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Maximizing Profitability Through Effective Business Tax Credits

A man's hands is busy in calculating an effective tax plan to reduce tax liabilities and maximize tax credits and incentives.

Operating a business can be challenging! From marketing and advertising to regulatory compliance, many details require attention to ensure a firm’s success. Taxes have a significant impact on profitability and long-term sustainability, so effective tax planning is critical.

What Is Effective Tax Planning?

Effective tax planning involves analysis, optimization, and compliance to reduce tax liabilities and maximize tax credits and incentives. It’s a comprehensive approach that produces advantages that assist with sustainability and profitability. Constantly evolving tax regulations and laws make effective tax planning critical for long-term success.

Commonly Overlooked Business Tax Credits

Many companies miss key tax deductions due to poor bookkeeping or lack of awareness. The following are some of the deductions/credits most commonly missed. 

  • Claiming what you pay: Employee benefits, wages, and salaries are a substantial business expense. Reasonable costs of salaries/benefits paid to family members working for the company are deductible. To ensure the legality of this deduction, keep accurate records. 
  • Prepaid expenses (rent, insurance, subscription services, etc.) are deductible. Thorough tracking is essential.
  • Legal and accounting fees (tax preparation, legal consultation, accounting services, etc.) are deductible. Ensure related invoices are logged appropriately.
  • Vehicle expenses (repairs, fuel, insurance, etc.) incurred by vehicles used for business are part of a company’s operating costs. They are deductible based on the percentage of personal versus business use. To make this claim, keep a logbook of business travel, ensuring accurate mileage is reported. 
  • Creating apprentice jobs may result in up to $2,000 in tax credits, helping you lower your business’s tax bill.
  • Business licenses and fees (such as memberships to trade or professional organizations) are deductible as business expenses. Ensure you have documentation proving membership. 
  • HST/GST payments on goods and services (ride-share services, parking costs, reimbursed expenses, etc.) qualify as input tax credits. To claim this deduction, keep complete and accurate records. 
  • Promotion and advertising (radio ads, free samples, social media ads, newspaper ads, donated services, etc.) are deductible.
  • Research and development credits are available to trusts, individuals, corporations, and sole proprietors. Businesses may claim a deduction against earned income and earn an investment tax credit.
  • Educational expenses associated with training or continued education related to the business (seminars, online courses, workshops, etc.) are deductible. 
  • Depreciation of intangible business assets (copyrights, patents, software, etc.) is often overlooked but qualifies for depreciation deductions. 
  • Clean investment tax credits (introduced in the 2023 federal budget) stimulate investment in clean technology and energy. They include the Clean Hydrogen Investment Tax Credit, the Clean Technology Investment Tax Credit, and the Clean Electricity Investment Tax Credit. They offer refundable benefits, making them attractive for new investments.

Do you need help maximizing business tax credits? Cook and Company provides high-quality tax planning and advisory services. Depend upon our Chartered Professional Accountants for help finding the tax credits for which your company qualifies. Contact us for assistance. 

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Optimizing Year-End Tax Benefits for Individuals

The owner of the company is optimizing year-end tax benefits for his employees.

Have you undertaken tax planning for your business or organization? Did you talk to a professional to maximize tax savings? Most company owners are on top of their tax situation but less often think of strategies for their individual tax claims. Planning is crucial for navigating investments, charitable contributions, and other deductions that optimize personal tax outcomes. The following are suggestions for optimizing year-end tax benefits for individuals.

Strategies For Investors

If you invest private funds, the following tips will assist you in optimizing your individual year-end tax benefits.

  • Trade before the investment deadline: If you are selling an investment (stock, ETF, mutual fund, etc.) at a loss (to offset capital gains), ensure you do so at least two business days before the end of the year.
  • Trigger accrued losses: If you have funds/securities that have lost value, sell them to trigger capital losses before the year-end, offsetting capital gains for the current year. 
  • Minimize capital gains tax using unused capital losses to offset capital gains. Consider an ITF account for a family member with little/no income and structure asset sales to receive proceeds over more than one tax year. 
  • Contribute to a TFSA (tax-free savings account), allowing tax-free growth and freedom of withdrawal times. 
  • Contribute to an RDSP (registered disability savings plan) for yourself or a family member. You may qualify for a matching government contribution.

RRSP Strategies

Last year’s notice of reassessment/assessment shows your RRSP contribution limit. 

  • Take advantage of unused RRSP contribution room, maximizing your RRSP to maximize benefits. Consider withdrawing monies from a TFSA or taking out a loan to make your contribution. 
  • Contribute to your spouse’s RRSP:  Minimize the effects of attribution rules on withdrawals by contributing to your spouse’s RRSP before year-end. 
  • Make home buyers plan withdrawals after year-end: Delaying a withdrawal allows time before repayment with RRSP funds begins. 
  • Make Home Buyer’s Plan required repayment (found on your notice of assessment) and designate it on your personal return, avoiding unnecessary income inclusion.

Family Strategies

Take advantage of the many family tax strategies available.

  • Set up a loan (prescribed rate) with your common-law partner/spouse. 
  • Swap assets with a family member(s) or transfer assets to a minor child. 
  • Apply for Canada Pension Plan pension sharing. 
  • Purchase RESPs for your children. 
  • Take advantage of the federal tuition non-refundable tax credit. 
  • Explore the Canada Caregiver Credit. 
  • Pay tax-deductible childcare expenses to adult children.
  • Review trust income, determining how much income to flow to beneficiaries. 

Optimizing year-end tax benefits for individuals can be convoluted and confusing! Talk to a professional tax planner for advice and assistance. They’ll provide guidance and tax planning support. 

Need help navigating investments, charitable contributions, and other deductions to optimize your individual tax outcomes? Contact Cook and Company Professional Accountants for tax planning and advisory.

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Forecasting Your Business’ Future: Financial Planning and Risk Management

A businessman is preparing for his future financial planning and risk management strategies to ensure long-term stability and growth.

Financial forecasting involves projections that assist with business performance and are critical to current business practices. Informed by market demand, sales figures, interest rates, stock prices, consumer spending patterns, job market trends, and other economic indicators, forecasting affects hiring, expansion plans, and investment decisions. It reduces uncertainty. Financial forecasting informs risk management decisions and financial planning. 

How Does Forecasting Work?

Forecasting relies on machine learning, data analysis of past and present information, expert judgment, and statistical modeling. It provides benchmarks for a business to make informed decisions that affect operations and the long-term perspective of the company. Forecasting involves creative evaluation and quantitative insight. 

The Benefits Of Forecasting

There are many business benefits of forecasting. Forecasting:

  • Informs budgeting: Forecasting offers insights into a business’s future cash flow, goals, expectations, and financial position, making budgeting more accurate.  
  • Assists with goal setting: Forecasting assists in the prediction of the growth or decline of a business, helping companies set achievable, realistic goals and expectations. 
  • Helps identify problems: Analysis of a business’s performance helps identify problems and potential problems.
  • Reduces risk by informing financial decisions. 
  • Attracts investors by indicating a business’s preparations for the future and sound decision-making. 

What To Do With The Information

The information gleaned from forecasting your business’s future assists in developing risk management tactics and a strategic plan.

  • Risk Management includes identification, understanding, and evaluation of potential hazards in the day-to-day operation of a company. It involves understanding the likelihood of financial loss due to changing interest rates, market fluctuations, operational failure, credit defaults, and economic conditions. It impacts a business’s cash flow, financial health, and profitability. Effective risk management helps a company understand and plan for risks and manage/minimize threats to success and growth. With over 20 years of experience creating financially resilient businesses, Cook and Company knows that not everything goes according to plan. Skillful risk management is essential to account for unexpected events. We assist businesses in developing comprehensive and competent risk management strategies. Though we can’t eliminate risk, we can provide the tools to thrive in unstable circumstances. We’ll help your company find effective risk management solutions based on forecasting.
  • Strategic Planning is a procedure company leaders utilize to map their vision for growth and determine ways to achieve these goals. This planning process affects a business’s objectives and decisions. It helps an organization navigate toward its targets. No matter what aspect of your business you are improving or developing, Cook and Company can help with business strategies. Our team of professional accountants conducts cost-benefit analyses, prepares financial projections, and tackles cash flow/profitability management. We help entrepreneurs find new growth and viability through results-driven strategies. 

If you need assistance forecasting your business’s future and developing an effective risk management and strategic financial plan, schedule a meeting with Cook and Company today!

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Essentials for Preparing Your Year-End Financials

A man is busy preparing his year-end financial report.

It’s crucial to gather information regarding expenses and income and create financial reports at the end of your business’s accounting year. These documents account for loan repayments, inventory expenses, employee wages/benefits, revenue assets, equity, investments, and paid taxes. Generating these reports includes reconciling, reviewing, and verifying all financial transactions since the last preparation of documents. Any discrepancies discovered between accounts payable and receivable require documentation or missing information to resolve the differences. Year-end financial reports create a picture of a business’s economic situation and inform organizational decisions (amount of inventory to order, number of employees to hire, decisions regarding loans, etc.).  

Preparing Year-End Financial Reports

The following are the steps for preparing year-end financial reports.

  • Prepare a schedule: List the critical activities necessary for the closing. Identify deadlines and the fiscal close date. Create a schedule with target dates for each task and assign the tasks.
  • Gather documents of your organization’s financial transactions (credit card statements, bank statements, inventory counts, loan statements, payroll reports, merchant statements, last year’s tax return, outstanding invoices/receipts, etc.). Ensure you have received all invoices for the year and check that you have invoiced all customers.
  • Review payroll documents (registers, employee records, timesheets, tax and benefit forms, etc.). Verify changes in compensation, policies, and tax withholding status. Reconcile payroll with financial reports (general ledger, tax filings, bank statements). 
  • Value and audit inventory: Do a year-end inventory count, verifying that the physical inventory matches the balance sheet. Consider the use of inventory management software to ease the task. Value your inventory to understand current assets, gross profit, and production demand. 
  • Review assets: Gather data on tangible assets (equipment, vehicles, property, furniture, etc.) and intangible assets (trademarks, patents, copyrights, etc.) and factor in depreciation.  
  • Examine accounts receivable and payable: Reconcile accounts receivable (money received and expected from customers) with accounts payable (money owed to suppliers/third parties). Review outstanding invoices, bills, and customer payments. List unpaid debts as liabilities/accrual expenses. 
  • Review agreements, contracts, and legal documents regarding relationships with clients, vendors, suppliers, landlords, partners, etc. Note conditions, terms, rights, obligations, and responsibilities regarding deliverables, payment, termination, indemnities, warranties, and dispute resolution. Make records of payment schedules, contract values, and billing cycles. 
  • Reconcile credit card statements, bank accounts, and loan balances. Ensure that recorded transactions match the evidence in bank statements, credit card statements, receipts, and invoices. Record adjustments by creating appropriate journal entries. Post balances to your general ledger. Verify records of interest and principal payments on loans.
  • Prepare an income/profit and loss statement: This document summarizes revenues, net income, and expenses. 
  • Prepare a cash flow statement summarizing cash outflows and inflows from investing, operating, and financing activities. 
  • Create a balance sheet to report your company’s liabilities, assets, and shareholder equity, providing a snapshot of your business’s finances. Group assets (accounts receivable, cash, prepaid expenses, inventory, long-term investments, etc.) and liabilities (short-term loans, accounts payable, accrued expenses, long-term debt, deferred tax, etc.) and shareholder’s equity.
  • Close the accounts, books, and ledgers for the last financial period. 
  • Distribute financial reports, sharing them with advisors, investors, consultants, and parent companies. 

How Cook and Company Can Help

If preparing year-end financial reports seems bewildering and time-consuming, contact Cook & Company. They prepare year-end statements (balance sheets, income statements, statements of owner’s equity, cash-flow statements) for all sizes of organizations and assist in the evaluation of company performance.

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Leveraging Accounting Technology to Improve Your Business Operations

A man is using advanced accounting technology.

Professional implementation of modern accounting technology streamlines business proceedings, revolutionizing the handling of financial operations. Automating time-consuming and repetitive tasks frees companies to focus on growth and strategic decision-making while ensuring compliance with reporting standards and reducing errors. Advanced accounting technology enables faster performance, detailed analysis, and more sophisticated operations.

Advanced Accounting Technology

Recent innovative solutions have reshaped accounting practices, offering increased precision and efficiency, improving security, and enabling scalability. 

  • Cloud-Based Solutions: Accounting firms utilize cloud-based solutions to create simpler, more efficient, and more secure accounting systems that can be accessed at any time with any device. These solutions automate monotonous tasks (recordkeeping, data entry, etc.), simplify data management, ensure fast payments, eliminate the need for costly software, allow real-time collaboration, and offer scalability. 
  • Accounting Software is designed to assist with generating financial statements, budgeting, taxes, managing inventory, payroll, and financial transaction recording. This software provides greater control, enhances accuracy, and ensures security. It enables deeper insights, facilitating data-based decision-making.
  • Machine Learning enables the gathering, organizing, and analysis of numerous datasets, continuously improving as information is accumulated. It provides real-time predictions and detects fraudulent statements, supporting efficient audits. 
  • Data Analytics: Accountants use analytics to provide meaningful insights, enabling data-driven decisions and effective business strategies. Data analytics are used for client advisory, risk assessment, forecasting, performance monitoring, and problem-solving. 
  • Predictive Analytics forecasts outcomes and generates predictions based on past outcomes and historical data. These analytic procedures help companies develop accurate budgets, estimate sales, and determine potential for expansion.
  • Artificial Intelligence incorporates self-learning capacity, empowering accountants to analyze large datasets efficiently. It is used to automate repetitive duties (data entry, tax filing, etc.) saving time and freeing companies to concentrate on tasks requiring creativity and critical thinking. 
  • Automation of accounting tasks eliminates human involvement in repetitive tasks, mitigates errors, automatically generates invoices, addresses vendor inquiries, and identifies discrepancies. 
  • Cybersecurity, such as stealth log-ins and password management protection, prevents unwanted access to accounts and credentials and minimizes the risk of data breaches.  

How Cook and Company Can Help

Effective, efficient accounting maximizes a business’s financial health but is a time-consuming, challenging undertaking. Cook and Company has over 20 years of experience of making the task easier by offering corporate accounting solutions tailored to each company’s needs. Our skilled implementation and accounting technology streamlines business operations and provides cybersecurity managed by professionals. We leverage technology for automated accounting processes. This saves money and time, improves compliance with regulations, and ensures accuracy. With integrity, honesty, and a personal touch, we use diverse, detailed, expertise to benefit our clients. We provide:

  • Bookkeeping: Recording revenues, charges, purchases, expenses, fees, and payments is a huge task. Cook and Company provides professional bookkeeping services for a variety of industries. Our proficient, bookkeepers help companies keep their finances up-to-date and in order. 
  • Preparation of year-end statements: Fiscal year-end statements help a business evaluate its performance. We provide statements that include a balance sheet (helps determine qualification for credit and loans and informs investors), an income statement (shows profitability and assists analysis of investments), a cash-flow statement (provides information regarding cash generation and expenditures), and a statement of owner’s equity (shows the cumulative company earnings available for distribution). 
  • Source deduction, remittance, and planning: Cook and Company ensure timely, accurate deductions and remittances (Employment Insurance premiums, Canada Pension Plan contributions, and income tax) and provide tax planning and advice. 

Contact Cook and Company for the assistance of chartered professional accountants. Let accounting technology improve your business operations.

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Tax Planning Strategies for the Second Half of the Year

The CPAs at Cook and Company work together in planning tax strategies.

We’ve entered the second half of the business tax year. Are you wondering how you can ensure tax savings for your company? Strategic tax planning is the answer. You can reduce tax liabilities and enhance savings by claiming available tax credits, income-splitting, utilizing small business deductions, making dividend payments to family members, creating a structured plan for business expenses/earnings, or implementing income deferral strategies. Read on to learn more.

Strategies for Reducing Tax Liabilities and Enhancing Savings

Following are several effective strategies for reducing the tax your business pays.  

  • Income splitting minimizes tax liability while remaining within tax laws and regulations. It may involve allocating income to a family member(s) (children, spouse) in a lower tax bracket by paying reasonable salaries for work done for the business. Dividends issued to family member(s) who are shareholders is another possible strategy. A family trust can also distribute income to beneficiaries. 
  • Claiming available tax credits is another critical aspect of business tax planning. Companies with foreign source income can claim foreign tax credit relief to prevent double taxation. A corporation can receive a tax credit on eligible research and development expenditures. Other strategies include depreciating capital assets, claiming business expenses (salaries, rent, supplies, etc.), and utilizing investment tax credits. 
  • Taking advantage of capital cost allowance enables corporations to deduct the cost of depreciable assets over time, reducing taxable income. One strategy is to purchase assets early in the fiscal year. Immediate expensing offers the chance to substantially reduce taxable income while claiming non-capital losses also reduces taxes.
  • Optimizing corporate structure for tax purposes is another possible strategy. Each business must choose the appropriate legal entity for its purpose, needs, and goals (sole proprietorship, partnership, corporation). 
  • Establishing a holding company is an efficient tax deferral technique. The holding company acts as a separate entity that owns/controls shares. Dividend income received by the holding company is usually tax-free. 

Why Should a Business Seek Professional Help With Tax Planning?

A chartered, professional accountant can help with corporate tax planning and strategy. Utilize their services to:

  • maintain accurate financial records
  • ensure compliant/advantageous corporate tax planning
  • stay up to date on changes in tax laws
  • ensure accurate, timely filing of business tax returns/documents
  • reduce tax liabilities
  • enhance savings
  • help navigate complex tax planning

Need help with corporate tax planning? Not sure what tax deductions your business can claim? Cook and Company’s team of CPAs provides corporate tax advice that is powerful, approachable, and reliable. Contact us for high-quality tax services.

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The Role of Due Diligence in Business Transactions

Woman is thanking gentleman for helping her with tax deductions.

A merger occurs when two or more businesses consolidate to form a new company, combining forces to generate benefits. An acquisition happens when a company buys/takes over another business, purchasing the target company’s stock. Due diligence is the unsung hero of successful mergers and acquisitions. Through research and analysis, due diligence ensures that both parties benefit. 

What is Due Diligence?

Due diligence is the analysis and research an organization or company undertakes to prepare for a merger or acquisition. It helps evaluate the risks and advantages involved in the transaction. 

Why Undertake Due Diligence?

Due diligence enables a deep understanding of the company you are interested in acquiring or merging with. It confirms or disabuses impressions regarding financial, commercial, legal, and other information. It’s about verification and trust. 

Kinds of Due Diligence

There are four main kinds of due diligence.

  • Commercial due diligence involves understanding how the company creates income, its goals/strategies, and the competitive environment. It necessitates looking into the company’s strategic plan, business model, key customers, suppliers, and employees. It often includes an examination of the company’s record of social responsibility, diversity, inclusion, and sustainability.  
  • Financial due diligence involves examining the company’s financial records (financial statements, year-to-date statements, trial balances, financial forecasts, tax returns, bank statements, budgets, etc). Look for tax liabilities, product margins, equipment repair/investment, operational inefficiencies, employee turnover rates, obsolescence, and working capital levels.  
  • Legal due diligence includes reviewing legal issues that affect the company (ongoing/pending litigation, past lawsuits, employment contracts, leases, customer/supplier agreements, laws/regulations that apply, licenses/permits, real estate, intellectual property, and corporate documents such as incorporation certificates, bylaws, and shareholder agreements, etc.). 
  • Customer due diligence applies to businesses in the financial sector and helps protect against money laundering or terrorist financing. It involves identifying customers, discovering the nature of ownership, and uncovering any suspicious transactions/practices.
  • Business mergers and acquisitions are two excellent ways to increase business growth, helping companies acquire new clients and expanding the market share through a single transaction. They help companies accelerate plans and build momentum. However, undertaking due diligence before completing a merger or acquisition is critical. Due diligence is the unsung hero of successful mergers and acquisitions. 

Need help with due diligence preceding a merger or acquisition? Contact Cook and Company Chartered Professional Accountants. With over 20 years of experience helping create financially resilient companies, Cook and Company know the business. We encourage skillful risk management to deal with the variables involved in operating a company. We can help with your business merger or acquisition.

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Common Errors in Accounting and How to Avoid Them

common errors in accounting

Keeping accurate up-to-date books helps a company make informed financial decisions and avoid mishaps that can affect financial health. However, tracking your business’ income, expenses, taxes and vendor payments is complicated and time-consuming. Including an item in the appropriate account, applying the correct description or code for the item and entering the correct amount takes time and attention. Accounting errors inevitably occur. The following are the most common types of errors in accounting that business owners make and suggestions on how to prevent accounting errors. 

What is an error in accounting?

Accounting errors are unintended accidents; inadvertent mistakes. Sometimes accounting errors are caused by transposing a number or hitting an incorrect key. Other times they stem from a misunderstanding of accounting rules and/or company policy. Accounting departments attempt to limit errors, especially in data that flows into financial reporting used by stakeholders. 

What are the most common errors in accounting?

  • Improper record keeping: Record keeping is the act or practice of recording important information for future reference. It involves identifying a transaction, recording it, classifying it, posting it and balancing the account. It may involve paper copies but can also be managed digitally. To avoid improper record keeping, implement a receipt capture, filing and backup system and enforce its proper use. 
  • Failing to do monthly reviews of your financial statements: A profit and loss statement provides a snapshot of a company’s sales, expenses and profit for a given accounting period. A balance sheet statement reports the ending balance of a company’s assets, liabilities and equity for a given accounting period. These statements provide insight into a company’s financial health. Financial statement analysis should be done on a regular basis (preferably monthly) to ensure all expenses have been categorized accurately and account balances have been reconciled. Add this task to the monthly duties schedule.
  • Neglecting to analyze budget vs. actual expenses: A budget versus actual expense analysis should be performed at the end of each month and each quarter to be sure your business is adhering to the budget. This analysis uncovers variances that require corrective action and helps determine areas where you can cut back. Schedule this analysis into your monthly duties roster. 
  • Neglecting reconciliations: When you reconcile your accounts at the end of the month, you validate the information in your books against an external document (the bank or credit card statement). Regularly reviewing business bank accounts against your books helps reduce the incidence of fraudulent transactions. It ensures you discover errors and thus prevents issues from developing. Put a note in your calendar to reconcile your bank and credit card accounts each month.

  • Failing to reconcile loan accounts: It’s important to reconcile your loan account each time you receive a statement as this is the easiest way to ensure the liabilities portion of your balance sheet is accurate. Put a note in your calendar to ensure your loan account is reconciled regularly.

  • Leaving undeposited funds on the books: Undeposited funds on the books means the payment has been posted but the deposit hasn’t been. This makes revenue look larger than it is, causing incorrect tax payments and inaccurate assumptions about business growth. This error can be avoided with proper workflows.

  • A lack of data backup: In case the device that stores your business’ financial information is lost, stolen or hacked, it’s important to have the information backed up. There are many backup options available.

  • Not utilizing accounting software: Investing in the right accounting software helps you avoid mistakes and makes it easier to handle your finances. Accounting software ensures you have all the historical data you need to manage your books, payroll and taxes. Choose accounting software that integrates with your bank account and has backup capability.

  • Inadequate checks and balances: No one person in the business should handle business funds without oversight. Ensure the person who does the bookkeeping in your business isn’t the same person making deposits for the company. Avoid giving employees signing authority on your business bank accounts. Make sure you review your business’s bank statements, including images of cancelled checks, on a monthly basis.

Accurate accounting information is critical for a business. Though there is no sure way to eliminate all accounting errors, understanding what errors are common and where to look for them is an important first step. Processes and controls help minimize their occurrence. Using good accounting software and preventive controls helps create a less error-prone accounting environment. Accurate books allow you to make informed decisions that will help improve your bottom line. Correction of errors in accounting is crucial.

Need help establishing a good accounting system and/or incorporating accounting software? Looking for business advice? Contact Cook and Company Chartered Professional Accountants. We are based out of Calgary, Alberta, serving clients across Canada and the United States. We provide high-quality tax, assurance and succession planning services for various privately-owned and managed companies. Contact us for a complimentary consultation.

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Innovations in Accounting Software

Innovations in Accounting Software

The use of accounting technology increases efficiency and streamlines a business’ approach to managing finances, enabling them to be competitive. Accounting technology enables accountants to connect effectively with the businesses they serve, allowing them to provide ongoing advice and guidance. Remaining current with recent innovations in accounting technology is critical for both accountants and businesses. The following are some of the most recent innovations in accounting software.

  • Blockchain technology is an advanced database mechanism (involving the distribution and decentralization of database tech) that allows transparent information sharing within a business network. It’s intended to protect encrypted data, reduce redundancy, improve efficiency and enable the maintenance of an expanding number of transactions. Blockchain technology enables a complete, automated digital audit of each individual transaction. Using modern encryption methods, this technology allows companies to use a common data retention infrastructure (involving the use of a shared ledger) even as each accountant, auditor and company maintains a privately managed database.

  • Cloud computing applications allow the storage and accessibility of data online rather than on a hard drive. They don’t require expensive hardware, hosting, ongoing updates and dedicated IT to maintain. They handle everything from payroll and invoicing to taxes and benefit payments. Financial information is updated as changes occur and can be monitored and managed from a user-friendly dashboard, enabling a free flow of information, no matter where you are or which device you’re using. Cloud computing makes it easier to collaborate and exchange information. The flexibility of cloud accounting software makes it simple for growing businesses to scale. Adding new users/features is as simple as upgrading your monthly subscription. Cloud-based software also helps companies to reduce their carbon footprint.

  • Automated accounting technology uses software to automate important financial operations. It limits the number of steps in workflows and makes the accounting operation a more hands-off experience by decreasing time spent on data entry. This tech is capable of highlighting anomalies or patterns without manual data input, creating greater efficiency. It reduces human error, often translating to higher profitability. From invoice approval processes to inputting sales data and automating revenue recognition, automated software features are expected to continue to develop. Automated accounting technology helps accounting teams work smarter, not harder.

  • Optical character recognition applications (also referred to as text recognition) scan printed/handwritten documents and convert them into machine-readable text that can be shared with colleagues/clients. This data can be copied and/or edited as required and allows for the performance of a simple digital search to find the information needed. This technology reduces time spent on tasks such as itemizing receipts, organizing invoices and tracking expenses. It eliminates paper clutter.

  • Artificial intelligence and machine learning make accounting more effective and efficient, improving productivity by up to 40%. AI can conduct repetitive, rudimentary tasks including auditing, payroll, uploading files and sorting through data. This frees up time for tasks such as analyzing and interpreting data and building more effective, efficient recommendations for corporate growth and stability.  AI substantially reduces the likelihood of frustrating and time-consuming mistakes. Deviations from the established pattern can be caught before calculations move beyond the problem. This leads to more accurate reporting, reducing the need for audits.

  • Real-time reporting is the process of updating your books at all times; revenue, account balances and profit. It allows the entire company to view all metrics/insights and make better use of analytics to make decisions.

  • Personalization technology is about delivering a valuable service or product to a customer based on personal experiences and historical customer data. It’s becoming more common, from sales and marketing solutions to consumer apps to accounting software programs. It allows specific functionality.  

By organizing everyday finance management, accounting software allows companies to grow their businesses. The administration process is streamlined, data can be processed remotely and the margin of error is reduced. Daily finances are better understood, empowering the business as a whole. Tasks that took hours can be done in minutes. Financial data is quickly and easily accessed in an easy-to-understand format. Innovations in accounting software save time and money while adding value to a company. 

Need help establishing a good accounting system and/or incorporating accounting software? Looking for business advice? Contact Cook and Company Chartered Professional Accountants. We are based out of Calgary, Alberta, serving clients across Canada and the United States. We provide high-quality tax, assurance and succession planning services for a wide variety of privately-owned and managed companies. Contact us for a complimentary consultation.

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What to Remember for This Tax Season

What to Remember for This Tax Season - Cook & Company - Chartered Professional Accountants - Featured Image

Tax season is upon us and it’s a busy time! Each business must undertake the process of reporting earnings and paying income tax on business profits. It’s important to report income in the fiscal period you earn it, no matter when you receive it. It’s crucial to deduct business expenses but only if you incur them to earn income and if you are able to back up the claim. With filing deadlines approaching, what do you need to remember for this tax season? The following are some reminders for your business in this hectic time. 

  • File on time: If you wish to receive the benefits/credits your business is entitled to and avoid penalties, it’s important to file your return on time. File your return no later than six months after the end of each tax year. The tax year of a corporation is its fiscal period. If your business’ tax year ends on the last day of a month, file the return by the last day of the sixth month after the end of the tax year. If your tax year ends on March 31, your filing due date is September 30. If your tax year ends on August 31, your filing due date is February 28. If your tax year ends on September 23, your filing due date is March 23. When a filing due date falls on a Saturday, Sunday, or public holiday recognized by the CRA, your return is considered on time if the CRA receives it or if it is postmarked on or before the next business day. For more information, go to Important dates for corporations.
  • File online: To receive your refund faster, sign up for a direct deposit and file your return online through NETFILE-certified tax software or the services of an authorized service provider who can use the CRA EFILE service. 
  • Claim all benefits, credits and deductions: Your business may be able to claim tax deductions, credits and/or expenses on your return. Top deductions for business owners include advertising expenses, business-use-of-home expenses, meals and entertainment, office expenses and vehicle expenses.
  • Remit GST: You may be required to register and file a GST/HST return. Your GST due date depends on your tax filing period. Some businesses choose to pay their GST/HST quarterly or annually. For more information on how to (pay) your GST/HST, the CRA has additional guidance here.
  • Reduce adjustments: To reduce the number of changes made to your business return each year, find information about common adjustments, including how to get forms, guides and other publications.
  • Pay on time: To avoid interest charges, pay any balance owed by the deadline. If this is not possible, work out a payment arrangement with the CRA. 
  • Keep receipts/documents: In case you are selected for review,  keep all receipts/documents for at least six years. If you’re self-employed or a sole proprietor, you may need to keep some of your business records for a longer period of time.
  • Claim non-capital losses: If your expenses exceed business income in any year, use this loss to decrease your income tax bill. The loss can be carried back three years or carried forward up to 20 years. Your Chartered Professional Accountant can help you decide if it makes sense to use the non-capital loss in the current tax year, carry the non-capital loss back to recover income tax you’ve already paid or carry it forward to offset a larger tax bill.
  • Strategize your capital cost allowance: Instead of deducting the cost of the depreciable property you’ve acquired in your business in a particular year, deduct this cost over a period of years through a capital cost allowance claim. You can use as much or as little of this claim in any year and carry any unused portion forward to help offset a larger income tax bill in the future. Also, consider buying and selling your assets at the right time. Buy new assets before the end of your fiscal year and sell old assets after the current fiscal year.
  • Manage RRSP and TFSA contributions: Registered Retirement Savings Plans and Tax-Free Savings Accounts are excellent income tax deductions for small-business owners. Since some or all of your allowable RRSP contributions can be carried forward into subsequent years, you’re better off saving RRSP contributions for years in which you expect a high income. If you’ve maxed out your RRSP contributions and need a tax-free place to put cash or investments, the TFSA is a good choice. TFSAs allow you to shelter savings and investment income from taxes. Income and capital appreciation from stocks, bonds, or other interest-bearing instruments are tax-free inside a TFSA. Your Chartered Professional Accountant can help you maximize savings using RRSPs and TFSAs.

Business taxes are complex and complicated. Consider hiring a CPA. Most businesses prefer to have a certified professional accountant complete their Canadian income tax returns. This saves time and effort, provides assurance of accuracy and increases your chances of efficient tax planning. 

Need help with your business’ tax returns? Looking for business advice? Contact Cook and Company Chartered Professional Accountants. We are based out of Calgary, Alberta, serving clients across Canada and the United States. We provide high-quality tax, assurance and succession planning services for a wide variety of privately-owned and managed companies. Contact us for a complimentary consultation.