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How can an Accountant Benefit your Business?

How can an Accountant Benefit your Business? - Cook & Co - Accountants in Calgary - Featured Image

To make good business decisions and ensure a healthy cash flow your financial data must be current and accurate. The process of keeping your information correct and up to date is complex and time-consuming. A professional accountant can help. But accurate data is not all an accountant offers. Your accountant can assist your business with:

 

The Start-up Process:

Your accountant can help create a strong foundation for your business by:

  • recommending the business structure that will best suit your business objectives, finances, and circumstances (sole proprietorship, corporation, partnership or other).

  • helping develop a business plan.

  • providing advice regarding accounting software.
  • assisting in the opening of a business bank account.
  • offering ideas regarding market opportunities.
  • providing advice for keeping personal and business expenses separate.
  • offering information regarding raising finances through loans, crowdfunding, investors or other types of financial opportunities.

 

Daily Business operations:

Once your business is up and running, your accountant can help by:

  • providing reports that monitor your financial progress, so you can make adjustments where necessary.
  • overseeing payroll.
  • helping set up accounting software.
  • providing advice regarding debt management.
  • helping you deal with unpaid invoices.
  • preparing and filing business taxes.
  • assisting with writing loan applications.
  • producing an accurate budget.
  • helping you take advantage of business deductions.
  • recommending strategies for inventory management.
  • preparing for and guiding you through an audit.

 

Business growth:

When you’re ready to grow your business, an accountant is an invaluable resource. Your accountant can:

  • provide insight on cash flow patterns, inventory management, pricing, and business financing.
  • present information on property and equipment leasing and purchase.
  • help you come up with strategies to manage cash flow.
  • create financial forecasts to assist in decision making.
  • help in creating a business budget that will support your goals.
  • assist with goal setting and give you tools to measure your progress.

An accountant is an invaluable resource for your business. They will provide you with advice and information to help you establish, operate and grow your company. Enlist the help of a professional accountant to help maintain the fiscal health of your business.

Need help with start-up, daily operations or business growth? Contact Cook and Company Chartered Professional Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company uses their experience and expertise to help your business. Contact us for a complimentary consultation.

References:

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Accounting Software Benefits

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Though spreadsheets have been helpful in accounting processes for many years, they can’t meet the demands of modern business. Accounting software is now widely used by many sizes and types of companies. It may be desktop software installed on an office computer or cloud software that can be accessed from anywhere. These systems provide features such as time and attendance tracking, direct deposit, check printing, storage of payroll records, form printing, management of multiple money types (i.e. tips and commission), deduction calculation (taxes, insurance, retirement) and tax filing. There are numerous advantages to using one of the many accounting software packages.

  • Reduce costs: Processes that took several hours and required a team of workers can be accomplished by a single employee in a few hours allowing for a reduction of the number of staff in an accounting department.
  • Increase efficiency: Accounting software performs tasks automatically or requires only a few minutes of time freeing up team members to focus on more important tasks.
  • Reduce the need for specialists: Learning to use accounting software is relatively easy allowing you to assign the task to an employee without an accounting background. It’s simple to train several employees in its usage making it easier to cover vacation or sick leave.
  • Minimize errors: Since data is entered only once and withholdings are automatically calculated, the risk of human error is significantly decreased.
  • Track inventory: Many quality software packages can track product inventory and provide up-to-date details on the amount of stock in hand.
  • Generate reports: Accounting software provides detailed reports on your business processes and helps track money flow in your organization. You can get a clear picture of your costs and revenue at any time.
  • Ease access: Information (historical and current) is stored and easily and securely accessed by supervisors and/or managers. Benefit information is available to employees who can make and review claims online. You can review, reprint, and resend invoices if needed and easily search by invoice number, name and/or amount.
  • Protect the environment: Accounting software decreases paper usage reducing your carbon footprint and eliminating excess waste.
  • Enhance data security. Most accounting software uses state-of-the-art security to protect sensitive data and reduces the need to send private information to a third party.
  • Create an audit trail: With accounting software, you can easily review payments and check tax in a matter of minutes.
  • Ease use of multiple currencies Many accounting packages allow a business to trade in multiple currencies with ease. Problems associated with exchange rate changes are minimized.
  • Increase compliance with the CRA: Some systems provide reminders of filing deadlines reducing penalties and keeping your business compliant. They’re programmed to calculate deductions and taxes for your location and can access updates related to tax codes and changes in tax law. These programs can be set to alert key people to review new compliance requirements.

Reduce costs, increase efficiency, minimize errors, ease access to information, enhance data security and increase compliance by using accounting software. Choose a system with tutorials, a comprehensive support services package and features that suit your business needs. You will not regret the investment.

References:

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Questions You Should Ask Before You Hire an Accountant

Questions You Should Ask Before You Hire an Accountant - Cook and Co - Accountants Calgary - Featured Image

An accountant can save you money, help you avoid difficulties with the CRA, assist you in growing your business, provide useful information/advice, prepare profit and loss reports, balance bank statements, prepare tax forms, assist with payroll and help you stay compliant with government regulations. With so many choices (firms and individuals), you may have to do some investigating to find the accountant that is right for you. Ask prospective agencies the following questions and listen carefully to the answers.

 

    • How long have you been in business? Look for an accountant that has experience with and understands the difficulties you face; a firm that has a record of supporting businesses with similar challenges.

 

  • What licenses do you/your staff have? The CPA (Certified Public Accountant) designation is the most respected credential.

 

    • What services do you provide? Most CPAs provide a range of services (monthly bookkeeping, payroll processing, tax preparation, payroll taxes, profit and loss reports, business advice, audit representation, etc.). Make sure your accountant offers what you need.
    • What kind of clients do you work with? Look for an accountant who has worked with other businesses like yours and knows the ins and outs of your industry.
    • Do you have references that I can contact? Reputable accountants will provide references upon request. Talk to some of the references you’re given. Ask them if the accounting firm can accomplish what they promise.
    • What is your fee structure? Ask about billing options; explore hourly, monthly, flat and project-based rates. Get an estimate of likely fees.
    • What’s your experience with the CRA? Ask if the firm is qualified to represent you in a CRA audit and how many tax audits they have participated in.
    • What’s your tax philosophy? Is the prospective accountant cautious, assertive or aggressive about tax deductions? Find an accountant who agrees with your philosophy.
    • How often will we communicate? Can you call them when you have issues? Will you meet mid and end of the year or quarterly? Make sure you feel comfortable with the frequency of communication.
    • How do you communicate? Firms may communicate in person or via telephone, email, Skype, teleconferencing and/or other online services. Be sure you are comfortable with their style of communication.
    • How long will it take for you to respond to my queries? Will they respond to you within a day? A week? A month? Specify your desired time limit.

 

  • How do you keep up with changes in your profession? Ask about the firm’s ongoing professional development strategies. Do they keep up on the news, information and technology that affects their field?

 

  • Why should I hire you? A firm should be able to explain what makes them uniquely qualified to help your business.

Finding the right accountant for your business is crucial and may seem daunting. Use these questions as a starting point for assessing the suitability of potential firms. It’s worth the time and effort to make sure you hire the accountant that matches your company’s needs.

Looking for an accounting firm to help your business? Contact Cook and Company Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company use their experience and expertise to help your business. Contact us for a complimentary consultation.

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Can I get Tax Benefits for Insurance I offer my Employees?

Can I get Tax Benefits for Insurance I offer my Employees? - Cook and Co - Calgary Accountants - Featured Image

Employers may choose to offer life, health and/or disability insurance to their employees. Should your business offer these benefits? Will your company’s insurance expenses be tax deductible?

 

  • Group Life insurance is term insurance with your company holding the master contract and coverage extending to your employees. It’s relatively inexpensive and usually garners high participation among employees. If a life insurance policy is owned by your employees, but the premiums are paid by your company, you may deduct the premiums against business income as long as the premiums are a reasonable business expense. If you have shared ownership of the policy with your employees, the premiums are not tax-deductible.

 

  • Group Health insurance plans provide coverage (supplemental to government health care plans) for a company’s employees at a reduced cost. If the health insurance policy is owned by your employees, but the premiums are paid by your company, you may deduct the premiums against business income as long as the premiums are a reasonable business expense. Premiums are not deductible if paid for shareholders who are not employees.

 

  • Group Disability insurance provides a percentage of pre-disability income (for a specified period of time) when an employee is unable to work due to illness or injury. Typically employers purchase plans that cover 50 to 60 percent of income. Disability insurance premiums are paid with after-tax dollars, but the benefits are received tax-free.

 

As business insurance issues are complex and convoluted, talk to your accountant before claiming a tax deduction for life, health or disability insurance premiums offered to your employees.

Not sure whether you can claim the life, health and/or disability insurance premiums you offer your employees, contact Cook and Company Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company use their experience, knowledge and expertise to help your business. Contact us for a complimentary consultation.

References:

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Should I Pay Myself a Salary or Dividends?

Should I Pay Myself a Salary or Dividends? - Cook and Co - Accountants in Calgary - Featured Image

If your business is set up as a corporation, you can choose to pay yourself a salary, receive dividends or a mix of both. It makes sense to choose the method that best accommodates your financial situation, but which practice is most beneficial for your business? There are many factors to consider and each payment method has advantages and disadvantages.

 

Salary: a fixed regular payment, made on a monthly or biweekly basis by an employer to an employee.

 

Advantages:

  • provides a legally recognizable personal income
  • allows you to contribute to retirement funds (CPP & RRSPs & TFSAs)
  • is tax-deductible for your corporation
  • fewer surprise taxes
  • easier to apply for bank loans and mortgages and often a better rate
  • entitles you to a Canada employment credit
  • can reduce exposure to corporate income tax

Disadvantages:

  • must set up a payroll account
  • pay twice into retirement funds, as the employer and the employee
  • a salary is 100% taxed, which could increase your tax burden
  • you won’t be able to carry back a business loss in future years when profits vary

 

Dividends: a sum of money paid regularly by a company to its shareholders out of its profits or reserves.

 

Advantages:

  • are taxed at a lower rate than a salary
  • can be declared at any time allowing optimization of your tax situation
  • save money, no CPP payments
  • simple process and little paperwork
  • don’t require payroll account
  • less chance of payroll penalties
  • do not require the shareholder to be an employee of the business

Disadvantages:

  • reduces the amount of CPP you are entitled to receive when you retire
  • you are not able to contribute to an RRSP
  • prevents you from claiming personal income tax deductions, such as childcare costs

 

Mix of both:

  • a business salary and some dividends are sometimes paid to ensure a corporation doesn’t earn over $500,000, the small business limit in Canada after which the tax rate increases
  • deciding to receive a salary and some dividends is based on income level, cash flow needs, projected annual earnings, the importance of personal cash for investments/tax deductions and/or the business owners age

As a business owner/manager, you can pay yourself a salary, dividends, or a mix of both. Whichever method you choose will depend on your personal and business needs and is best made with professional advice from your accountant.

Not sure whether a salary or dividends are best for your corporation, contact Cook and Company Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company use their experience and expertise to help your business. Contact us for a complimentary consultation.

References:

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What to expect if your Business is Audited by the Canadian Revenue Agency

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A tax audit is a detailed examination of a business’ books and records by the Canadian Revenue Agency (CRA). It’s conducted after you’ve received a notice of assessment and is intended to check that your records support your tax return. Audits are meant to ensure that the Canadian tax system is fair for all.

How does the CRA choose a file for audit?

From 2017 to 2019 an average of 5,900 audits of small businesses and 1,800 audits of medium-sized businesses were undertaken each year. These files are chosen for audit based on a risk assessment; factors such as frequency of errors on tax returns, indication of non-compliance with tax obligations and comparison to similar files. If your file is identified as high risk, a CRA officer will review information from a variety of sources to determine whether they should go forward with an audit.

What are the most common issues that prompt an audit?

For small and medium sized businesses the CRA may consider an audit if they discover:

  •   Multiple or repeated errors on your tax returns
  •   Major changes in income or expenses
  •   Repeated losses
  •   Expenses not in line with others in your industry
  •   Under-reported earnings
  •   Over large charitable donations
  •   Unsubstantiated home office deductions
  •   Discrepancies between GST returns and Tax returns
  •   Shareholder loans that should be considered income
  •   Missing information
  •   Audit of a related party
  •   A lifestyle incongruent with your declared income
  •   Real estate transactions
  •   Vehicle expenses
  •   Informant tips

What is the procedure for an audit?

A CRA auditor will contact you by mail or phone and set a date, time and location for the audit. A review may be held at your place of business, your representative’s/accountant’s office or at a CRA office. You’ll receive the agent’s contact information and be informed of the scope of the audit. You’ll be asked to provide supporting documents for the review. The auditor may make copies of your records and/or borrow some of your documents. The agent will discuss with you any questions that arise during the audit and address your concerns.

What documents are required for an audit?

The documents requested may include:

  • Business records (ledgers, journals, invoices, receipts, contracts, rental records, bank statements)
  • Personal records (bank statements, mortgage documents, credit card statements)
  • Records of other individuals related to the business (spouse, family members, corporations,    partnerships, trusts)
  • Records from your accountant that relate to the books, records and tax returns of your business

What happens when the audit is complete?

  • The auditor will prepare a schedule of proposed adjustments to your tax assessment including detailed calculations and explanations
  •   The agent will hear and discuss your explanations before closing the audit
  •   You’ll receive a letter explaining the results of the audit
  •   If changes are made, you’ll receive an amended notice of assessment

What do I do if I disagree with the results of the audit?

If you disagree with the reassessment, contact the auditor, explain your concerns and provide documents to support your position. If you are not able to resolve the disagreement, you have the right to appeal.

Filing taxes for a small or medium sized business is a complicated procedure. A CPA will ensure your tax return is complete and accurate, reduce the chances of your file being chosen for an audit and ensure you’re rewarded the deductions you’re entitled.

For all your tax needs contact Cook and Company Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company uses their experience and expertise to make tax time a breeze. We will assist in dealing with the CRA in the event of an audit. Contact us for a complimentary consultation.

References:

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What to Consider when Scaling Your Business

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Scaling a business refers to setting the stage to facilitate and support growth in your company. It involves planning, acquiring funding, ensuring sufficient staffing, improving processes and utilizing technology in order to manage an increase in sales/work/output without compromising performance or losing revenue. It’s about capacity and capability. So, what do you need to consider when scaling your business?

 

  • Plan and Evaluate: Are you ready for growth? Do you have the staff and systems to handle an increase in sales? What processes can you handle internally? Which should you outsource? Do you need new technology, more equipment, larger facilities? Take stock of where your business is now. Generate a detailed sales growth forecast; a month by month prediction of the level of sales you will achieve, a break down of projected sales (by product, market, and geographic region), the number of new customers required, orders you wish to generate. Anticipate where expenses will rise. Consider what you will focus on, what you will change and what steps are involved.  If possible, involve staff in your vision and planning. If they are invested they will work harder and remain longer.

 

  • Acquire funding: Find the funds to fuel your growth. Evaluate all possibilities; a kickstarter, crowdfunding, monthly subscription model, a partner, investors, debt financing, a business loan, equity financing, a line of credit.

 

  • Utilize technology: Examine the possibility of using technology to streamline operations,  reducing time and labour while boosting volume. Evaluate software (CRM, marketing automation, sales management, inventory, manufacturing, accounting, payroll, HR, shipping, training) and hardware (servers, computers, printers, telephone equipment). Decide whether to invest in internal IT support or outsource.

 

  • Find and hire the right people: Having the right team with the right skills is crucial for coping with the challenges of scaling your business. Determine how many employees you need for customer service, manufacturing, inventory, management, accounting/payroll and delivery of products. Can you use contractors or part time employees? How will you onboard/train new hires? Who will recruit and hire? Do you have a strategic interview process in place? Offer benefits to attract top candidates.

 

  • Simplify processes: Complexity requires more meetings, more explanations, more communication, more training and more people. It slows down a business and inhibits growth. Constantly look for ways to simplify strategies and operations.

 

  • Collect and use hard data: Collect data regarding your customers and prospects; how they move through your sales funnel, how long it takes to convert, what causes them to leave/stay, how they engage with your business, what their trigger/pain points are, their complaints/issues with your product/company, what they love about your product/company. Use this information to inform your marketing campaigns.

 

When you’re ready to scale your business, aim for a slow, steady, strategic rise. Plan thoroughly, hire quality staff, keep your costs low, pay attention to your data, simplify when possible, make wise use of technology and obtain sufficient financing. Think big. Then take small individual steps to make your vision come true.

 

Thinking of scaling your business? Let Cook & Company help. We’re a Chartered Professional Accounting firm that’s helped countless businesses achieve financial success. We offer a different approach to accounting and tax advice, personalized one-on-one service, creative financial solutions and unique strategies to handle everything from income tax planning to financial statement audits and financial planning. Contact us today to find out how we can help your business. Call 403-768-4383

 

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Why It’s Important to Keep Personal and Business Finances Separate

It’s tempting to mix personal and business finances, but it’s not always a good idea. There are many benefits to creating a clear boundary between your company’s fiscal matters and your personal income and expenses.

Reduce Liability: Without a clear distinction between personal and business finances, creditors can claim your personal assets to satisfy a business debt. If you utilize personal credit cards and personal loans for your business and your company has financial trouble, there will be consequences to your personal credit score.

Establish a Professional Image: Even if your business is part time and you work from your home, having a separate business account helps establish your business identity, shows your commitment to your company and enables clients to take you seriously.

Simplify Accounting: Keeping personal and business finances distinct will simplify the accounting process, saving time and money. You can access information on your company income and expenses quickly and easily without the need to untangle it from personal expenditures. The tax filing process is streamlined and you get better visibility regarding your business cash flow. Financial statements can be quickly produced for an outside party such as a bank or potential business partner.

Help with Taxes: Keeping personal and business finances separate helps when claiming tax deductions for business-related expenses (i.e. travel, supplies, office expenditures, etc.). A well-documented division protects you from potential penalties in the event of an audit.

Establish Business Credit: A business needs a credit profile to secure business loans and/or establish vendor lines of credit. Mixing personal and business assets makes it challenging to establish a business credit profile.

Protect Your Business and Yourself: Treating your business as a separate entity reduces the possibility of using it for personal expenses, protecting the solvency of your company. If you encounter personal financial difficulties, your business has the potential to sustain you. It also safeguards your personal finances ensuring you have something to fall back on in the event of a business collapse.

Reduce your personal liability, enhance your professionalism, simplify accounting and tax preparation, and protect yourself and your business by establishing a clear financial division between your business and personal finances. Get assistance from a CPA or other professional to help you with this process.

Need help and/or advice on keeping personal and business finances separate? Want to be prepared for the possibility of an audit? The entrepreneurial accounting team at Cook and Company Accountants is eager to help you and your business. We provide the knowledge and resources your company needs. Contact us for a complimentary consultation.

 

References: 

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Is your Company GST and HST Compliant?

The most common type of audit undertaken by the CRA (Canadian Revenue Agency) for small and medium sized businesses is the GST/HST audit. Failure to file, late filing and failure to accurately report GST/HST information can result in a penalty. Interest of 6% (compounded daily and levied quarterly) is charged for late payment, insufficient payment and any outstanding balance of GST/HST. It’s important that you, as a business owner, know your responsibilities regarding remittance of these taxes.

The Goods and Services Tax (GST) is a federal tax added to commercial sales. It’s levied on supplies of goods and services purchased in Canada. The Harmonized Sales Tax (HST) is a combination of Provincial Sales Tax and GST. All businesses engaged in commercial activity in Canada are required to collect GST or HST on their taxable sales and remit this to the CRA. The only exemption is for small businesses that have taxable sales of less than $30,000 in the last four quarters (https://www.futurpreneur.ca/en/2019/how-to-ensure-your-business-compliance-with-the-canadian-revenue-agency/).

Input Tax Credits (ITCs) can be claimed by a business to recover the GST/HST paid for property or services acquired in the course of their commercial activities. You can claim ITC credits for rent, advertising expenses, equipment rentals, office expenses, accounting fees, motor vehicle expenses, travel, and some capital expenses such as property, machinery, vehicles, furniture and appliances (https://www.thebalancesmb.com/what-are-input-tax-credits-2948163). Goods and services purchased for personal use or enjoyment do not qualify as Input Tax Credits.

The GST/HST requirements are complex. The rules governing what is taxable, what is not, what is exempt and for which benefits you can claim an ITC are involved and intricate. It is easy to make a mistake in calculation and filing of your GST/HST. Use the services of a CPA to ensure that you meet your GST/HST obligations and remain in good standing with the CRA. Chartered Professional Accountants have the knowledge, skill and expertise to help you file your claim correctly and in a timely manner.

For all your tax needs contact Cook and Company Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company use their experience and expertise to make tax filing a breeze. Contact us for a complimentary consultation.

References:

https://www.thebalancesmb.com/what-are-input-tax-credits-2948163

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Create and Use an Employee Expense Account

An expense account is a financial allowance offered to employees to cover business expenses. Employees pay for business related goods and services with the understanding that they will be reimbursed. This makes it easier for personnel who travel and/or entertain clients to conduct business that helps your company grow. It is in your company’s best interest to establish a clear expense policy, share it with your employees and then regulate it often and fairly.

Write an Expense Account Policy

Take the time to write a complete and comprehensive expense account policy.

 

  • Use clear and precise language to avoid misinterpretation or confusion.
  • Divide the policy into sections for easy and quick reference.
  • Itemize carefully what is allowed and what is not allowed.
  • Include details regarding expected rates, limits, what requires preauthorization, when receipts are needed.
  • Use examples to increase clarity.
  • Take into account all possibilities; accommodation, travel, mileage, food, alcohol, entertainment, business purchases, subscriptions, donations, computer hardware, software, equipment, etc.

 

Once the policy is complete, make it available to employees and management. Consider a hard copy and a copy online. Make time for questions and feedback. Continually review and refine the policy.

Develop an expense report and reimbursement process

A strong expense report procedure will speed the process of reimbursement and reduce expense leakage.

  • Create an expense report template which requires all pertinent information; date of purchase, category (i.e. accommodation, food), amount, point of purchase and preauthorization (if required).
  • Consider separate templates for each department customized to their needs.
  • Generate a separate mileage template for travel.
  • Reimburse purchases and expenses quickly checking them against the policy.
  • Set expense deadlines and compensate staff on their payday.
  • Manage employee expense accounts online to save time and paperwork.

Document your expense report process and include it with the expense account policy. Field questions and assist employees in learning to navigate the process with ease.

If your company’s personnel spend money for work purposes, establish a comprehensive expense policy, create templates, monitor the claims process and adjust as needed. A clear expense process creates trust and respect.

Cook and Company Accountants offer specialized skills in business accounting and asset management, provide expertise in tax planning strategies and can assist you in retaining the value of your company’s estate. Our team of chartered professional accountants are dedicated, knowledgeable and experienced and will provide a personal touch. Contact us for a complimentary consultation.

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