expenses… the list goes on.

Sometimes just a slight change in terminology can drastically change the audit outcome.

I had a trucking company client go through a review to determine whether a subcontracted driver was an employee. If the contractor was determined to be an employee, my client would have been liable for over $20K in payroll taxes. My client kept referring to the contractor in employee terms even though the nature of the arrangement was leaning toward the contractor. Had I not been able to pre-screen and rephrase his responses to the appropriate terminology, the client would have ended up with a nasty bill.

4. CRA isn’t always right.

I know…it’s shocking indeed. You want someone in your corner who understands taxes to be able to argue on your behalf.

I had a client undergo a GST audit. The auditor (who appeared somewhat inexperienced) proposed an assessment of over $20,000 owing. Upon review of his supporting paperwork, I successfully argued the GST owing down to less than $2,000.

Do you need help in dealing with a CRA issue? We’re happy to help!

 

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.

GST QUICK METHOD

If your business is operating at revenue of $400,000 or less, you need to stop what you are doing and read this!

Canada Revenue Agency (CRA) offers an elective GST filing method for small businesses who have less than $400,000 in annual revenues. It is called the Quick Method and, in my opinion, it is a highly under-utilized election.

Who should use the Quick Method?

  • Other than a few industry specific exceptions, most businesses with less than $400,000 can use this election
  • Businesses with the majority of their expenses not being subject to GST would want to utilize this method. For example, if your largest expense is payroll you would definitely want to consider this.

How does the Quick Method work?

Under this method you would still charge the applicable rate of GST/HST on your sales, but this is not the same as the amount of GST you end up remitting up to CRA. What you end up remitting is based on the quick method remittance rates which are less than the applicable rates of GST/HST you charged.

Yes, that is correct, you collect more GST from your clients than you send to CRA. You do not get to claim any GST paid under this method though because the part of the GST you collected but got to keep accounts for the ITCs you would have otherwise claimed. The intention behind this election is to streamline the GST process for small businesses, but it can end up saving your business money! Who doesn’t want to save some money?

If the majority of your expenses are not subject to GST anyways, you are going to end up ahead under the Quick Method. You can find all the specifics on CRA’s website but I’ll go through a quick example below.

A practical example

It may seem a little confusing and it does require a little bit of number crunching so I will just sum it up a little.

Let’s look at Joe’s Contracting Ltd. Joe owns this business and he provides handyman services to his customers. He has very little costs associated with supplies as the majority of the jobs require only labour so he has one employee that helps him out. His business is based in Alberta and he earns exactly $400,000 in revenue a year.

Under the regular method of GST, Joe would collect GST of $20,000 from his clients and send the whole $20,000 up to CRA.

Under the quick method, Joe would still collect GST of $20,000 from his clients, but the cheque he sends off to CRA is only $15,120.

If you can choose to send CRA $20,000 or $15,120 which one are you choosing? I would think Joe would prefer sending the smaller cheque as well.

And has an additional bonus – this savings will continue to happen every single year when he files his GST return as long as he continues to meet the criteria.

The bottom line

If you think you qualify for the Quick method but have never heard of it before, you may very well be sending too much money to CRA. Reach out to us to discuss.

  1. Jazz Hands.

    That’s right. No auto-correct here—I meant it. With many cities implementing mandatory masks in public, we are missing out on a significant portion of our non-verbal communication options. Many of us can admit to over exaggerating our squinty eyes in attempts to convey that we are in fact smiling. Since Covid-19 is apparently here for the long haul, perhaps we need to consider implementing a universal sign that we are smiling without purposefully deepening our crows-feet (which, going forward, will likely be known as smiling mask wrinkles).

  2. Extended Deadlines.

    I recently visited my dental hygienist for the first time since lock down hit. After my teeth cleaning, I re-booked the appointment for six months later. In six months, it’ll be the end of March 2021! This realization was a bit of a smack in the face. In six short months, we’ll be doing our personal taxes all over again! This point is specifically for the procrastinators out there. Be aware that it’s almost time to do your 2020 personal taxes… even though you JUST finished your 2019 taxes. Perhaps you completed them earlier but JUST paid them. That next tax bill isn’t very far away. For many individuals (corporate filers included), the deadline extension has skewed the sense of urgency/timing/responsibility. Don’t procrastinate. Get ‘er done. Be on time. Missing deadlines may result in penalties, interest, missed incentive opportunities and delayed family tax credits.

  3. Covid-19 Incentives.

    Back in March and April, many folks got caught up in the government incentives and handouts. I’d encourage everyone to re-visit the CRA website to double check those programs. Over the last few months, the criteria has evolved and the website has been updated continuously. Did you actually qualify for that incentive? Perhaps you first thought you didn’t qualify but now you do. If you didn’t actually qualify but have received money, there are options to repay that money (via My Account and My Business Account on CRA online). Rest assured that CRA will be reviewing all who have received incentives to ensure eligibility.

  4. Creativity

    I’m impressed with the resiliency of entrepreneurs in Alberta. So many businesses have taken this setback and have quickly revised processes/systems and products/services to survive and or thrive. Thankfully this pandemic has hit when we have the technology to work from home. Could you imagine if this happened in 1985? Check out my article on how home offices impact your tax return. On the other hand, there are many businesses that have become victims of the lockdowns. This is truly heartbreaking. If you fall into this category, do continue to talk to your professional accountant to determine your filing responsibilities and opportunities to claim any losses.

If you need advice on COVID-19 issues with your business, please reach out! We’re happy to help. Contact us today.

The COVID-19 pandemic and resulting lockdowns have brought on a huge shift for people to work from home. Several business leaders have determined that having employees work from home is entirely possible and a great way to reduce overhead costs. Why would you force your employees to drive across town and sit in an office when they are just as productive (if not more) in their own homes? This trend has impacted our household. My husband’s automotive expenses are a fraction of what they were a year ago. On the other hand, our utilities, unlimited highest speed internet requirements, toilet paper and coffee costs have increased substantially. How does this trend impact your tax filing obligations?

Information for Employers:

If you have required your employees to work from home at least 50% of the time, they can claim some of their home office expenses on their personal tax returns. When you hand out your employees T4s, provide a completed T2200 Declaration of Conditions of Employment form. Indicate on the appropriate sections that the employee was required to work from home.

Based on the size of their home office, your employees will be able to claim a percentage of their expenses. This percentage is calculated by dividing the workspace area by the total finished area of the home. Expenses to track include: Utilities (heat, electrical, water), and maintenance (cleaning supplies, paint, plumbing, etc.) and rents. If your employee is paid commissions, they may also claim their insurance and property taxes. If home office specific expenses are incurred (fax line, increased internet capacities, office space only maintenance), the entire expense may be deductible. For example, if your household normally spent $50 per month on internet and now you spend $150 so that your ZOOM calls don’t freeze, one could argue that the $100 extra should be deductible. Similarly, if you revamped a spare room to create an office oasis (paint, shelves) you may (within reason) claim 100% of these costs.

Ensure that your employees are aware that employment expenses are often reviewed by Canada Revenue Agency. Encourage your team to keep their receipts/invoices/statements to be able to prove their claims.

Information for Business Owners:

Whether you are incorporated or a proprietor, you may also claim some home office expenses. The portion claimable is calculated in the same manner as for employees (office space divided by total finished area of your home). In calculating this percentage, it’s tempting to say that a significant portion of the home is used for business purposes. As a general rule, it’s best to keep the percentage around 10%. Any more than that and Canada Revenue Agency can argue that your home was a revenue generating property and you put your Principal Residence Exemption at risk… meaning tax implications on any gains when you sell your house. Also note that if you rent a secure commercial space, you likely cannot claim your office as well.

Keep track of your rents, heat, electricity, insurance, mortgage interest, property taxes, security monitoring fees, and maintenance costs. You can claim the calculated portion of those expenses. Consider office specific costs: the portion of internet required for the smooth running of your business, a fax line, office décor, desk, shelves, chair, chair mat, WIFI booster, etc. These office specific costs may be considered 100% for business purposes and expensed accordingly. Larger items such as furniture, computer, printers, and other office equipment would be expensed over a period of time via Capital Cost Allowance.

Ensure that your claims are reasonable and justifiable. Would it pass the sniff test for Canada Revenue Agency? Was it an expense incurred to earn business income? I think my favorite COVID-19 home office question so far has got to be: With the shortage of toilet paper, do you think I can justify expensing the entire cost of the bidet seat for my toilet? This client won tons of points for creativity and making me laugh out loud during a particularly stressful time in the accounting world. My advice: I would stick to the 10% household repairs and maintenance write off on this one.

If you have any specific questions or concerns about home office expenses for either your employees or yourself as a business owner, I’m always happy to chat. Send me a message at angela@rmllp.ca.

Choosing the right account is important.

In a previous article, I discussed what CPA means and why it is important to choose an accountant with the CPA designation. Now I want to talk about other considerations when choosing an CPA that is the right fit for you or your company.

Does your accountant have relevant experience?

First, I would like to talk about experience.

  • How long have they been working in public practice?
  • Have they been around for many years or did they just decide to open up shop one day and may be gone the next?
  • What about the type of clients and industry they have past or current experience with?

When meeting with a potential new accountant, you should feel free to ask how long they have been in practice. You should also ask about their existing client base to find comfort that they have experience in your industry.

What is the accountant’s availability and communication like?

Another important consideration is availability.

  • Does your accountant return your phone calls and emails in a timely manner?
  • Do they have a partner or staff that can assist you with urgent matters if they are on holidays?

It is imperative to know that if something unforeseeable happens that prevents your accountant from continuing their practice that there is someone available to assist you.

Does the accountant have a strong professional network?

It can be beneficial to clients when an accountant has a team of people that they can rely on to take care of the needs of their clients.

  • What about their contact sphere?
  • Do they have other professionals they trust and work with regularly that you may also need?
  • If you find yourself in need of a new bookkeeper or a corporate lawyer, does your accountant have connections that may help you?

Are you comfortable discussing hard topics with the accountant?

Now let’s discuss comfort level.

You only need to talk to your accountant once a year so it doesn’t matter if you like them and feel comfortable with them, right? Wrong!

Your accountant should know all your confidential financial information and you should be comfortable to discuss this with them. The more your accountant knows about you, the more likely they will be able ensure that you are utilizing all the tax credits and deductions available to you. The more comfortable you are with your accountant, the more likely you also are to ask questions if you do not understand something.

It is important for a taxpayer to have some basic understanding of their financial statements and income tax return.

The partners of Richardson Miller LLP Chartered Professional Accountants have a combined 35 years of experience in public practice in several different industries. Our clients are important to us and we pride ourselves in our client relationships. We know that the world of tax is complex and confusing, so we aim to educate our clients in a way that is understandable and relevant to them.

CPA makes a difference in your protection

Have you ever looked for professional accounting services and been overwhelmed by the number of businesses to choose from? Have you ever noticed some of these companies have a Chartered Professional Accountant and some do not? What does Chartered Professional Accountant, or CPA, even mean?

Let us help shed some light on this.

Chartered Professional Accountants Association aka CPA

The Chartered Professional Accountants Association is a professional regulatory body that focuses on protecting the public. What does CPA stand for? When an accountant has CPA after their name that means they have completed:

  • a university degree (or equivalent);
  • a couple of years of practical work experience;
  • and professional level exams in order to receive the CPA designation.

An ongoing 40 hours a year of professional development is required to maintain the CPA letters. The Association protects the public by ensuring its members meet their high professional conduct and ethical accounting standards. They continue to monitor CPA firms to ensure ongoing competency, absence of professional misconduct, and validity of applicants for membership

Who is regulating the non-CPA firm to ensure they are qualified as well?

Unfortunately, in Alberta, there is no law to prevent anyone from calling themselves an “accountant”. It is the old “buyer beware”; if there is no CPA in the firm name or behind the accountant’s name, there is no one regulating the work being performed.

If the strict monitoring of a CPA firm isn’t enough to help you make a choice, you should also consider current and future financing. Depending on the level of financing, financial institutions may require a company’s financial statements to be prepared by Chartered Professional Accountant.

Check out the CPA Alberta website for more information on protecting the public or to verify that a chartered accountant, or a firm, is registered with the CPA Alberta Association.

How Can a CPA Help Me?

A chartered professional accountant can offer a variety of services to ease the burden of finances. Professional accountants can offer tax services, manage audits, and perform CFO functions. As a business owner, the business is your top priority. Hiring a chartered professional accountant to manage your finances gives you the extra time to invest in your business. CPAs can perform financial services in less time, with fewer clerical errors, and with a wider range of knowledge gained from education and experience.

“Many businesses choose to work with chartered accountants because of so many reasons. These professionals are experienced and vigorously trained to handle all tax and finance-related problems. Yes, hiring a chartered accountant will be an added expenditure, but the money they help you save will certainly outweigh those costs.” source: Small Business Sense

Investing in a CPA is investing in your business

Tax planning can assist you in saving thousands of dollars. Proper planning and filing of forms help you to avoid audits, penalties, or late filings. CPAs are professionally trained and knowledgeable on tax laws and how to use them to their advantage. We all know the headache of cutting through the red tape of taxes. CPAs will slice through and come out saving you in the end.

Nothing is certain in life except death and taxes. What comes with taxes? Audits. Chartered accountants can help protect your business and prepare you for the inevitable. Having a chartered professional accountant backing you when the Canadian Revenue Agency comes knocking is the highest reassurance one can have. They will know the proper steps and procedures to appease the CRA. Knowing your finances have been professionally prepared and documented takes all the burden during this potentially stressful time.

Did you know that chartered accountants can do more than just taxes?

CPAs can fill the role of Chief Financial Officers, CFOs. They can help manage expenses, perform payroll analysis, and assist in financial planning for the future. Outsourcing the role of CFO helps businesses have a professional perspective of the entirety of their finances. Along with business owners and management, CPAs can help develop solid financial plans to ensure the growth of businesses.

With ongoing training and certified professional education requirements. chartered professional accountants a wealth of knowledge available to business owners. Laws and industry standards are constantly changing. CPAs make staying on top of these changes their job. Knowledge is power and nothing comes close to the strength of CPAs when it comes to finances. This powerful ally is waiting to be called on whenever necessary.

Industry-Specific CPAs

Within the Accounting Industry, the CPA profession is diverse as the businesses they serve. CPAs can choose to specialize in certain areas of the accounting profession. A chartered professional accountant’s specialty can vary based on the size of the business they wish to represent, the types of businesses, or even accounting services they have honed throughout their accounting career. Business size has a massive impact on money management.

CPAs choosing to specialize in small businesses will have many more strategies and methods to best serve their clients. CPAs choosing to focus on a type of business within a specific service or industry will have more knowledge of the laws and regulations of this field. They are trained and educated in all areas of the accounting profession, however, CPAs can be more proficient in some services.

Hiring a Chartered Professional Accountant is important for your business. We have a proven track record of success and are qualified and motivated to provide you with the best financial advice and tax strategies for your business.

Click here to contact us today and learn more about how we can help your business grow.

New Entrepreneur Check List:

  • Brilliant idea?  Check.
  • Endless passion?  Check.
  • Supernatural ambition?  Check.
  • Nerves of steel?  Check.
  • A clear vision of success?  Check.
  • An accountant?  …. WHAT? WHY? …I haven’t made any money yet.  Why do I need to worry about accounting?

That is a fantastic question.

You don’t know what you don’t know.  When you don’t know what you don’t know, it’s easy to overthink the unknown.

Does it make sense to incorporate?  How do I incorporate? Do I need to register for GST?  Payroll vs Dividends? What can I deduct? How do I track my information?  When do corporate taxes need to be filed? Paid? How much to save for tax and GST?  Who should own shares in the corporation?

At this point, new entrepreneurs will generally do one of the following:

  1. Spend countless hours online trying to find information.
    There are endless sources of information online. Is it true?  Is it understandable? Is it relevant? How much time was spent researching stuff that you really don’t care about?
  2. Procrastinate.
    It’s easy to become overwhelmed at the thought of all those questions and vow to deal with it soon… very soon… next month for sure. Ignoring Canada Revenue Agency and it’s various filing requirements rarely ends well.  Consequences can range from penalties and interest to CRA seizing your bank accounts. It’s difficult to run a business when CRA strips your bank account of every penny each time you make a deposit.
  3. Ask friends and relatives. I can’t tell you how many times I’ve heard my clients say, “But my neighbour said I could claim all of my personal grooming expense in my business because I have to look presentable and presentable”.Or “My brother in law says he claims______________ ***insert ridiculous personal expenses here***_______”   All is well and good until there is an audit. At this point, you’re dead in the water.

Bringing an accountant from day 1 can:

Save you time.

  • More time to focus on your business—and less time is taken away from your family and loved ones.

Save Money.

  • Procrastination can be extremely expensive in late penalties
  • Also, save by coming up with a tax plan custom to YOUR business and personal situation
  • Perhaps there are certain elections you’d qualify for… or grants

Gain knowledge.

  •  An accountant can offer a bird’s eye view on your business idea.  What haven’t you thought about? Insurance? Financing? Are you partnering up with someone without a unanimous shareholder agreement?  What sorts of things can you deduct as it pertains to YOUR industry?

Assist in creating a strategic plan.  

  • Should you incorporate?  If incorporation is a logical choice, when should you incorporate?  Perhaps you’d be better off operating as a proprietor for a year or two first.  What would be an appropriate corporate fiscal year end date? People assume that December 31 is the obvious choice for a fiscal year-end.  The reality is, you can choose any date for a year-end and a non-December year end allows for so much more flexibility in tax planning.
  • When are the various government filings due?  Avoid surprises and prepare in advance.
  • How are you going to maintain your records?  Can you manage the documents yourself?  What tools/software and applications are available?  Do you need to hire a bookkeeper? What documents should be kept and for how long?  What are your options for the organization?
  • How are you going to pay yourself?  How much do you need to set aside for tax?
  • How are you going to manage your cash flow?  An accountant can assist with some strategies to make sure there is money in the bank.

Gain Peace of Mind:  – carry on your first year KNOWING that you’ve got a plan of action.

If you have questions about getting started, comment below or contact us.