What is Cloud Accounting?

We hear a lot of different terms in the finance and accounting world, and it can sometimes become confusing. You want to know that you’re utilizing the most up to date techniques and processes, but that can be difficult if you’re not sure what something means!

Cloud accounting is a term that we’re hearing a lot about lately.  

The best way to think about Cloud accounting is to talk about Cloud storage first and foremost. Most of us use the Cloud to store large documents or images, for instance, our personal photos. This is because the Cloud is able to store things easily, without taking up a huge amount of space, and it is also secure. These days, security is a vital part of the jigsaw. If you want to share documents or images you can password secure these and allow someone else to access them, a person you have given express permission to.

Cloud accounting follows many of the same principles, and it is basically the ability to access and make changes to your accounts and financial information from anywhere, because they are stored in the Cloud. In addition, you can employ the services of a Cloud accountant, who is responsible for your financial arrangements. This person will use your accounts stored in the Cloud, and you can view them at any time. You contact this person via email, via video calls, messaging, or you can pick up the phone if you prefer.  

In many ways, Cloud accounting is regular accounting but much more secure and much more convenient.

The Benefits of Cloud Accounting

•   Access to a wider range of accountants - This is because you can employ someone from another city if you want - your accountant will work online, and therefore isn’t restricted to being close to your business address. You can also search for accountants who are specialists within your business type, and therefore understand your specific accounts far better.

•   Security - There are no concerns about security when it comes to Cloud accounting. Your accounts are backed up over several servers and are also encrypted. Only those who need to have access to your accounts can, due to password protection.

•   Access at any time - If you are on vacation and you suddenly forget something which you need to input, you can do this anywhere in the world; all you need is your password and you can log into your Cloud-based accounts.

•   Extra features - Features such as the ability to scan receipts, auto-invoicing, etc, are all fantastic added extras which you can use as part of Cloud accounting software packages.

•   A more streamlined service - Everything is kept in one place, and that means your accounts are far less likely to be inaccurate. When everything is synced and streamlined, you’re very unlikely to miss anything.

Cloud accounting is certainly growing in popularity, and when you look at the range of benefits which could come your way as a result of utilizing it, it’s hardly surprising that more and more businesses are choosing to opt for the Cloud.

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

- The Capex Team

How to Choose a Fiscal Year End for Your Business

Once you establish your corporation, the next big question that you need to answer is about its fiscal year. Many business owners initially feel confused when trying to determine the accounting cycle for their corporation.

The fiscal year that you decide upon is the one at the end of which you will be required to prepare your financial statements and file the appropriate tax returns.

Your fiscal year-end matters as you will be expected to file your company’s taxes within 3 months of this date. When you do that, you can avoid any interest charges. Moreover, if you wish not to pay any late charges you must make sure to file your tax returns within 6 months of your fiscal year end date.

How to Choose the Right Fiscal Year End

Due to the effects that your fiscal end may have on your tax schedule, it is important to decide carefully. There is another essential CRA requirement that you must follow to file your T2 returns on time. According to the CRA, your fiscal year date should be within not more than 53 weeks of the date of incorporation.

Keeping this regulation in mind, many first-time business owners choose the end of their business’ 53 weeks to be the fiscal year end. To set a particular date as your fiscal year end date all you have to do is file your T2 returns.

The date of your fiscal year is automatically established with the CRA once you do this.

It is important to consider that the date, once set, requires quite a hassle to get changed. Therefore, it is strongly recommended to determine the right date. Here are some factors that you must keep in mind when setting the fiscal year-end:

1. Deductions (Small Businesses)

If you own a private corporation in Canada, you will be eligible for a small business deduction that can significantly lower the amount of taxes you need to pay. However, to fully utilize this deduction, you must make sure that your fiscal year is one that nears the mark of the full 365 days. As the fiscal year end uses a majority of the 365 days in the year, you are entitled to deduct more from your tax payable thereby lowering your overall expenses.

2. Delaying the Fees

There are certain expenses associated with your fiscal year end. Apart from the paying of the taxes, you will also need to pay professional fees as soon as your fiscal year-end approaches. Therefore, it is a good idea to keep the year-end as distant as possible to make room for such expenses.

3. Carrying Out Your Homework

Make sure that you are ready for what’s about to come at the time you have your fiscal year end. This is crucial for seasonal businesses as they end up with a fiscal year end that coincides with the busiest time for sales, and they will lose focus. You must give yourself ample room and time to prepare all the financial statements so that you can pay your taxes. Therefore, choose a date that gives you sufficient time to get everything in order.

It is important to note that not all businesses have the liberty to determine their fiscal year end as and when they please. There are certain types of businesses that must follow the calendar year end as their fiscal year date. An example is a business that comes under partnerships and/or those that have specific agreements. It is hence essential that you consult a professional regarding whether you have the option of choosing a fiscal year end different from the calendar end or not.

Also, in case you decide to opt for a date that is different than that of the calendar year end, you must make sure that you have help from a professional accountant . It is not unknown for businesses to lose track of their fiscal year-end as a result of picking a date that does not match the calendar. Therefore, seek help from a professional accountant who can maintain and regularly update the books.

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

- The Capex Team

A Few Lessons to Learn

When you start up a business and allow it to grow, you start to make a profit and want it to grow even more. That’s human nature, and it’s a great way for a business to progress. As that occurs however, you will also find yourself with all manner of advice coming your way. Fellow business owners, friends, family, do-gooders, they will all be telling you that you should incorporate your business.

Is this a truth?

It’s true that with most pieces of well-meaning advice you need to be cautious, but some issues are worth taking notice of. For instance, did you know that if you choose to incorporate your business, there are several benefits which could come your way?

You might like the idea of being unincorporated to some degree, e.g. flexibility, but you could be missing out on a fair amount of money saved in terms of your taxes.

If you choose to incorporate your business in Canada, you will be able to take advantage lower taxes from a corporate point of view, and you can also choose to sell shares in your business in a tax-free way. This isn’t the full story however. When incorporation was invented, this was aimed at businesses who were investing in the economy, taking on staff and paying them salaries etc. That is not necessarily your situation.

If you are a small business and you do not have employees, i.e. it’s just you, you could be named as a ‘Personal Service Business’ instead. This is because you do not have staff, and means that you might not be able to utilize the business deduction that most small businesses in Canada can. You won’t be able to take expenses and deduct them in any special way, which means you’re not likely to receive much in the way of benefit. 

So, what you need to know is whether you can incorporate your business and avoid having this label of a Personal Service Business being sent your way.

Luckily, there is a way.

How to Avoid Personal Service Business Labeling

The CRA will look at your business and decide whether it falls under this label or not. In order to avoid it you need to be seen in their eyes as a self-employed person, and not an employee of a small business. In order to make this decision, three areas are examined. This includes a test for economic reality encompassing:

•    Control - You must be able to show that you take orders from no one, you control the management of the work, etc.

•    Tool ownership - You need to show that you own the tools required for the business you do

•    Risk of profit and loss - Every business has the potential for loss, and you need to show that you have risk within your business, and that you also have potential for profit

You will also need to undergo an organization test or an integration test. This basically decides whether or not you are dependent on the business you do. The best way to show this is to have more than a few companies, which you need to send invoices to over the course of a year. This shows that you are not an employee, but indeed self-employed.

The final test is a specific results test. This means that you are the one performing several different tasks which business survival depends upon, and that you are not only responsible for one task, i.e. as an employee would be.

If you can prove all of the above, incorporation is certainly a good option to look at, but you should always seek to reliable advice from an experienced accountant before making any financial decisions within your business.

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

- The Capex Team

Why Cloud Accounting Solutions Are the Answer to Your Future Accounting Needs

Do you currently keep financial records on an old fashioned spreadsheet?

If you are nodding your head, it’s time to change things up and move with the times.

What if you accidentally lose your spreadsheet due to a file corruption? What if you accidentally delete it and can’t retrieve it? Disaster, that’s what!

If you’re using a spreadsheet system for your finances, how are you storing your receipts and bills? Are you actually keeping the paper-based documents in a folder? Again, if you’re nodding your head, it’s time to change! You could easily lose those bills or receipts, they could easily get torn, or you could accidentally throw them away without realizing they’re vitally important.

If you’re doing the two above things, you’re probably also invoicing your customers and clients with a Word or Excel document. Again, it’s time to move! This doesn’t look particularly professional, and your competition has already realized this.

It isn’t difficult to change your accounting processes, and the single best way to go is cloud accounting.

What is Cloud Accounting?

You probably already utilize the Cloud for your personal needs, e.g. storing documents at home, photos, music, etc, but you can also use it for your business needs too. Cloud accounting means you get to do all your accounting tasks online, anyone within your business who has access to the document can make changes accordingly (including your accountant), and everything is done in real time.

It’s quick, it’s easy, it’s cost effective, and it will completely revolutionize and modernize your accounting and financial requirements. No more lost documents, no more unprofessional looking invoices, everything is synced and tied up within the same program.

No more tedious data entry, which takes hours, you simply need to sync your business bank account and everything is done automatically. You can invoice directly from your software package, and it looks super-professional as a result. You can even keep track of unpaid invoices and chase them up with the click of a button!

Can you see how much time and effort changing your financial systems to a Cloud-based package can save you

A More Time Effective Solution

When you store all your financial accounts in the Cloud, you can access them wherever you are, be it at home, in the office, or on vacation. All you need is a reliable online connection and you’re away. You can give your employees the information to log on, provided they have authority to do so, and again, you can work in real time with your accountant on your end of year reports and accounts. If you want to, you can utilize an add-on and download an app.

If you’re worrying about safety, no need - everything is encrypted for total data safety. Automatic back ups take place on a regular basis across several different worldwide servers too, so there is probably more safer and more secure option for your financial information.

Put simply, by moving to a Cloud based accounting software package, you are saving not only time, but money too. After all, isn’t that what business is all about?

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

- The Capex Team