It’s only January. There’s lots of time before you need to think about tax deductions and filing business taxes. Or, is there? Contacting your certified professional accountant in January is wise. It gives you time to consider and discuss all possible deductions. It gives your accountant time to maximize your deductions and minimize your taxes. Tax laws change constantly. Your accountant will stay abreast of changes and, if given adequate time, may find new tax credits you’re eligible to claim. The health of your business could depend upon it! Contacting your accountant in January has many advantages:
- Reduce stress: Last-minute tax preparations reduce potential tax planning and create unnecessary stress. Tax minimization requires careful preparation, planning and time. Do your business and yourself a favour and contact your accountant in January. Save yourself from stress and headaches by tackling the problem in advance.
- Keep your accountant informed: Your accountant can help mitigate losses and solidify successes. To provide these services, they need all the facts. Contact your CPA in January and let them know about any changes in your business (new product line, second location, switching of banks, equipment purchases, etc.) so that they can help plan for the future of your business.
- Manage cash flow: Cash flow problems can spiral out of control. Manage your cash flow problems by talking to your accountants. They can help you maintain a healthy cash flow all year.
- Keep a handle on growth: An professional accountant has experience handling both revenue growth and capacity growth. They can tell you if you need more customers or if you are unprepared to handle more clients. They can assist your business with financial advice and planning.
- Stay ahead of changes: Changes to regulations and tax codes are constantly occurring. To stay competitive and receive all possible benefits, you need the help of your accountant. They will ensure compliance with all tax changes.
- Handle transitions: Changes in your life (inheritance, marriage, divorce, new partners/investors) have accounting and tax implications. Your CPA can help you handle these transitions effectively.
- Ease budgeting for tax payments: Filing your tax return early gives you information on what you owe the government and an opportunity to plan a payment strategy for your tax bill.
- Ensure all items are included: Contacting your CPA in January gives you plenty of time to find important or misplaced records and receipts. No last-minute unpleasant surprises!
- Lower accountancy fees: Take advantage of the lower rates afforded by many professionals during off-peak months to save your bank balance and your stress levels.
Gather all of your business’s essential reports and documents in early January, every year. Include your previous year’s return to help pinpoint your past data and compare it to your present information. Contact your CPA and let them help properly prepare your tax return in a timely manner. By making an appointment to see your accountant in January, you can conquer one of your biggest challenges, filing your business tax return accurately and on time.
For all your tax needs contact Cook and Company Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, we can use our experience and expertise to make tax time a breeze. Contact us to request a meeting.
Starting a business is exciting! It’s also scary! Approximately 95,000 new businesses are created each year in Canada while 85,000 businesses close annually. Less than 50% of Canadian businesses last 10 or more years. If you’re thinking about starting a business, there are some important steps that you should know to help promote your chances of success.
- Generate an idea: The hardest part of starting a business is coming up with a great business idea. Watch current business trends. Examine budget and profit potentials. Consider your skills, goals and passions. Do you desire to improve upon existing concepts or contribute something new to the market? Do you want to own your own business or purchase a franchise?
- Do the research: Market research combines consumer behaviour and economic trends to confirm and/or improve your business idea. It helps determine if there is an opportunity to turn your idea into a successful business and helps you reduce risks. Have a look at the demographics of your potential customer base (age, wealth, family, interests, income). If possible, talk directly to potential customers (surveys, questionnaires, focus groups, in-depth interviews). Observe your potential competitors. Peruse their websites. Talk with similar businesses. Keep up with the latest small business trends.
- Choose a business structure: Which of the three basic business ownership structures you choose influences your day-to-day operations, taxes, personal liability, risk, capacity to acquire finances, etc. A sole proprietorship is a business owned by a single individual, is easy to form and gives you complete control of your business. A partnership is a company jointly owned by two or more people whose shares, rights and responsibilities are spelled out in a partnership agreement. It’s the simplest structure for two or more people to own a business together. A corporation is a business owned by shareholders. This form of business ownership protects its owners with limited liability.
- Develop a business plan that can be presented to investors and lenders. It’s a roadmap for how to structure, run and grow the business. It guides you through each stage of starting and managing your company. The plan should include an executive summary, a company description, market analysis, a description of the organizational and management structure, marketing and sales plan, details regarding products/services offered, financial projections and funding requirements.
- Choose a name that communicates what your business does in a visually interesting, memorable, and positive way. Take into account legal considerations. Protect your name by registering it with the right agencies both federally and provincially.
- Find funding: Your business plan will help you figure out how much money you’ll need to start your business. If you don’t have enough funds of your own, you’ll need to raise or borrow capital. Consider a line of credit, a business bank loan, venture capital, crowdfunding, angel investors, private lenders, a merchant cash advance, invoice factoring, business-to-business lending and/or government-sponsored small business grants, loans and/or subsidies.
- Get a business license: You may need to get a business license before you can operate legally within your municipality. If your city or town doesn’t have a website, you can find contact information for government agencies online.
- Pick a location: The location you choose (including an online store) affects your taxes, legal requirements, and revenue. Take into account the location of your target market, business partners, and your personal preferences. Consider the costs, benefits, and restrictions depending upon location (salaries, minimum wage laws, property values, rental rates, insurance rates, utilities, licencing fees, zoning ordinances, etc.).
- Register for GST/HST/provincial sales tax so you can take advantage of Input Tax Credits which assist your business in recouping GST/HST paid out on purchases for business use.
- Open a business bank account to help handle legal, tax and day-to-day issues. Common business accounts include a checking account, savings account, credit card account, and a merchant services account. Rates, fees, and options vary, so shop around to make sure you find the lowest fees and the best benefits.
Embrace both the excitement and fear of starting a business! Put yourself on the path to successful entrepreneurship. Follow the key steps outlined here to help ensure the success of your endeavour.
Thinking of starting a business? Need help, guidance and advice? Contact Cook and Company Chartered Professional Accountants. Whether you wish to operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company uses their experience and expertise to help you. Contact us for a complimentary consultation.
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.
The fear of making errors when filing your business tax returns is understandable. Mistakes such as forgetting to claim certain deductions or failing to track or categorize expenses properly are not uncommon. Fortunately, you can amend a business tax return that you’ve already filed.
The type of tax return you’re filing will depend on whether your business is incorporated, but for now we’ll focus on T2 tax returns filed by corporations. If you already filed your T2 and have found that adjustments are needed, you must wait to receive your Notice of Assessment from the CRA. Filing an entire second return or requesting amendments before having received the NOA will lead to further complications and delays. In most cases, the time limit for this request is three years after having received your NOA, but this can vary significantly depending on your company’s corporate status at the end of the given tax year and many other factors.
Methods for Amendment
Once you’ve received a Notice of Assessment, you can request a reassessment electronically or by mail. If you used tax preparation software to file your T2, you can make your reassessment request using that software or by mailing the barcodes corresponding to your amended information to your company’s tax centre. If making the request entirely by mail, you can write a letter to the tax centre. The letter must include the details relevant to your amendments and the necessary supporting documents, along with your corporation’s name, its business number, and the tax year. It’s important not to send your complete return.
Some types of amendments to T2 corporate tax returns, such as retroactively claiming a deduction or credit that you weren’t previously aware of, are relatively straightforward and do not involve potential penalties. Others can be trickier and more urgent. Misreporting business expenses on financial statements, for instance, is a common issue that carries the possibility of being flagged for an audit and incurring penalties. Identifying mistakes and judging their impact or magnitude (often known as materiality) is not always easy. It’s one of many areas where a corporate accounting specialist can help you catch the right errors and make the right call.
Preventing mistakes with your business tax returns is the best way to avoid the need for amendments. At Cook & Company, we help business owners with tax planning, filing, and much more. Call (403) 768-4377 to speak with some of Calgary’s most experienced and trusted CPAs!