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Cloud Accounting

Accounting for Amazon, Ebay, Etsy, Shopify, and Other E-commerce Businesses

Accounting for Amazon, Ebay, Etsy, Shopify, and Other E-commerce Businesses

Accounting Solutions For E-Commerce Businesses

If you run an Amazon Store, a Shopify business, or any other type of e-commerce investment, you will need to keep records and store them in a very organized manner. Accounting for an e-commerce business is no different to accounting for a brick and mortar business, but there are several more choices you can look into.

When it comes to the financial side of a business, there are often several common questions that an e-commerce business has. These include the following: 

•   Should you think about incorporating?
•   Should you charge sales tax?
•   Should you charge provincial sales tax?
•   Should you register for sales tax in the US?

Let’s explore these in turn.

Should You Think About Incorporating?

If you have worries about liability then incorporating is a good option. The reason is because it gives you more protection over your assets (personal) from creditors. In addition, if you’re making good profits, you should also consider incorporating, from a tax point of view. 

If you are going to incorporate, you might not have a clue where you should start. E-commerce businesses are truly global, after all. Put simply, you should incorporate in Canada if you do most of your business from there, i.e. that is your location physically.

Should You Charge Sales Tax? 

This depends on the products you’re selling online, and how much money you’re earning. The golden figure is $30,000 per year, and in that case, yes you will need to register and charge sales tax. You could still decide to do so, if you earn less.

When setting up your platform (Amazon, Shopify, etc), you should ensure that your setup allows you to collect this tax from multiple areas.

Should You Charge Provincial Sales Tax?

This depends on the province you’re in. You should check ahead of time to find out the specific areas which demand this, and which don’t.

Should You Register For Sales Tax in The US?

This is a complicated area, and a personal decision unless you decide to incorporate in the US. If you have an office in the USA, whether you are personally there or not, you’ll need to register. If you don’t, then you need to think about the advantages and disadvantages of whether to register or not. 

E-commerce businesses fall into that grey area much of the time, and the US sales tax side of things, when not physically in the US is one of those areas. If you have a lot of customers from the US, this is something you might want to consider registering for.

Overall, ensuring that you cover the absolute basics when it comes to tax and accounting for your e-commerce business is vital. Just because you don’t have a static office and employees, doesn’t mean that you are exempt from the complicated nature of tax requirements, and it actually means you’re more likely to miss something important, if you don’t do your research.

We hope this post helps you cover all bases and helps you pick a platform which allows you to charge taxes whenever necessary.

Click on the link below to book a meeting.
https://calendly.com/capexcpa/phone-call-with-jag

- Written by: Jag Bath

Hubdoc – Keeping it Paperless

Hubdoc – Keeping it Paperless

One of the greatest benefits of cloud accounting is the opportunity to take your business from being audit prone to be audit proof. The way Hubdoc helps to do this is by digitizing all receipts by using the smartphone in your pocket. Hubdoc is like your digital cabinet as it stores all your receipts, bills and other bank/credit card statements. It’s super easy to send bills received via email that come in the mail by simply forwarding them to the unique email address Hubdoc provides.

Now to address the elephant in the blog. The most frequent question we always get is ‘why do I need to manage my receipts in 2018?’ Well if you have your own corporation the CRA requires you to keep your receipts and documents for their potential review/audit for a minimum of 6 years. If you don’t do this than any expenses you have claimed will be disallowed and added back to your corporate income and taxed with penalties and interest being backdated. As you can imagine the cost of going through this is quite punitive. Comparing this to the Hubdoc monthly fee of $25 seems more than reasonable for what the app does for you. 

Hubdoc has a basic proposal which is to organize all financial documents in one place automatically. The key here is automatically. Hubdoc being a smart cabinet uses machine learning-powered data extraction to read the receipt for the key details like vendor name, date, and total amount. These details are extracted and used to ‘file’ the receipt into a folder. All this happens automatically, and the bots do this themselves. It’s quite magical really. #DisneyMoments

Traditionally, Accountants accepted shoe boxes of receipts that clients dropped off which went through quite the process. I think we can create a small film named “the life of a receipt”. Seriously though these receipts were sorted, reviewed and entered in to a desktop based Accounting system. As you can imagine the painful nature of going through this process was not a value addition to clients. Eliminating the need to do data entry switches the focus from administration to strategy. Accountants that use Hubdoc can inherently add more value to their clients by not focusing on receipt sorting but helping a business project and forecast the future performance. Using Hubdoc also helps to work with your Accountant more efficiently by reducing the administration involved in year-end tax preparation. 

Hubdoc plays really well with two main online cloud accounting solutions being QBO and Xero. When a receipt photo is taken, the machine-learning powered data extraction technology kicks in and all the necessary fields are generated by Hubdoc. Within 24 hours from the time the picture is taken the receipts are reviewed by our staff and published. When a receipt is published it gets connected to the transaction in the cloud accounting solution. This creates perfect synergy because now your receipt is attached to the actual transaction from the bank. If the CRA ever target the business for an Audit the receipt is easily found as proof of the transaction is attached to the transaction in QBO/Xero. Hubdoc also has the unique ability to ‘fetch’ bank and credit card statements from the bank which helps with bank reconciliations. The bank reconciliations are extremely important for the purposes of knowing that the pro-forma financials are free of material errors. 

We at Capex implemented Hubdoc as part of our Core app closet. Hubdoc has helped our clients get more organized, keep our clients audit proof and also help us provide a seamless accounting experience. Our goal has always been to provide the Small business owner with high value and low administration. It turns out people love taking pictures with their smartphone because it ultimately saves them tax money. I highly recommend everyone to start implementing this solution for their respective businesses. If you have any questions on how Hubdoc works please reach out to us as we fully support the platform. 

Hubdoc: 
www.hubdoc.com

CRA Receipt rules:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/long-should-you-keep-your-income-tax-records.html

Click on the link below to book a meeting.
https://calendly.com/capexcpa/phone-call-with-jag

- Written by: Jag Bath

We are your Accountant 2.0

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We are your Accountant 2.0

Change is the only constant in the new age of technology. Technology changes companies and even entire industries might get wiped out. The days of looking at a set of financial statements to see how the business is performing are long gone. Small businesses require more relevant information on their business to help make the decisions of tomorrow.

In the past Accountants have played the role of what we call historians. Accountants would typically speak to the historical financial performance and assume that to be a viable representation of the future growth of a business is inherently flawed. Let's think of a practical example, If Rogers Communication loses 20 million in revenue it wouldn't be such a big deal had they lost 20 million cellphone subscribers. Take that in for a minute basically the market now reacts to new information such as the subscriber base which isn't represented in the traditional financial statements. The understanding here is that focusing on the bigger pictures leads to the bigger results i.e. higher subscriber base will bring in the higher revenue.

As such each business has what are called key productivity indicators. It's important to study these metrics as you can not make something better and bigger if you don’t measure it. Measuring can be a lot of administrative work and can be counter productive unless you use the cloud. The cloud can shape your business and empower you the business owner with just in time information. Imagine having the ability to check how your business is doing above and beyond the business bank account.

Imagine being able to run the Profit and loss, balance sheet and cash flow statements all by yourself or just running simple dashboards to see how you did from this month versus the last month? Being able to do projections and set sales targets with a few clicks of the mouse and done. Setting up targets is critical for growth and understanding why you didn't hit those milestones is what financial information should be used for. Reading past the numbers is what business owners require and need and delivering this in a robust and efficient way is what the new breed of accountants will need to adopt.

The 21st century business owner wants a new breed of accountant who plays as a linebacker while they play the quarterback. The days of seeing your accountant once a year are coming to an end and for accountants being a benched player are slowly drifting away. It's game time and it's a exciting opportunity to help each business grow and flourish.

Embrace the silver lining of the cloud and feel the difference!

Choose Change. Choose Capex.

Click on the link below to book a meeting.
https://calendly.com/capexcpa/phone-call-with-jag

- Written by: Jag Bath

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Top 5 Benefits of Cloud Accounting

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Top 5 Benefits of Cloud Accounting

If you have an email account from Microsoft or Google, then Cloud based technology is not a new concept to you. The technology has finally hit the Accounting industry and is making a huge difference and changing the role of Accountants for years to come. The cloud provides great benefits that save time and money which is re-invested into your business.

Moving your accounting from "On-Premise" to "The-Cloud" can bring significant benefits. Not only is it cheaper, more secure but also accessible comparatively to the desktop counterpart. Below are the Top 5 reasons I think Cloud technology is the best thing after bread.

1.       Accessible anywhere providing the required flexibility - Cloud accounting software allows the user to access their information securely 24/7 from anywhere all that is needed is an internet connection. You no longer have to buy multiple licenses or carry your laptop everywhere. As small business owners are out and about and now have access to the engine room anywhere. That quick report to see how your business is doing. Done.

2.       Cloud Accounting is a time saver. This is taking the traditional method of Accounting and reversing it on it's head. Connecting your online banking to your cloud software package means the bank feeds from your credit card and bank card statements come directly through to the software system. The reconciliation process of accounting used to be a huge headache but with bank feeds your constantly synced to the bank so your reconciliation is never off. No data entry. More strategy.

3.       Build your customized cloud software. In the past building your own customized solution would have been extremely expensive with hiring IT consultants and other experts. Products like Xero and Quickbooks online have an ecosystem of apps to choose from which are called "add-ons". Some add-ons are free while others carry a fee of a few extra bucks monthly. Thinking of automating your Accounts Receivable collection process...Yup there's a app for that!

4.       Sharing and collaboration has been overhauled. In the old days the accountant would spend most of time "converting" a Simply Accounting file to a useable Quickbooks format. Once this conversion was completed the accountant would then move on to the actual year-end process. With the ability of sharing and collaboration the Accountant is now put in a position of having a conversation with clients during the year not just during the year-end. No more copying data to USB drives sharing is effortless.

5.       Improved security. A lot of people object to the security element of financial information in the cloud. Actually cloud-hosted software is more secure than software hosted locally on your desktop or your own server. The data is stored in high security storage facilities and your data is encrypted meaning it is unreadable to hackers. Additionally, your data is backed up multiple times in a day in many different locations to help protect your data. If your laptop is stolen well that's okay just buy a new one because your data is safe. If you are comfortable using online banking, you should be equally comfortable using Cloud technology.

Essentially with Cloud technology you have the ability to compete with bigger companies on a technological level but get to keep that small business owner mindset. I think this marriage of the two principals will help grow businesses. Most businesses see Accounting as a necessary tax compliance, it is but Accounting is the business language and if you know the language well you can really start to realize the benefits the information can provide. 

Click on the link below to book a meeting.
https://calendly.com/capexcpa/phone-call-with-jag

- Written by: Jag Bath

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Lawyering in the Cloud

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Lawyering in the Cloud

Let's face it the legal profession has faced aggressive competition. In a industry which similar to accounting is built on trust and relationships it becomes important to manage those relationships both efficiently and effectively. The legal landscape is changing with the introduction of new technologies that lawyers are embracing. Clients are demanding more from their lawyers and expect speedy responses and status updates. With a market full of traditional law enforcers clients are truly looking for legal partners #Suits.

Catering to the changing demands of clients who want answers right away and having a edge over competition has become critical to long term growth for law firms. Competing against lawyers who haven't adopted Cloud practice software like Clio are falling behind the tech curve. Traditionally a lawyer fresh out of the law firm would most probably use PC Law to manage their respective practice which like Clio includes time-tracking and Client-billing. One of the major drawbacks is that PC law is restricted to the computer it is installed on. The client data is actually safer on Clio servers than it is on your personal laptop.

More importantly desktop based practice softwares don't allow for case details to be available anywhere. Forgot your laptop? Lost your laptop? Stolen laptop? #Toobad. Having the ability to work from any device is non existent which leads to inefficiencies. These inefficiencies lead to higher costs which are ultimately passed on to clients. Let's introduce the idea of Clio Cloud practice software which is a completely web based solution. You can effectively run your law practice from a iPad or a iPhone. The practice software allows for seamless integration with trust accounting ledgers. 

Law firms are required to have monthly trust account reconciliations and bookkeeping completed in addition to the form 9As signed. Money movement from the lawyer trust to general Account is a heavily regulated accounting area which is handled beautifully with Clio. The cloud based practice software attaches a Clio matter number which makes it way magically into your Quickbooks or Xero accounting system. Reconciliations are painless and compliance is easier to adhere to #ThankYouClio. We strongly recommend the lawyers starting their practice to try out Clio for a free Trial. Capex is a certified consultant for Clio and we can help you with any questions you might have!

Click on this link below to take it for a test drive! No credit card required and test drive the software in seconds. If you have any questions feel free to give us a call!  

https://app.goclio.com/signup/?referral_code=CCC-CAPEX

Click on the link below to book a meeting.
https://calendly.com/capexcpa/phone-call-with-jag

- Written by: Jag Bath

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Why is Cloud Accounting for me?

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Why is Cloud Accounting for me?

Cloud Accounting is a game changer for the Accounting profession an evolution for the accounting industry. Traditionally when you think of the profession of Accounting you perhaps think of Taxes, Bean Counting and Geeky excel wizards #Stereotypes. Things are changing with Cloud Accounting where Accountants are redeeming themselves as more than just #BeanCounters. Accountants are stepping into the role of Strategic Business Advisor, so much better than just being a Governmental filing agent. So what’s the Cloud hype all about? Well for that we have to go back in time to where it all started. #TimeMachine

In the old days the traditional Accountant and client would both have only half the information during the fiscal period. Consolidating these pieces of information together was complicated, difficult and costly because of the multiple software packages used by the Accountant and Clients. Moreover it was super painful to synchronize these accounting softwares into one accounting system so the business can finally be analyzed and Taxes filed. Since the old way of billing a client was strictly based on “billable hours” the Accounting costs for clients kept increasing. #FixedPricesPlease

With the Cloud things changed. The Client and Accountant are using the same software and General Ledger. No more synchronizing issues and installation of software issues. The Client and Accountant can actively collaborate together strengthening the relationship. The Accountant can now take the position of a Strategic Business Advisor rather than just a Tax Advisor. Imagine making the move from seeing an Accountant once a year for compliance work compared to having the Accountant actively involved by providing you the reports and numbers on a weekly/bi-weekly basis so you constantly have financial information available to make more strategic decisions. #NumbersDontLie

The cloud shines in one particular area which is where Cloud Accounting softwares (Like Quickbooks) directly connect to the client’s Business Bank and Credit card. This speeds up the process because the actual data entry work involved is significantly decreased leading to increased time saving which are re-invested into the Client’s business. The security of Cloud accounting is the same level of security of Banks. If you do any Online Banking your comfort level should be the same using this Accounting software package.

With Cloud accounting you no longer have to pass over that dreaded end of year shoebox. When deciding on an Accountant it’s important to not only concentrate on governmental compliance filings (which everyone can do), but are you also getting the skill-set of a Strategic Business Advisor. I’m sure your business would compete better with a Business Advisor on your side speaking of which, when’s the last time your Accountant talked to you about your Business’ Competitive Advantage?

Click on the link below to book a meeting.
https://calendly.com/capexcpa/phone-call-with-jag

- Written by: Jag Bath

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