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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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Financial, Community and Accounting Resources for New Canadians

Attending resources for new Canadians

In the year 2022, Canada welcomed 437,180 immigrants and saw a net increase in the number of non-permanent residents estimated at 607,782, a population growth of  2.7%. International migration accounted for 95.9% of all growth recorded. Much of this increase is related to efforts by the Canadian Government to ease labour shortages, drive our economy and help bridge the demographic gap. 

The decision to immigrate to Canada is a big step. Those arriving require advice and guidance from the time they decide to immigrate until they’re settled in Canada. They need to get familiar with financial institutions, navigate the education system, find housing and secure a job. It may be necessary to become informed about work and study permits, visitor and business visas, inadmissibility, permanent residence and citizenship. In short, they need to become aware of Canadian systems and the resources and tools available. So what financial, accounting and community resources are available to new Canadians?

Resources available to immigrants:   

There are many government and community resources and tools for new Canadians to help them navigate the laws and culture of their new home. Don’t forget CPAs! They can help newcomers and more established immigrants answer the many financial questions that arise when people come to this country.

New to Canada? Looking for 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.

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Strategies to Improve your Business’s Accounting

Business accounting

If you want to weather the current economic climate and encourage growth for your business, you need a well-planned and implemented accounting strategy – an approach that tracks revenues, expenditures and profits, systematically. Being on top of your financial situation enables you to make decisions best suited to your circumstances. The following are some strategies to improve your business’s accounting.

Keep business and personal banking separate:

Open a dedicated bank account for your business, preferably one with online access as this makes it easier to make payments and do bank reconciliations. If you need business money for personal expenses, do a regular transfer to your personal account. This will make bookkeeping much easier.  Don’t use your personal credit card for work purchases and vice versa.

Recognize business vs. personal expenses:

You need to know what type of expenses can and can’t be claimed against your profit for the purpose of reducing tax. An expense that is directly related to the operation of the business and towards producing income is tax-deductible. An expense that is for your personal pleasure is not. Mixing personal and business does not mean a full claim for business can be made. If you’re in doubt about whether or not to claim an expense, contact your accountant.

Develop a budget:

Begin by coming up with revenue projections and a list of anticipated expenditures. Compare this budget to actual expenses and revenue. Adjust the budget as needed.

Keep an eye on high-cost expenses:

Labour and inventory costs are the largest expenses for most small businesses. To reduce labour expenses, consider outsourcing  work to contractors that bill at an hourly rate. They may not need 40 hours/week to complete your work and they don’t require benefits. Time-tracking software makes it easier to understand how much certain tasks cost your business, enabling you to find ways to control expenses. Track inventory carrying costs, inventory turnover ratio, amount lost to obsolete inventory and other key metrics.

Plan for major investments

Consider what expenses will arise in the next one to five years (upgrade of facilities, new office equipment, peaks in staffing costs, emergencies). By planning for major expenses, you can avoid taking money out of the company during good months and finding yourself short in slow months. Track expenses and revenue to help identify the best time for large investments. Business credit cards help establish a credit history giving you a better chance at qualifying for financing (lines of credit, loans) and they often offer perks such as business or travel rewards.

Utilize bookkeeping software:

There are free bookkeeping software packages if you are on a tight budget (Wave, ZipBooks, Akaunting, SlickPie, GnuCash, CloudBooks). If you can afford it, purchase a good-quality program that comes with occasional updates (Cashbook, Quickbooks, Xero, Sage, Freshbooks, Zoho). Choose one that is easy to use, customizable, produces charts for quick reference and combines different aspects of reporting from one period to the next. 

Organize and store source documents:

Quotes, orders, delivery dockets, sales and purchase invoices, credit and debit notes, payment/remittance advice, cheques, receipts, wage records and deposit slips need to be filed and archived for 5 to 7 years. Keeping source documents at your fingertips makes it easier to prevent fraud in your business, improve your accuracy and ease finding transactions when needed.

Read and understand monthly reports:

Keep your bookkeeping system up to date and produce reports monthly. Learn to read and understand these reports, in particular the income statement and the balance sheet. 

Reconcile bank statements

to get a fair picture of your financial health. Make sure the figures in your accounts are registered on your bank statements and vice versa. 

Keep on top of sales invoices

Late and/or unpaid bills hurt cash flow.  As soon as a job is complete or a product is delivered, prepare and send out customer invoices. Put a process in place to track your billing carefully (issuing a second invoice, a phone call reminder, penalties and/or extra fees). Be organized.

Ensure inventory data is accurate

To prepare financial statements you need accurate inventory data. Track physical inventory either manually, by counting items on a regular basis, or by pairing counts with an inventory management system that automatically adjusts the numbers as sales happen (via integration with your point-of-sale system). Inventory management software makes it much easier to track inventory and the information will be more accurate.

Make accounting a joint effort

Educate new employees on how your accounting process works and how they can contribute to smooth operations. Ensure that staff are aware of deadlines and cutoffs for payroll, expenses and payment runs. Inform your team of key performance indicators and how they can provide financial information that would support your goals.

Know when to outsource:

If you find bookkeeping too difficult or don’t have enough time for it, outsource the task. This can be cost-effective and professional help will ensure accuracy. Professional bookkeepers often give great business advice and assist with many tasks (recommend good software, attend meetings with your banker, explain accounts you find difficult, prepare annual budget and cash flow reports, etc).

 

Don’t let accounting be the downfall of your business. Try these accounting strategies to help you improve your business, spend less time on finances, focus on growing your company and enhance your customer relationships. When it’s time, get professional bookkeepers and/or accountants involved. 

Need help establishing a good accounting system? 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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How to Establish a Budget for your Business

Establish a Budget for your Business

A budget is a financial plan for a company’s future. It projects revenue and expenses, enabling a business to make confident financial decisions. Creating a budget for your business promotes accurate goal setting, assists in writing a business plan, informs spending decisions, unifies stakeholders, attracts investors and aids in determining staffing needs. It makes operating your company easier, more efficient, gives you the best chance of achieving your long-term goals and helps you reap rewards for your hard work. So, how do you go about preparing a business budget? 

  • Tally income sources: Determine how much money your business brings in each month and where that money comes from. Tally sources for a 12-month period. Look for seasonal patterns. 
  • Determine fixed costs: Fixed costs are expenses that don’t change. They may occur daily, weekly, monthly or yearly and include payments such as insurance, rent, website hosting, payroll, bank fees, accounting and legal services, supplies, debt repayment, taxes and equipment leasing.
  • Include variable expenses: Variable expenses are costs that change each month based on your business performance and activity such as usage-based utilities, shipping, packaging, sales commissions, travel costs, inventory, production costs, professional development and marketing.
  • Predict one-off costs: These costs fall outside the usual work of your company. They may be start-up costs (equipment, furniture, software) or infrequent expenses (business course, cost of moving to a new location, purchase of real estate, purchase of new equipment, large-scale facility upgrades, severance pay, etc).
  • Create a contingency fund: Prevent the problems associated with unexpected costs by keeping extra cash on hand for difficulties such as equipment breakage, inventory damage, a security breach, etc. 
  • Put it all together: Tally the total income and expenses. Then compare the cash flow in to the cash flow out in order to determine profitability. Adjust the figures throughout the year. As projections change, alter how money is spent and allocated.
  • Create a budget spreadsheet: A simple spreadsheet provides you with all the information you need at a glance making summarizing and reviewing your finances easy. Make budget evaluation a regular habit. Monitor and adjust numbers as needed.
  • Consider using accounting software: If you wish to learn how to make a budget and stick to it, try using accounting/bookkeeping software alongside your newly created budget to help you stay accountable.

Creating a budget takes time and effort but it’s worth the toil. Budgeting gives you the insights you need to make good decisions regarding your company’s finances. It’s an essential process for all businesses and will help you grow your company, compete and ensure a solid emergency fund. It’s especially important for small businesses where being off on cost projections or estimated earnings can have a devastating effect on the company. Consider hiring a chartered professional accountant with expertise in business finance. They’ll help your business create a detailed and viable budget. 

Need help preparing a budget? 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.

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Should You Set up a Trust for Your Assets?

Set up a Trust

You probably know of others who have set up a trust(s) to protect their assets. Maybe you’ve heard mention of trusts on a TV special regarding inheritance and finances. Ever wondered what a trust is? Inquisitive as to how a trust might benefit you, your family and your business? The following is information regarding trusts and how they can protect assets. 

What is a trust?

A trust is a legal entity that allows you to transfer the legal title of an asset(s) to a person while assigning the benefit of the asset to another. The creator or original owner of the asset is called the grantor. The person who manages the trust is known as the trustee (often an attorney or accountant). The person who receives the benefits is known as the beneficiary. Depending upon the type of trust, the grantor can retain the right to make some or all decisions regarding the trust. A well-designed trust helps save time, paperwork and other challenges when settling an estate. It can reduce the amount of estate taxes beneficiaries have to pay when they inherit assets. 

Categories of trusts:

Trusts are either revocable or irrevocable and may take effect during your lifetime or after death.

Revocable trusts are most common and can be changed or revoked at any time. They instruct the trustee on how to distribute your assets to beneficiaries while you’re alive, after death or if you become incapable of doing so. Income from trust-held assets is taxable at Canadian trust tax rates.

Irrevocable trusts are set in stone the minute the agreement is signed. Only in rare circumstances may changes be made. Irrevocable trusts remove the benefactor’s taxable estate assets, meaning they are not subject to estate tax upon death. The benefactor is also relieved of tax responsibility for any income generated by the assets. The trust is protected from creditors and legal judgment.

What are the advantages of a trust?

There are a variety of benefits to the establishment of a trust. You can:

  • Control assets and provide security for both the grantor and the beneficiaries.
  • Provide for beneficiaries who are minors or require expert assistance managing money.
  • Minimize the effects of the estate or income taxes.
  • Provide expert management of estates.
  • Minimize probate expenses.
  • Minimize the time to accomplish probate. 
  • Maintain privacy.
  • Protect real estate holdings and/or a business.

What are the disadvantages of a trust?

There are a few issues to be aware of when considering the establishment of a trust(s).

  • Cost: An estate attorney usually does the paperwork involved in setting up a trust and transferring your assets into the trust.
  • Time: You’ll need to spend time dealing with paperwork. You may need to have uncomfortable conversations about who gets what.
  • May not be necessary: Some people can indeed save on estate taxes with certain trusts, but most estates aren’t subject to estate taxes in the first place.

Reasons to set up a trust:

There are a number of reasons that you may seek to establish a trust(s).  

  • You want to leave assets to minors or young adults
  • You have children from a previous marriage
  • You want a professional to manage your assets when you’re gone
  • You have a disabled or special-needs child
  • You want to support your spouse in the case of his/her incapacity
  • You want to save taxes

If you’re seeking to ensure that your finances are well managed as you pass your assets on, a trust is useful. A trust helps make sure that your assets are directed toward the people and causes that are important to you. 

Need help understanding the benefits of a trust? Want assistance setting up a trust? 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.