Tax Tips for 2021 Filings

For Canadians preparing last year's taxes will be a bit different.  Many businesses closed, emergency benefits were released, workers moved into home offices, and much more.  Here is some information that may help.

Emergency Benefits

The Canadian Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB) were each released without taxes being withheld.  Look for a T4A tax reporting slip to include with your 2020 return.  The amount of the tax will vary depending on your total income, including the benefit. 

The second round of benefits released in September, Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), and Canada Recovery Caregiving Benefit (CRCB) all withheld 10% for taxes.  Depending on your overall income, this may or may not be sufficient to cover your taxes due.  With CRB you are also subject to a clawback rate of $0.50 for each CRB dollar paid over your 2020 income that exceeds $38,000.

If you received benefits to which you were not entitled and didn't repay them in 2020, those amounts will appear on your T4A.

Home Office

In order to claim home-office expenses, you will need to review all your receipts or ask for the appropriate forms from your employer.  If you have worked from home more than half (50%) of the time for at least four consecutive weeks due to COVID-19, you can claim $2 a day to a maximum of $400, a temporary flat-rate home office deduction.  There is also a detailed method for a home-office tax break.  You should use an online calculator to see which will benefit you better.

Ottawa provided a one-time, non-taxable $600 payment for disabled persons to help with the extra expenses with COVID.

Charitable Donations

Recognizing the impact of the virus through joblessness, increased domestic violence, and the struggle for many to simply survive with lower or no income, the federal and provincial governments offer tax credits for charitable donations.  Federally, there is a 15% credit on the first $200 and then 29% on anything over and above that initial $200.

As you can tell, completing your 2020 tax return may not be as cut and dried as it has been in the past.  It will be a good idea to get as much of a jump on your return as possible.  If you have not already done it, gather all your receipts and documentation into a single folder.  Catch up on all the latest releases.  There are online calculation forms that can be helpful.  Of course, there are programs for sale that will talk you through the entire return and ask appropriate questions.  If you are still confused, you may want to consult an accountant or tax preparation service.  April 30 is just around the corner and it may take you longer to navigate the forms and calculations.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

- The Capex Team

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What to Know About Starting a Small Business

Where does a small business enterprise begin?  With an exceptional idea.  Find similar concepts and make improvements.  Differentiate yourself from others in your field or related endeavors.  Complete all testing.  Make it fail so that you can fix the problems.  Choose a name.  Be sure it does not fall into any restrictions or is being used by someone else, or even similar.  If you decided on a hybrid name, check foreign languages, just to be sure.  The name should reflect what the business will do and be memorable at the same time.  Register the name with the government.

Decide on what form of business you want like a sole proprietorship, partnership, or corporation.  That will mean looking at the different tax liabilities with each, as well as the legal implications.

When everything seems solid, start working on your business plan.  This serves two purposes.  It will show you if your idea will work as well as give you a basis to present to financiers.  This may also include making applications for grants.  Understand everything you can.  You probably won't get financing with a winning smile and pleasant personality; this isn't the movies.  You will need to understand all the financials, marketing plans including the target audience, and much more.  Investors come in many varieties and each will generally have a niche that they want to explore.  First and foremost they will want to know that you plan to be fiscally responsible and that means understanding all the reports and projections.

Once you have the money, you will need to set up a business.  That means getting a license through your local municipality.  You may also need other permits or licenses.  Check out BizPaL to see the laundry list of business documents.  You will also need a bank account, possibly a line of credit,

You will need to set up accounting and bookkeeping procedures and processes.  After all, you will need some way to account for the money that people will be paying you.  Early on, think about employees.  You will need to be sure you are legally covered to hire employees in Canada.  This will also mean payroll deductions, insurance, personnel records, policies, and procedures.

Then you can finally start marketing and selling your product or idea.  That includes a marketing strategy and plan.

All of this may sound overwhelming and it can be without support.  Start with a professional accounting firm.  They are experienced in setting up accounting, securing business and other licenses, and knowing investors.  They can also help with technology like cloud accounting that will help you stay efficient and maintain easy access to the documents you may need quickly. 

Interview various persons and firms to find the best fit for your new small business.  They need to be knowledgeable as well as a good fit personality-wise.  You need to be comfortable with them as well as confident in their abilities to help you when needed.  Most will also have relationships with other professionals like attorneys, that can help you further.

If you are in a quandary, don’t hesitate to contact us at Capex. We have Professional CPA’s in Mississauga who are happy to sit down and consult with you so that you make the best decisions possible for your business.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

 - The Capex Team

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When Does It Make Sense For Business Owners To Hire A Tax Accountant

Timing is everything.  But sometimes it is difficult to know what is the right time to make certain investments or changes in your business practice.  For example, when is the best time to hire an accountant?

Before Opening a Business

Even in the planning stages, an accountant is a valuable asset.  They can help you create a solid business plan and show you where others have failed.  Knowing the complexities of your undertaking is the first step to success.

Accountants work with lots of different types of businesses and they understand the costs involved with each one.  Being able to estimate and project the expenses will show banks and other lenders that you are serious about how you want to run your business and allow you to accurately determine the amount of cash you will need to initiate your company.

You will need to decide what kind of structure for your company.  Everything from a sole proprietorship to incorporation.  Each has benefits and drawbacks both personally and especially for taxes.  The accountant can give you insight into each and help you choose the best option.

There will also be numerous registrations like GST/HST, Payroll, etc.  Navigating these forms will be easier with advice.

During Operation

If you have already set up your company, not worry.  An accountant can still be beneficial to your ongoing concern.

It is probably safe to say that keeping books is one of the owner's least favorite tasks.  Actually, it can become rather complicated if you are not on top of things.  While not all accountants offer bookkeeping services, many can facilitate the work by recommending computer programs and cloud-based systems to make things easier.

Reaping the benefits of your hard work is what you are after.  However, paying yourself often slips to the bottom of the list.  Depending on the business structure, an accountant can tell you if it is better to draw a salary or to take dividends.  They can also figure out how much you can afford to pay yourself.

As your enterprise grows, an accountant can be invaluable.  There are many governmental reports you will probably need to file.  In addition to taxes, there will be government safety programs to report to as well as regular reports to any investors. 

Buying and Selling your Business

For some, it is more advantageous to simply buy an existing business and turn it into your own.  That also goes for purchasing a franchise.  Your accountant can perform the tasks necessary for due diligence so that you are sure the company is in good financial shape before you take the plunge. 

If you would like to move onto some other project or retire, accountants can produce the financials that will show a prospective buyer the value of your company.  They can also work with the accounts for the buyer to answer any questions and help the process move smoothly.

On a personal basis, they can help structure the sale using lifetime capital gains exemption to help with your own income taxes.

They can also recommend attorneys who are skilled in sales and mergers to assure that everything is in good order and appropriate.

If you are in a trouble, don’t shy to contact us at Capex. We have Professional CPA’s in Mississauga who are happy to sit down and consult with you so that you make the best decisions possible for your business.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

- The Capex Team

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3 Tips for Running Your Business More Efficiently

At the start of new years, fiscal or calendar, it is often the practice to try and find new and better ways to operate your small or medium sized business.   

Fixes

Before jumping into upgrades and improvements, start by assessing what is broken.  That is where the first changes need.  Find what is the most inefficient process or operation and start by brainstorming.  Start with what you want to achieve.  Make it as specific as possible.  Not just “increase sales” but “increase sales by 10%”.   

Inefficiencies crop up everywhere from redundancies to outdated procedures.  Pick the worst culprit and fix that.  Don't try to implement too many changes or systems because everyone will just get confused.   

Listen to your employees.  After they identify the problem, see if any of them can come up with a solution.  Listen to all the ideas, even if they are cockamamie. 

Look at how other businesses run, even if they are not in your line of business.  Can you make things go faster by putting out an app for customers' phones? 

Look at Digital Solutions

From automated answering and VoIP, there is are often many efficiencies to be found in the digital advancements.  Automating time consuming tasks will free employees to handle more complex issues.  Just be careful to fully explain that this does not mean a loss of jobs but opportunities to increase skill levels.

Community Interaction

Just as families come in all different sizes and types, the community in which you operate can be the block where your store is located or the entire world.  If you use social media effectively, you can devise a way to find out what your customer base would like improved.  They may even have suggestions about how to go about it.  This could be a treasure trove or a Pandora's box.   

Opportunities

Keep vigilant about opportunities you may not have recognized before.  This can be re-purposing the product or service you offer to a different market segment or tweaking your offerings so that it will appeal to a broader audience.  It may mean moving out of your comfort zone or taking a risk.  Weigh the options and make your best decision.  Sometimes you can explore an opportunity in a limited segment or for a shorter period of time to see if it really works. 

Don't discount the professionals you use in your overall operation.  Your investors may have seen a similar change do wonders for another of their businesses.  Attorneys work with a variety of companies and see successes and failures.  Your accountant is one of the best resources to advise about economies of scale or investing in new technology. 

Whatever you do make sure that the change is positive, not just change because you want to shake things up.  Focus on the solution or end result.  Use collaboration whenever possible.  Trust your gut.  Look for openings and needs to fill. Think and explore.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

- The Capex Team

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4 Important Tax Tips for Small Businesses

As a small business owner you are probably acutely aware that it is tax time again.   There are some  items to keep in the forefront of your to do list.

Deadlines

The deadline to file is June 15, except that if you owe money, it needs to be paid by April 30.  So, unless you have a good handle on what your liability will be, or if you will expect a refund, plan on having the taxes completed by April 30. 

Covid Related

CRA initiated CEWS to help Canadian employers who had a drop in income but continued to pay employees.  It was intended to keep employment steady and to help businesses operate as normally as possible.  CEWS is a taxable item.  Be sure to include it on the T1 or T2. 

TWS – The Temporary Wage Subsidy was a three-month window where eligible employers could reduce the CRA deductions for each eligible employee.  If you did not claim this subsidy, but were eligible, you will get that amount as a credit or refund on your taxes, after all the calculations are done. 

CEBA – The Canada Emergency Business Account was a no-interest loan that was designed to keep small businesses alive during the brunt of Covid.  If you pay back the loan before the end of 2022, a third (up to $20,000) will be forgiven.  This is something that you won't need to deal with at this point. 

CECRA and CERS – These were measures to help small businesses pay their overhead costs, specifically rent.  The Canada Emergency Commercial Rent Assistance should not affect your taxes, except that your operating costs may have been reduced.  The Canada Emergency Rent Subsidy is taxable and must be included on your return.

Split Income

Hiring a family member do handle some of the work for your company can help on your personal taxes.  Just be sure that the work is legitimate and the wages are reasonable.

Advanced Planning

If you meet the criteria, you may not as yet be required to charge GST/HST.  As your sales exceed $30,000, you will need to charge this amount to your customers.  So, as you look at two quarters and whatever part of the third you are in, and it looks like four consecutive quarters will come close to the threshold, register and start charging the GST/HST.  It is much better than realizing too late and having to pay the equivalent out of your own business pocket.

There are a number of fine accounting systems that will help you calculate your taxes, but a better option is to acquire the services of a good accounting firm that has specialized working with small and medium sized businesses.  They can be on top of all the tax laws and alert you to some of the advantages you are missing on your own.  Staying ahead of the game is always so much easier than lagging behind.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

- The Capex Team

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Why Hire an Accountant for your Start Up

This is the year!  You have a wonderful idea and you are going to go into business for yourself.  Start your own operation.  This will be a year of excitement and challenges.  The only problem is whether you should ask for help from a mentor or hire professionals to guide you on your way to success.

Research shows that established business owners are more likely to rely on accountants, lawyers, etc.  Part of the reason is probably that an ongoing concern has extra money to spend on these services but a new business is on a tight purse string.

If this all sounds like you, here are some reasons why you might want to consider hiring an accountant.

More than Taxes

An accountant does not only handle tax preparation.  If you engage their services as a resource, they can offer perspective on the economy as a whole and frequently on your segment of the business world.  They can help muddle through when times are tough and show you how to expand during booms.

Focus

It is your job as an entrepreneur to focus on the business you want to establish.  If you get swallowed up in daily details like keeping the books and endless paperwork you won't have the time to truly get your business off the ground, let alone on the road to success.  Accountants can take on many mundane tasks or show you how to automate the process so that you can truly pay attention to what is happening with sales and clients.

Balance

Everyone needs downtime.  Not just for sanity but to rejuvenate.  Taking time for yourself or your family in hobbies or avocations means you become a more well-rounded person and able to deal with the stresses of your job.  It also means you come back to the business refreshed with new ideas for expansion or progress.  An accountant can take on the mundane tasks that most people hate and free up your time for something enjoyable.

Guidance

New businesses often overlook the value of a professional accountant and the connections in the community and elsewhere.  Accountants look at financials from a wide variety of operations and have a perspective on the general economy.  They also can advise about avoiding pitfalls others have missed and sharing this information can be invaluable to you.  They also will have working relationships with financiers and investors.  They understand the documentation necessary and will help you with your presentation.

Relationships

As a business owner, you need to establish your place in the industry or community.  Showing a solid business relationship with other professionals will enhance your reputation.  As you develop your own ongoing relationships with other companies and owners, you will take your place as a successful person.

If you are in a quandary, don’t hesitate to contact us at Capex. We have Professional CPA’s in Mississauga who are happy to sit down and consult with you so that you make the best decisions possible for your business.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

- The Capex Team

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5 Essential Work From Home Tips

If you were not among the large group of office employees who have been allowed or encouraged to work from home and are wondering if it really would be a good idea for you, here are some tips to consider.

Routine

Pretend you are actually commuting to work.  Set the alarm and get up at the same time every morning; shower and dress (although you can probably move to jeans and t-shirts instead of work clothes).  Have breakfast before moving to your work area.

Decide what you will work on that day.  Organize your day to include meetings and appointments and set time to work at your desk.  Use your break time or lunch hour to walk the dog, prep for dinner or throw in a load of laundry.   

While you don't need to chart every minute of the day, don't fall into the trap of co-mingling household tasks with work related matters.  This will make you more productive and give fair time to your employer.  It is also a good idea to give your housemates or children clear guidelines about your work hours. 

Self Care

Schedule and take regular breaks including stepping outside to breathe fresh air, staying hydrated, and eating healthy meals.  Just like you establish a start time in the morning, keep an end time.  At the close of your workday, close the door or throw a sheet over the computer.  Working through the evening or night will only serve to make you more tired and cause errors.  You deserve breaks and your employer deserves you to be in focus for the tasks assigned.

Overcommunicate

Remote working means you can't see your co-workers or staff and can often result in misconstrued actions.  Set regular phone calls or Zoom meetings to be sure everyone is on the same page.  Emails and text won't always give you enough information.  It is also imperative for idea sharing and team maintenance.  Voices and facial expressions will help convey true meanings when the typed word won't.

Drop a quick note to a supervisor or teammate telling them you are breaking for lunch and when you anticipate returning, or if you expect to be on an extended call with a client or customer.

Environment

Make your “home office” as professional as possible.  Eliminate as many distractions as you can, including signage for when you are available to housemates or when you need to focus on job-related tasks. 

If you are an employee, work with your employer to be sure you have the right tools including headphones, an ergonomic chair and proper lighting.  If you are moving into the world of self employment, decide how to do this on a budget. 

Boundaries

Just like in a traditional office, there should be limits around social interactions, personal tasks and phone calls, and family crises. 

Learning to work from home can be tricky or can be a dream come true.  You don't need to be perfect but it can be enjoyable, if it is for you.  If not, don't worry.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

- The Capex Team

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Where Can I Find a CPA in Mississauga?

You live or work in Mississauga and you feel you want to hire a CPA to complete your taxes.  You search the internet and find that there are quite a few to choose from.  You have probably also talked with family and friends as well as other small business owners to get suggestions.

How do you narrow the selection?  What questions should you be asking?  Here are some ideas.

Specialization

Like physicians, not all CPAs cover all areas of accounting services.  Find a firm or person that works with the area you need help with.  If you just need a tax preparer, there will be a lot to choose from.  If you want someone to help you deal with other aspects of your business like consulting, financing preparation, as well as taxes, then keep looking until you find the right one. 

License

Be sure your CPA has a valid license.  There are databases available where you can search about a CPA's status, issue and expiration dates, and any disciplinary actions that may have occurred. 

Also find out if they maintain memberships in any professional associations like Chartered Professional Accountants of Canada.

Experience

Probably one of the most important areas to learn about is the person or firm's experience.  Be sure they have at least a few years filing taxes, or consulting with businesses, or dealing with other reporting requirements.  As a small business owner you have a unique perspective.  Be sure that your firm shares that viewpoint and understands the demands of a business owner and entrepreneur and how many years they have been working with small or medium sized businesses.

Also find out the full range of services they offer.  If they handle taxes, will they represent you if there is some type of audit or need for clarification.  Or, you may only be interested in tax preparation at this point in your business, but will they help if you become interested in a merger or acquisition or preparing documents for additional financing.  Plan for the future.

Technology

Are they savvy about technology?  Areas like cloud accounting will make your record keeping easier to maintain and transmit.  Time is money and the easier it is for you to submit data, the better equipped you will be to devote time to running your business and your life. 

Fees

There are a number of different fee structures like flat fees, hourly rates, or other arrangements.  It will also depend on the amount of work you are asking them to perform. 

Personality

Choose a company with whom you feel comfortable.  You will be trusting this person with private information about your company, family and finances.  In addition to being trustworthy, you should feel they understand your viewpoint and concerns. 

At Capex CPAs you will find that we check all the boxes.  Using cloud accounting for our small and medium sized businesses, we are able to provide the best service to our clients.  We have the expertise and experience regarding taxes, financial reports and dealing with financial institutions.  In Mississauga we should be your CPAs of choice.  Feel free to make an appointment to meet our staff and discuss your needs and our rate options.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

- The Capex Team

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