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Estate and Succession Planning for Businesses

Business Estate and Succession Planning

A stable and growing business is what every serious entrepreneur desires, but what about your company’s long-term future? After devoting much time, money, and effort to the creation and operation of your business, you’ll want to ensure a smooth succession process. Whether you’re selling it, passing it down to the next generation or closing it down, it’s important that you take the necessary steps to shape your business’s future in accordance with your needs. If you’re planning to sell, how can you get the most value for what you’ve built while enabling a successful transition of ownership? If retirement is on the horizon, who is best suited to take the wheel and bring the company to new heights? How can you protect your family, your personal assets and your business should you pass away? Whatever the circumstances, a smart exit strategy will make all the difference for you, your family and your business. The following are some estate and succession planning tips for business owners. 

Separate your Personal and Business Assets:

Without proper estate and succession planning, when you die default directives are applied that essentially lump your business assets in with all other assets you own. Your beneficiaries may be required to pay significantly more tax than necessary and the survival of your business may be threatened. To avoid this scenario, draft essential documents to separate your personal from your business possessions and make your wishes clear. 

    • A buy-sell agreement allows business stakeholders to retain or assume control of the business itself while letting you pass on the value of your stake to your personal beneficiaries. This type of agreement makes for less stressful outcomes for all concerned.
    • Powers of Attorney for your business interests/activities: These may differ from those authorized to administer your personal affairs.
    • A business succession plan: You may transfer your business outright to a beneficiary or set up a trust that can be used to control the assets of the business. 

Establish Estate Planning Asset Protection:

To do this you take nonexempt assets subject to creditors’ claims and reposition them as exempt assets through techniques such as family limited liability companies and irrevocable trusts for your spouse, children and other beneficiaries.

Undertake Estate Tax Planning:

In order to minimize the tax burden of settling your estate, there are estate planning concepts that can be applied to potentially taxable areas including RRSPs, RRIFs, and capital gains on real estate and shares.

Transferring the ownership and management of a company is a personally and professionally delicate process. Without skillful planning, a number of issues and mistakes are prone to arise. Revising and updating your succession and estate plan regularly is crucial. Constantly amend your plan for changes in desire and the current business environment. Everything is more achievable when you’re well-prepared and involve the right help. Talk to your Chartered Professional Accountant. They have the expertise, knowledge and experience to help you create and maintain a successful succession and estate plan for your business. Businesses deserve nothing less than to feel comfortable every step of the way.

 

Need help with business succession and estate planning? 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. We possess a detailed and tactful understanding of business succession planning and its many moving parts. Contact us for a complimentary consultation.

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What is a Capital Asset?

Capital Asset

A capital asset is an item a business owns for investment purposes; an investment that is anticipated to generate some kind of value over a specified period of time.  It’s owned for its role in contributing to the business’s ability to generate profit. When you sell it, you earn a capital gain or a capital loss, depending on the price. Gains are taxed at a special rate and losses can be used to reduce the amount that is taxed.

Capital assets have the following characteristics:

  • The asset has an expected useful life of greater than one year.
  • The acquisition cost of the asset exceeds some predetermined company minimum amount, known as a capitalization limit.
  • The asset is not anticipated to be sold as part of normal business operations.
  • The asset is not easily convertible to cash.
  • The asset is recorded on the balance sheet and expensed over its useful life through a process called depreciation.
  • The asset is expensed over the course of its useful life helping to match the cost of the asset with the revenue it generated over the same time period

Kinds of capital assets:

There are two main categories of capital business assets.

  • Tangible capital assets are physical and have a finite monetary value. They include cash, inventory, vehicles, equipment, buildings and investments. 
  • Intangible capital assets do not exist in physical form and include things such as accounts receivable, prepaid expenses, patents, copyright, franchises, trademarks, trade names and goodwill. An intangible asset is difficult to evaluate.

Is there a set cost at which an item becomes a capital asset?

There is no fixed cost at which an item becomes a capital asset rather than a consumable item. It depends on the size of your business. A computer might be a capital asset in a very small business but would be a consumable item in a large company. However, items like batteries, cables and memory sticks are always consumables. If you’re not sure whether an item is a capital asset, speak to your accountant.

Depreciation of capital assets:

A capital asset’s value is spread across the time it takes to be used in your business (it’s useful life). A proportion of the asset’s value is shown as a day-to-day running cost for each year it’s useful. This is referred to as depreciation for a tangible asset or amortization for an intangible asset. The cost must be written off over more than one year. At the end of each year, you subtract all depreciation claimed to date from the cost of the asset, to arrive at the asset’s book value, equal to its market value. At the end of the asset’s useful life for the business, any non-depreciated portion represents the salvage value for which the asset could be sold or scrapped. Accountants use a variety of conventions to approximate and standardize the depreciation process.

Ideally, your business assets will store and increase wealth, increase income and/or reduce expenses. Selling an asset results in a capital gain or capital loss. If you need more information and or understanding regarding your company’s capital assets, talk to your accountant. They have the knowledge, experience and skills to help you with your business needs. 

Need information regarding capital assets and your company? 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.

 

References:

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Bookkeeping Tips for Small and Medium-Sized Businesses

Bookkeeping Tips for Small Businesses

As your business grows, the once simple process of bookkeeping can become complicated and daunting. Yet, it’s vital that you have accurate books. If you don’t keep detailed financial records you can end up with problems; unpleasant financial surprises, an audit, forgotten paperwork, missed goals, large bills from your accountant, payroll and tax challenges. Accurate and efficient bookkeeping can help you make and keep long-term goals, smooth out the ups and downs of seasonal cash flow, improve profits and alleviate troubles with the CRA. The following are some tips to help you improve your bookkeeping skills.

  • 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.
  • Plan for Major Expenses: 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.
  • 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. 
  • 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 the customer invoices. Put a process in place to track your billing carefully (issuing a second invoice, a phone call reminder, penalties or extra fees). Be organized.
  • 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).

These bookkeeping tips can help you improve your business, spend less time on finances, focus on growing your company and enhance your customer relationships. Give them a try!

Need help establishing a good bookkeeping 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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The Benefits of a Holding Company

Benefits of a Holding Company

The Canadian taxation system allows for the establishment of holding companies. The registration process is the same as any other company. You can register at a regional or federal level. If you wish your company to have an official name, ensure that the proposed name is available for use by doing a search through  NUANS. Your corporation can alternatively be recognized by a unique number assigned to it by Corporations Canada.

What is a holding company?

A holding company is an entity created for the purpose of gathering various assets under one umbrella (real estate, shares, stocks, GICs, term deposits, bonds, other companies). This type of company doesn’t conduct any operations, ventures, or other active tasks for itself. There are several types of holding companies (pure, mixed, immediate, intermediate).       

  • A Pure holding company is formed for the sole purpose of owning stock in other companies.
  • A Mixed holding company (also known as a holding-operating company) not only controls another firm but also engages in its own operations. 
  • An Immediate holding company is one that retains voting stock or control of another company, in spite of the fact that the company itself is already controlled by another entity. 
  • An Intermediate holding company is a firm that is both a holding company of another entity and a subsidiary of a larger corporation.

What are the advantages of having a holding company in Canada?

  • Increased Asset Protection: A holding company helps keep assets safe from creditors in the event that something happens to the operating company. The operating company can take risks without exposing the holding company because the holding company performs no transactions and therefore does not move cash and other assets. The only risk is the extent of the holding company’s investment in the operating company. 
  • Tax Benefits:  Since dividends between Canadian-controlled private corporations (owned by the same person) are tax-free, you can move money from an operating company to a holding company with no negative tax consequences. 
  • Lock in the Capital Gains Exemption: There are specific criteria that need to be met to claim the Lifetime Capital Gains Exemption (LCGE).  A holding company can help business owners meet these criteria.
  • Estate planning: Shares in an operating company can be transferred to younger family members through a holding company by way of an estate freeze that is structured to cap a person’s tax liability upon his or her death and transfer any future growth to family members.
  • Limited Liability:  Companies frequently get sued by employees (wrongful termination), by suppliers and vendors (breach of contract) and by customers (product liability). Holding companies can protect an individual’s personal assets, shielding the individual from debt liabilities, lawsuits, and other risks. 

What are the disadvantages of having a holding company in Canada?  

  • Costs: Holding companies require set-up costs (incorporation fee, lawyers fee) and yearly compliance expenses (financial statements, corporate tax returns).
  • Complexity: A holding company adds a level of complexity that requires reliance on professionals. 

Holding companies are not right for all organizations. If your business is accumulating excess cash and you’re looking to invest, incorporating a holding company may be the right decision for you. Establishing a holding company is complex, so consult a Chartered Professional Accountant to discuss the pros and cons. Ideally, a holding company provides tax savings, helps you reach your estate planning goals, assists in growing your business, provides asset protection and limits your liability.

Interested in establishing a holding company? 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.

 

References:

 

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Succession Planning for Small Businesses

Succession Planning for Small Businesses

Planning can be overwhelming! Because of this, sometimes we avoid planning or we do it quickly and poorly. Small business succession planning is particularly difficult as it’s complex, people are often resistant to change and there’s potential for conflict. But no one stays in the same position forever. Illness, retirement and/or turnover are inevitable. If a company fails to plan, knowledge may be lost, opportunities missed and clients delayed. Succession planning provides a business with a framework that ensures continuity when change occurs. 

What is succession planning?

Succession planning is a process of identifying and developing future leaders/owners of your company. This strategy prepares your business for all contingencies by training high-quality people for advancement. It ensures that your business continues to run smoothly after key people retire, resign, move on to other opportunities or pass away. This process involves the coaching and development of designated successors.

Why develop a succession plan?

There are multiple benefits and reasons for succession planning for your business. 

  • Lower hiring costs
  • Stronger internal hires
  • Shorter vacancies for key positions
  • Better career development
  • Increased employee engagement
  • Higher performance
  • Increased retention
  • Higher job satisfaction
  • Disaster-proofs the business
  • Identifies the most-qualified future leaders
  • Creates a structure for training and development
  • Maintains brand identity
  • Helps a company plan for the long-term

Phases of succession planning:

  • Phase One/Identification: Establish who you are as a company and what you want. Then, consider all key roles in your organization determining the day-to-day import of each position and the impact that would occur if that position was suddenly vacant. Identify multiple candidates for each position (a short list) and teach them the values, guidelines and vision of the business.
  • Phase two/selection: This is where a specific candidate is chosen for each role. The successor may be the person next in line in the organizational chart but may also be a promising employee from another position. Look for those who display the skills necessary to survive and thrive in the new post. Objectively consider your shortlist for performance, skills and emotional intelligence. Choose a candidate who is a lifelong learner and both self and socially aware.
  • Phase three/training: This phase involves scheduled professional development for the chosen successor(s). This may include job rotation (for knowledge and experience), mentoring in soft skills (communication, interpersonal relations, empathy, diplomacy), position shadowing and/or taking over when the person presently in the role is on vacation. 
  • Phase four/transition: This involves the present position holder retiring/stepping down and the chosen successor formally taking the role. 

Succession planning keeps a business moving forward, prepares a company for inevitable changes, assists in retaining strong performers and supports the continuity critical to a company’s future. A succession plan is a good idea at the start-up, growth and maturity stages of a company. It’s worth the investment of time and effort.

Need help with a succession plan for your company? 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.

 

References: 

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RRSP Basics you Should Know

RRSP basics

RRSPs are one of the best methods of saving for retirement. However, many people do not fully understand this form of investment. The following are some basics you need to know about RRSPs. 

What is an RRSP?

A Registered Retirement Savings Plan is a sheltered account provided by the Canadian government to assist Canadians in saving for retirement. Contributions are tax-deductible and earnings are tax-sheltered. Contributors delay the payment of taxes until retirement, when their tax rate is lower than during their working years. 

How much can I contribute?

The holder of an RRSP can contribute 18% of their yearly income, up to their annual contribution limit. You can find your limit on your Notice of Assessment from the Canada Revenue Agency.

When should I start contributing to an RRSP?

There is no minimum age for beginning an RRSP. As long as you have employment income and file a tax return, you may set up and contribute to an RRSP. 

What investments can I hold in an RRSP?

  • Mutual funds
  • Exchange-Traded Funds (ETFs)
  • GICs
  • Stocks/Equities (both Canadian and foreign)
  • Certain shares of small business and venture capital corporations
  • Options, REITs, coins.
  • Cash
  • Investment-grade gold and silver bullion
  • Treasury bills (T-bills)
  • Bonds (government, corporate and strip bonds)
  • Canadian mortgages
  • Mortgage-backed securities
  • Income trusts

What investments are not allowed to be held in an RRSP?

  • Precious metals
  • Personal property such as art, antiques and gems
  • Commodity futures contracts

Where can I open an RRSP account?

  • Banks and trust companies
  • Credit unions and caisses populaires (cooperative, member-owned financial institutions)
  • Mutual fund companies
  • Investment firms (for self-directed RRSPs)
  • Life insurance companies

What happens when I turn 71?

In the year you turn 71, you need to convert or collapse your RRSP by converting it to an RRIF (Registered Retirement Income Fund), purchase an annuity or both. 

Things you should know:

  • Unused contribution room carries over indefinitely. 
  • You can set up a recurring transfer from your chequing to your RRSP so you won’t be left scrambling to find money to contribute.
  • First-time homebuyers can make a tax-free RRSP withdrawal of up to $35,000 to purchase a home through the Home Buyers’ Plan (HBP). You have 15 years to make equal installment contributions back to your RRSP to replace the funds you withdrew.
  • With the Lifelong Learning Plan (LLP), you or your spouse can withdraw up to $10,000 in a year to further your education, with a total limit of $20,000 over four years. Once your education is complete, you’ll repay 1/10 of the total amount you withdrew, every year, until it’s fully repaid.

 

For most Canadians, an RRSP is the most tax-effective investment they can make. Contribute to your RRSP while in a high tax bracket to get immediate tax savings, then pay taxes on withdrawals from the plan while in a lower tax bracket. 

Looking for business and investment 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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Advantages of Hiring a Bookkeeper

Advantages of Hiring a Bookkeeper

Business owners need accurate, up-to-date financial information in order to make good business decisions, maintain CRA compliance, support readiness in case of an audit and provide preparedness for the possible future sale of the company. Keeping track of business transactions and ensuring accurate books is complex and time-consuming. A bookkeeper can help. 

What are the duties and responsibilities of a bookkeeper?

A bookkeeper is a person whose job is to keep records of the financial affairs of a business. He/she undertakes a variety of tasks including:

  • Recording the financial transactions of your business (incoming and outgoing) and posting them to various accounts
  • Processing payments
  • Conducting daily banking activities
  • Developing a system for organizing sales, purchases, payments and receipts
  • Identifying trends and how they apply to your business
  • Producing various financial reports
  • Reconciling reports to third-party records such as bank statements
  • Providing a complete set of year-to-date accounting records
  • Supplying information regarding the performance of your business

Advantages of hiring a bookkeeper:

  • Saves you time: Bookkeeping tasks are time-consuming and tedious. Hiring a bookkeeper relieves you of these duties, allowing you to dedicate your time to growing your business. 
  • Saves you money: The cost of outsourcing your bookkeeping is usually less than employing a full-time bookkeeper. A bookkeeper’s detailed records will save you money by reducing the time your CPA needs to analyze your accounts.
  • Prevents errors: Mistakes are costly. Having a bookkeeper means your books are up-to-date, organized and accurate. 
  • Eases budget creation: A bookkeeper will examine your revenue and expenses, providing you with budget tips that help reduce spending, assist in efficient business operations and contribute to profitability.
  • Enables better business decisions: By identifying spending patterns and sales trends, providing forecasts of seasonal ups and downs, recognizing money-making opportunities, avoiding cash-flow problems and finding ways to increase income and/or decrease spending, a bookkeeper provides you with the information you need to make good decisions for your business.
  • Contributes to effortless tax season:  A bookkeeper provides up-to-date accounting records and a year-end financial statement making it easier to prepare accurate and complete tax returns and avoid tax penalties.
  • Allows maximum tax deductions: Proper bookkeeping allows you to take advantage of all possible input tax credits and deductions. 
  • Ensures compliance with the law: A good bookkeeper complies with the latest legal regulations and remains up to date with recent legal changes. 
  • Provides audit preparedness: Accurate and up-to-date records ensure a smooth audit process. 
  • Promotes ease of securing loans and/or investments: It’s easier to secure capital when you’re able to clearly outline your business’s performance and financial position. 
  • Reduces risk: A good bookkeeper can detect fraud and/or embezzlement, helping you spot suspicious business transactions.  

Businesses benefit from the assistance of a qualified, professional bookkeeper. These professionals help companies through all stages of start-up and growth.

Need professional bookkeeping and accounting services? 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.

References:

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Preparing a Business Budget

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A budget is a financial plan for a company’s future; an estimation of revenue and expenses over a specified period of time. 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 cash flow in to 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.

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.

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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How can an Accountant Benefit your Business?

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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.

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