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.
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.
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.
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