How To Keep Your Business Steady During Slow Months

Many businesses are cyclical in nature and they learn to adjust to the slower times by catching up on tasks that can be deferred or scheduling vacation or promoting educational opportunities.  However, if your business should be a steady flow and isn’t you may want to think about ways to boost activities during those down times.

Sales

If it is a matter of sales, the problem could stem from either inside or outside the company.  External issues could be a change in the economy or in the market.  As an example, you were one of only a few companies that offered a specific widget but suddenly there are hundreds of those widget makers or that widget is no longer necessary for the equipment in service.  So, it is a matter of deciding what your customers need and either how best to provide it or how to adapt what you make to suit the new needs.

Internal issues can be a bit more tricky.  If you are losing long-time clients, you need to take a step back and find out why.  If it is a matter of quality control, you can fix that.  if it is a matter of your competitors offering better pricing or more advantageous terms, you may need to decide where you can add value or cut expenses.

Value

A good way to increase importance of your product is through better customer service.  That may be reducing the turnaround time between orders and shipping or offering overnight delivery for a minimal increase in price.  It might be as simple as getting rid of an automated answering system and revert to a live person answering the phone and properly directing the calls.

Another way of increasing value is to offer a free consultation visit, or to explain the quality of your merchandise vis a vis the competitors’. 

Appreciation

Similar to a bonus, this would be an opportunity to thank current customers.  Sometimes it is as simple as a handwritten thank-you note packaged with the delivery or coupons for a discount on the next purchase.  Social media can also help your clientele feel special. 

The method you choose depends on your company and the product or service you provide.  Build on the style and corporate culture of your operation and then make it work.  As you see your sales flagging, implement one of those appreciation strategies and see if it won’t get you a few orders.

Mentor

If you have a mentor or business advisor, draw on that resource.  That is why they are there.  It could be they went through a rough patch themselves and they would be willing to share how they survived and hopefully thrived.  Listen with an open mind about how you might be able to adapt their strategy to your business “personality” or how it can be updated to current technology.

If you don’t have a mentor, try asking some of the professionals you work with like an accounting firm in Brampton or Mississauga.  It is probable that they have worked with other companies who have developed slow downs, either regular or unexpected.  They should have a number of approaches to offer that would work to help you.

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

- The Capex Team

Is the Customer Always Right?

Treating a customer as if they are always right is not necessarily good business practice.  Many professions like attorneys, accountants, and medical personnel have found this to be true.

Expertise
To begin with, you should be the expert in your field.  You and your staff have studied the field for years through education and experience.  You should be aware of the current laws and regulations and practice ethically in the community. 

Then there is the client that comes up with a concept that you feel is inappropriate for their business model, or could cause some problems that will be difficult to resolve.  Yet that client is insistent that they are right.

If what they want is illegal, you have no other choice but to flatly refuse and explain why.  Quote chapter and verse, show them the citation.  You cannot risk your own career.

On the other hand, if what the client wants is legal but not a good business move, allowing them to convince you to initiate or maintain that business move could be highly detrimental.  If you want to keep the client, but still feel what they want to do is poor judgement, you may want to implement a policy of putting those actions in writing and having the client sign.  That way when disaster strikes, you will feel justified.  It will also protect you against disgruntled clients who will blame you for their own bad decisions.

Just remember that you have the expertise, not the client.  You should be persuasive enough to convince them of your abilities and recommendations.

Employee Satisfaction
Your own company rests on the quality of your staff.  If your employees are feeling browbeaten by demanding clients, they may very likely seek other companies.  Maintaining a low turnover in your own business enhances your reputation.  Satisfied employees reflect in their daily activities in dealing with all clients and potential clients, which will only enhance your ability to attract and retain more customers.

Change is Difficult
Especially with a new client, the prospect of radical change can cause trepidation.  What you recommend may seem difficult.  You may need to offer a softer approach and continue to explain the benefits and advantages for now and the future. 

Revisit why the client is asking for your help.  Find compromise whenever possible.  Create collaboration between you and them so that the best results can be achieved.

While outstanding customer service is the core to having your own business succeed, you need to be realistic about difficult customers, especially those who border on bully tactics.  Encourage your staff to develop the skills to be confident in their abilities to recommend and persuade clients toward trusting your suggestions.  As your recommendations succeed, your customers will develop a deeper appreciation for your expertise and abilities to help them accomplish their goals.

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

- The Capex Team

How to Become Unique in the Client’s Eyes

Accounting is pretty much a standard function.  Everyone puts the numbers in the right places and they all add up.  Attracting new clients and retaining the current ones can seem simply a matter of personal choice.  It is important to try to stand out in some way.

Personalization
Especially when working with small business owners, you need to explore how they achieved their current status and those points that are important to them.  Beyond the balance sheet and tax advantages, you will need to look at the humanity of the owner and whether his or her decisions are based on an emotional attachment and what that might be.  If you understand the client, you will have an advantage over other accounting firms.

For accountants, it is a good idea to have a gentle, individual conversation to discuss personal goals, including the desire to continue in their current line of business, especially if there are changes looming like different technologies that will impact their operation.  Another delicate subject can be succession planning, the desire to sell, or retirement.

As a professional it may be difficult to share personal situations, but by doing so you can help the client understand that you are in the same or similar position.  It shows your humanity and willingness to help the client succeed.

Remember that this is not a one-time conversation.  Circumstances change.

Niche
Make understanding your clients’ needs your forte.  Just like in a boutique clothing store, offer personalized attention.  Knowing the ins and outs of a company’s business means you can better counsel for profitability.  You can also go an extra step or two and find training sessions for the manager(s) for business ideas as well as human resource information.  If the business owner appreciates your extra effort, they are more likely to remain your client.

Educate
When you introduce new technology, be sure to offer enough training and follow up.  Especially for long-time employees, change is difficult and new computer programs can be confusing.  If you develop a technique to explain the benefit of the program or various steps, and then show them results that will make their lives easier, you will be more successful working with the company’s staff.  Don’t forget about helping them find online videos or instruction manuals.

Keep in Touch
As electronic as we have become, don’t ignore the personal touch.  Simple things like a birthday card sent through the postal service, or a phone call to offer holiday greetings, can enhance your esteem in the eyes of your client.

Don’t Rush
Always allocate extra time so that if the client needs to ask more questions or discuss another issue, you will be available to them.  When you schedule too many appointments and meetings too close together, it may seem as if your time is valuable but theirs is not.

With a little effort you can become an asset to the team of each of your clients.  They will become reliant upon your good judgment and will recommend you to others.  As your clients’ businesses grow, so will yours.

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

- The Capex Team

Handling a Stressed Staff

Every job has its own degree of pressure.  Generally pressure will help employees feel challenged and motivated.  Stress is when there is excessive pressure placed on the individual resulting in an adverse reaction.  Again, everyone will have some stressors in their life.  However, when the stress is companywide or results from some occurrence in the workplace, you are facing a major problem.  People can become physically ill.  Tensions will rise.  Production can begin to falter. 

What can cause it?  Loss of a major client.  Gain of a high-maintenance customer.  Potential mergers or sales.  Change in management.  A boom period when there are not enough people to share the load.  Personality conflicts.  Lots of things.

Some of the more obvious signs are:

• Squabbling

• Lethargy or excessive absences

• Loss of camaraderie or spirit

As the owner or senior management, you need to keep an eye on the pulse of your staff and nip potential situations before they become major issues.  Staying aloof will not help.  You should mingle; encourage one-on-one conversations and truly listen to not only what is said but the tone and undercurrents.  Recognize that you could be the source of the problem; personal or work-related issues that are causing you stress can filter into others. 

As an employer, you have a responsibility to maintain a safe workplace.  Stress is an issue that can cause mental or physical health problems or injuries.

Once you know the cause, you need to develop a solution.  Not all solutions are easy.  If there is a person who is the instigator but that same person has a key role in your company, it will take some finesse to handle. 

Celebrate – Even small things can be worth celebrating.  Find something every few days and make a statement that shows you appreciate the effort.  Acknowledge employment anniversaries. 

Encourage Breaks – Just a five-minute interlude several times a day can have a positive impact.  Allow them this time without interruption.  Never discuss business issues in the restroom.

Rewards – Bring in the occasional box of goodies from the bakery around the corner.  An extra few hours of paid time off may ease the tension. 

Ask for Help – You hired your employees because of their skills and intelligence.  Ask them if they have a solution.  Bring in a third party who can independently observe the function of your operation and see what they observe as problem areas.

Look for signs of employees unable to cope with their demands, especially if this has increased suddenly.  Are one or more employees becoming isolated and not performing as a team mate?  Do your employees understand their role in the company and how it contributes to the bottom line?  Is change looming that makes them feel out of control?   These are all issues that you can address as a manager.   

One last comment, the stressor may not be work related.  Personal issues infiltrate other areas of our lives.  You may not be able to correct an individual’s personal problems but you can at least be sympathetic and understanding.

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

- The Capex Team

Deductible Business Expenses

The good news is that the Canadian government has stipulated that a business can deduct any reasonable capital or current expense that has earned business income.  The bad news is that there are, of course, exceptions.

First we need to explain the difference between Current expenses and Capital expenses.

Capital expenses:

• Provide a benefit for longer than one year.

• Improve property.

• New property or equipment.

Current Expenses

• Expenses that recur especially after a short period of time.

• Restores property to its original state.

• Repairing equipment or property.

So, buying a new copier is a capital expenditure because it is a new purchase and it will last for more than a year.  Having the copier repaired is a current expense. 

Using Money to Make Money
The next criteria are if the expense is reasonable and if it is used to earn income.  It would be reasonable for a computer programmer to require a computer, but not necessarily for a bricklayer.  If the programmer wrote lots of code, but didn’t sell any of it nor his services to write it, then the computer is not deductible.

Another glitch is if the expenses were split between business and personal use, like a vehicle or a mobile device.  You may have to allocate the expenses proportionately.

Exceptions
Like we mentioned at the outset, there are exceptions:

• Meals and entertainment – You can claim a deduction of 50% for business meals or entertainment. Keep careful records, especially about the nature of the business discussed so that you have verification in case of an audit or questions.

• Vehicles – You can deduct the expenses (fuel, insurance, lease, maintenance, etc.) for a motor vehicle when it is used to earn income. However, if the same vehicle is used for personal use, you will need to prorate the costs. Hint: driving from your home to place of business is considered personal use.

• Home office – This is allowable if the space is the site of your primary place of business, or if it is exclusive for business purposes, and you use it for meeting clients, customers or patients on a regular basis. If you meet all those requirements, you can deduct utilities, property taxes, mortgage, etc. based on the percentage of the space used. In other words, the ratio of the square footage of the room(s) used exclusively for business as compared to the overall square footage of the house.

• Gym and Golf memberships – If the facility is dining, recreation, or sporting, the dues are not deductible. 

If you have any questions or concerns about allowable expenses, be sure to contact a tax expert or CPA for clarification.

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

- The Capex Team

Credit Score Tips for 2020

A credit score is a formula used by lenders to see how responsible you are to make payments, including how often you pay and how long it takes to get to zero balance.  The numbers range from 300 to 900, with anything over 760 is considered excellent. 

The better (higher) your credit score, the more likely a lender will provide funds, especially for a major purchase like a home or vehicle.  Not only will they want to lend you the money, but it will affect the rate of interest they will charge.

Plus, there are other areas of your life that can be affected by your credit score. 

• Renting – If you are thinking about renting an apartment or condo, most landlords will check your score and you are more likely to be approved with better numbers.

• Employment – Potential employers now look at credit scores to help them determine your overall responsibility.

• Better Credit Cards – With a good credit score under your belt, you will be eligible for higher limits and lower interest rates.

• Insurance – Insurers may adjust your rates depending on how good or bad your credit rating is.

Even if your credit score is outstanding, there are always things to do to make it better:

Time – As much as possible, pay your bills in a timely manner, before the due date.  Payments on anything, phone, utilities, or credit cards (of course) that are still due more than 30 days past the due date are classified as “delinquent”.  This can impact your credit rating for some time.  Even if your balance is small, the record stays available for seven years.

Limit Your Credit Usage – Credit utilization is the term used for the percentage of credit you use as compared to how much is available.  On your credit card statements you will see a note about what your current credit limit is.  If your limit is $100 and you have a current balance of $50, then your utilization is 50%.  This credit utilization is a compilation of all of your outstanding credit.  If you have car loans, credit cards, lines of credit, they all count toward your total amounts.

We all get those offers to increase credit limits.  They are to your advantage because they play into the credit utilization amount as available.  However, if you think it will only give you permission to charge more, then don’t accept the additional limits.

Longevity Counts – The longer you maintain the same credit card, the better off you will be.  That establishes a longer history of good payments.

More is Not Better – Each time you apply for a new credit card or loan, it is registered in your credit report.  Lenders look at how often you apply for credit cards especially within a short period of time.  Those promotional cards can possibly do you more harm than good.

Variety is Good – Lenders prefer to see how you handle different loan types.  Mortgages and car loans get paid down each month and are collateralized, so these are viewed as safer loans.  Credit cards are more risky, but if you keep them paid up, you are in good shape.  If you keep running up the credit card debt or max them out, you are probably going to be considered more risky.

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

- The Capex Team

How to Teach Kids About Money

Every parent is an educator, along with most adults that children come in contact with.  Children are keenly observant and it is important that significant adults work with children to be sure that they understand what they see and hear.  One of the essential areas is financial issues.

Even pre-schoolers will notice the exchange of money for goods.  There are some basics that you can introduce at this point.

• What is money? Show the child coins as well as paper money. Explain the various denominations and how they differ. It can also help in learning to count and add.

• How to get money. This is where you correlate work and pay. Even young children can have chores and a corresponding allowance. However, paying an allowance when those tasks have not been completed, can give the wrong message.

• Purchase power. Guide your examples by the age and understanding of the child. Explain that one is not allowed to eat the food in the grocery cart until it has been paid for.

• Incorporate them in some decisions. At the supermarket you can explain that you have $2.00 allocated for fruit; does the child want to buy apples or pears with that money. For an older child, you can also explain that you can buy 10 apples or only 7 pears for the same amount. 

There may be times when you need to forego the use of credit or debit cards and use actual cash to pay for toys or a restaurant bill to offer a more tangible example.

Elementary through high-school aged children will give you the opportunity to introduce more complex concepts. 

• Earning power. Increased responsibilities at home can correlate to an increase in allowance. Some parents may be able to encourage their children to part-time jobs.

• Budgeting. This can be very difficult. You may be able to establish a bank account either through you at home or at a brick-and-mortar financial institution. This will probably involve the realization that you can’t always get what you want when you want it. Budgets may take some one-on-one time to write (or type) the expenses the child is expected to cover and how much each one will cost. It will probably also need periodic reinforcement depending on the age and comprehension of the child in question.

• Saving. This will tie into budgeting by allowing the child to understand the concept of accumulating enough money to get a future item. As the child matures, you can explain how adults save for major expenses, unexpected needs, and charitable contributions.

• Loans. This is advanced training. It should incorporate a signed agreement and a serious discussion of what happens with late or non-payments. 

Reasonable decision making is part of maturity and financial security should be part of that process. 

If you need help, check at your local bank or other financial institution.  There are also financial advisors and CPA firms that will offer seminars or tutorials that will help parents become good role models and children to better understand the basic concepts of finances.  Try Investor.gov to explain interest payments.  For younger children, inquire at your local library about story books that deal with money.

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

- The Capex Team

QuickBooks Desktop Changes for 2020

QuickBooks is releasing its changes for the year 2020.  These improvements are available in Canada, the United States and the UK.

Payments

Everyone likes to get paid.  QuickBooks is trying to make it happen quicker.

• Reminders – This will let you create reminder emails. In fact, you can customize them for the lateness of the payment. It will let you review the invoices before they are sent and, even better, let you see when they are opened. You can follow the entire path from sent date through payment receipt.

• Purchase Order Number – If you want, you can insert the purchase order number into the subject line of the email that shoots out the invoice. This is a convenience for the customer as well as for you to make locating a specific invoice easier.

• Combining Emails – You have a customer that is way behind in payments. The update will let you combine those non-payments into a “combine forms” single transmission with the subject of “Transactions from [your company name]”. This is not yet available for any customer other than non-payments.

• Payroll – You have the option to view the payroll status to see if it was transmitted on time and if it is in process. Employees can also check on whether their pay has been direct deposited yet.

There are other improvements, but are available only to U.S. users.

• Collapsing – Instead of a single button to expand or collapse, you now have two: one for columns and one for rows.

• Help – The search help feature has been improved to provide a list of the more frequent searches. If that is not sufficient, you can access the Community, request a call back, or opt for a chat.

• Upgrades – If you want another version, you can upgrade inside QuickBooks. They have QuickBooks Solution Providers (QSP) who will gladly help.

• After Upgrade – It is now easier to locate your company file after you have upgraded.

• Direct Deposit – You can now check on the status inside QuickBooks

Administration

They have improved the reset of your Admin Password by eliminating that long list of data.  It can now be handled through a drop down menu and entering the code you received.

Enterprise Platinum

• Landed Cost – Inventory items can include ancillary charges like shipping. It can now be added to the cost of the inventory, so when it is sold, you have accurate numbers.

• Vendors – Managing vendors now includes both contact information and costs, so you can show additional vendors for items. This is available for both Canada and the U.S.

• Express Pick Pack – You can give the same person both picking and packing assignments.

QuickBooks has a toll-free support service telephone number if you have any questions. 

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

- The Capex Team

Why Hire an Accountant in Mississauga?

If you are a business owner in Mississauga you probably realize the importance of filing your corporate tax return.  In fact, if you are a new business or small operation, you probably are doing the calculations on your own.  Possibly you are considering hiring an accountant to take over this task and are wondering if it is a good idea or not. 

Bookkeeping

Using a firm to incorporate your bookkeeping activities is advantageous because those folks keep up with all the laws and their changes, plus they are experts with the different methods that are used.  Another advantage is the fact that they thoroughly understand the software available.  In fact, they are probably able to deal with any of the major producers of accounting software.  All this means you are getting expert help and your accounts will be kept up to date without you having to carve out time from your daily activities.

Payroll Service

An accounting firm can also provide help with payroll.  It can be difficult to keep your business payroll entries and payroll tax payments under control.  You need to be concerned with employee gross earnings, withholdings and the company’s taxes due to the CRA.  Using an accounting service means you won’t miss deadlines, it will be easier to complete your annual tax returns, and handle any adjustments as they occur. 

Other Services

Accountants are available for a number of other related services. 

• Budgets – They can help you develop a good annual budget.  They are also available to help you review your plans periodically.  They can notice things you don’t because they are more detached from the daily operations. 

• Business Plan – They will help you review your overall business plan.  By helping you evaluate your strengths and weaknesses, you will be able to prepare updates.  This comprehensive document, along with accounting reports, will be the material you need to present to investors and lenders. 

• Software Solutions – Accountants are familiar with a wide array of software programs.  This includes bookkeeping, email, conferencing, and integrated opportunities.  Since they work with a number of different types of industries, they can help you choose the best versions and combinations to help your company operate efficiently.

• Investments – Since they keep close watch on economic trends, they are a good resource when you want to invest in new equipment or technology.  They can suggest approaches that you may not have considered. 

• Recommendations – When you need more specific input, a reputable accounting firm will have a list of professionals that can provide the counsel you need or want.  This will include attorneys, financial advisors, and others who will give you the edge on your competition. 

So, if you are a Mississauga business owner and you are looking for a good CPA firm that will provide the full service advice, opinions, and guidance, contact Capex CPA.  One of their professionals will be happy to discuss the options available.

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

- The Capex Team

Fall Tips to Help Boost Your Small Business

As autumn approaches, most small business owners are looking for ways to improve their fourth quarter as well as making plans for the next year.  If you are in that position and would like a checklist of some ways to work on this project, here are some things to review.

Finances

More than ever it is important to keep an eye on cash flow.  That means keeping the books up to date daily or at a minimum weekly.  By watching receivables and expenses, you will have a better feel for the financial health of your company.

Goals

This is one of the most difficult tasks.  For example, you want to make more money.  The two basic ways are to increase sales and profit and to reduce expenses.  Say you choose to increase gross sales.  To be effective, you need to be specific, like increase gross sales by 20%.  Then you need to decide whether you will hire more sales force or implement technology like VoIP (Voice Over Internet Protocol), or drive more business through website conversions. 

While this is extremely complicated, it is probably the best investment in your time each Fall.  Understanding where you are and where you want to go can be a game changer.

Trends

In 2020 almost all businesses showed a marked increase in online sales and personal shopping with curbside delivery.  Actually every year has its own movement within various industries and businesses, local communities and even globally.  Keeping abreast of issues and events even in an ordinary year will give you an advantage to plan your company’s reactions.

Best Practices

This is your industry or profession’s gold standard of operation.  This is a combination of guidelines, ethics and practices that have found to be the most efficient, or most sensible acts and accomplishments.  Involving your employees and staff can give the small business owner a different perspective.  It can involve a change in technology or creating a more cohesive atmosphere, and everything in between.  By being open to new concepts and opinions, you can improve the results of your operations.

Motivation

A workforce that is motivated can greatly improve the performance of your company.  Active listening is critical as well as taking in all opinions regardless of position or longevity with the company.  The two critical factors for the business owner is keeping an open mind and the ability to accept change. 

Limitations

Knowing where and when to stop is vital.  Far too many companies have taken a nosedive when they expanded too soon or too rapidly.  Another example is recognizing your own inadequacies or shortfall and finding ways to capitalize on that problem.  If you are great at ideas but not at sales, implement someone to drive that side of the business.  One of the most efficient ways is to find a company to handle your bookkeeping and accounting processes.  This is one area where many small businesses lag because of the volume and tediousness of the job.  

For more ideas, contact us at Capex CPA in Brampton, Mississauga and surrounding areas.  We have professionals who can help you develop the best plan for the balance of this year and to look forward to the next.

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

- The Capex Team

Financial Planning for the Ill

Adverse health situations can occur at any time.  As a financial advisor, you can help your clients prepare financially for such events.  Your role is to help the individual or family focus on recovery or dealing with the illness with as little concern about ongoing expenses as possible.

When this happens, a previous financial plan can become less useful.  All of the assumptions may not apply when a serious health issue crops up, especially with little warning.  Presumably if the client has an ongoing or chronic condition, you have addressed the issue but most likely the change in health will create a need to start anew or at least to a great degree.

While planning in advance for health issues should be part of the overall financial approach, a diagnosis suddenly puts a different perspective on the arrangements.  The previous plan needs to be reviewed and adjusted to adapt to the situation at hand.

The client(s) are probably still reeling from the diagnosis and feeling out of control.  As an accountant, you can bring some concrete facts to the table.  It is hoped that this will create some stability.

It is always good to start with a list. 

• Assets – This would include savings, property or other valuables.

• Health insurance, if applicable.

• Life insurance policies

• Retirement savings

• Salaries or disability plans

The other side of the balance sheet needs to be addressed as well:

• Debt – Include mortgages, credit cards, business lines of credit, etc.

• Household and living expenses

• Relatives who may be able to step forward to ease the burden

• Expected cost of care

With all this identified, it is possible to develop a short-term financial care plan and budget.  Depending on the type of illness and prognosis, a longer term focus may need to be developed as well.  The short-term budget will focus on cash flow as well as the tax implications of early withdrawals or sales. 

Your accountant needs to keep in mind the needs of the sick client but also advocate for the future of the family.  It is all too easy to lose sight of the burden on the caregiver(s) and the additional stress of financial insecurity it has on them.

A serious illness is difficult to manage for all concerned.  Accountants can play a significant role in providing a detached perspective and helping the client manage during a difficult time.  If the diagnosis is one that may not be terminal, a long-term viewpoint is important to take into consideration additional expenses in the future.  Working with attorneys and family members, a serious illness can be addressed as a team.  You will probably be the primary contact if money becomes an issue.  Not every situation may be resolved to the financial advantage of the client or family.  That will certainly become an emotional issue for all concerned, including you as the accountant. 

The bottom line is that in a circumstance where a serious and often terminal illness is involved, each person does their part to support the patient and family to the best of their abilities.

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

- The Capex Team

What to know about Tax Audits!

Anyone who has filed a tax return has concerns about an audit.  Although many audits are simply a random sampling, audits are generally triggered by certain factors that will make it more susceptible to a second look.  This article will look at a number of those areas that the CRA targets. 

Self-Employment – Most people work for an employer who withholds taxes and reports that information both to the individual and to the Canada Revenue Agency.  When someone is self-employed, they do not receive a T4 and that can make the CRA a little more willing to look into your books.   

Where you Work – There are a number of businesses or fields that deal with cash transactions, like wait staff in a restaurant, an owner of a construction company, or someone who buys or sells gold.  

Expenses – In our growing electronic age, it is very easy for the CRA to compare your expenses with your competitors in the same industry.  If your data is out of line with the others, someone will probably question the return.

Adjustments – If you have requested a refund or other significant adjustment to the taxable income, the return will be reviewed.  The CRA doesn’t want to make any adjustments unless they are sure they are correct and warranted.

Real Estate – There are certainly a number of opportunities in the real estate market today.  The CRA is aware of that and pays close attention when something shows up in the tax return.

Repeated Loss – If you operate a business, the CRA believes that you should have a “reasonable expectation of profit”.  So, if your business continually loses money, and especially if those losses offset other income, your return will be checked carefully.

High Expenses – A red flag is when an individual uses their personal vehicle for business travel.  If you keep detailed records and logs of mileage and other business expenses to back up your deduction, you will have no problem justifying your return.  The problem is when the expenses are estimated without any documentation back up so the CRA can easily deny the entries. 

Similarly those people who claim home office expenses are under analysis.  They will look at such things as actual home space devoted to business versus what is reported, as well as charging off cleaning costs, storage areas, etc.  Again, the CRA will use available information to compare your claim versus standard usage.  If it appears out of line, you will be audited.

Charitable Contributions – Always keep all receipts.  If you claim donations of clothing or other items to a thrift shop, be sure to get a signed document that you can retain.  If charitable deductions seem out of line, there is a good chance of a CRA audit.  Also if you contributed money to a charity that has subsequently been found to be suspicious or fraudulent, this will also trigger a closer look at all the contributions you made.

There are many other factors that make up a CRA audit, but these are a few of the more common situations that will cause the CRA to take notice of your returns.

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

- The Capex Team

Estate Planning Tips

At some point, most adults consider an estate plan.  If you are unsure about yours, it is one of the ways to put your affairs in order before you pass away.  The overall plan is usually completed by an attorney.  However, to be thorough, you should have your accountant or financial advisor looped into the process.  They provide a somewhat different aspect to the process and can be invaluable in saving tax dollars for your beneficiaries.  In addition, the accountant can be part of the team that helps the survivors in the years that come.

The Will
This is probably the cornerstone of an estate plan.  It is a legal document that states how assets will be distributed after death.  It can also include things like custody and care of minor children and specific bequests like family jewellery. 

Realize that for retirement plans, insurance policies or IRAs, the beneficiary designations will prevail.  So, when you start your estate plan, verify who those beneficiaries are and take that into consideration when distributing your assets.

Trusts
There are certainly valid reasons for establishing a trust under a Will.  Sometimes it is to benefit a disabled member of the family, to help someone who likes to spend more than they should, or to prevent bickering among the heirs.  If it is created through the Will, it is called a testamentary trust.  There can be benefits to creating a living trust for tax reasons.

Power of Attorney
This is a document that allows another party to act on your behalf.  When it deals with the financial end of things, it is called “attorney in fact”.  If it is established as a “durable” power of attorney, it will continue to be in effect even if the individual is incapacitated.  If the power of attorney does not take effect until the individual is actually unable to conduct business, it is referred to as “springing”. 

It is not unlikely that an accountant would be considered to assume that power of attorney since it generally deals with financial matters.  It can be drawn to take care of specific tasks like dealing with personal property or it can be very broad and deal with all financial matters.  The document ends when the individual passes away. 

Healthcare Power of Attorney
Similar to the power of attorney, this one is specific to health issues.  Again it can be limited or very broad.

Living Will
This is very much like a healthcare power of attorney, but it is restricted to decisions concerning the end of life.  It goes into effect in the event of a serious accident or a terminal illness and usually directs whether any, or which, life sustaining measures should be taken.

As you decide which of these documents will be pertinent to your situation, you will probably consult your spouse and/or close family members.  While an attorney will be the person to actually draft the documents for your review and eventual signature, you may want to consult with your accountant or other financial advisor and have them involved in the process.

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

- The Capex Team

Non Profit Account Planning Tips

As an accountant dealing with a non-profit, you probably realize that you are working with a somewhat “different animal”.  They are trying to help people or a specific cause.  They are focused on philanthropic projects and probably have less attention toward the financials, except where it can further their cause.  They are less business oriented.  Here are some ideas about how to work with these organizations and the folks who run them.

Board of Directors
The Board is probably composed of 3 or 5 members.  They should be unrelated to each other, but in reality, they probably are friends or very good acquaintances.  Each of these individuals probably has a passion for the goals of the non-profit.  They may or may not have a financial background.  They should have a wide range of skills and experience and hopefully are good at fundraising.

It may be your job as a financial advisor to liaise with this group and explain the realities of reporting and fiscal responsibilities.  Although you may appear to be the naysayer on many projects, you will need to find common ground and help them understand you have the best interests of the organization at heart and are doing what you can to help them achieve their goals.

Projects
The everyday people are looking at the big picture.  They are trying to combat an illness, save the oceans, or feed the hungry.  As an accountant, it is your task to help them achieve their goals in reasonable chunks.  You have to show them how the projects impact their cash flow as well as their investments and how each project has an effect on the financial stability of the organization and the good deeds it is trying to accomplish.  By helping them tackle achievable goals, they can realize their work is having an impact on the problem, but that it won’t be solved in one big bite.

Multi-Year Plan
In that same vein, you can help establish a plan that spans a number of years with reasonable goals.  This should relate to fundraising and assets as well as the ultimate goal of the organization. 

Audits
It is a fact that audits are required.  The office personnel may need to be reminded about gathering all the information necessary in a timely manner.  Don’t let the calendar get ahead of you.  If you are using an independent auditor, work with them toward fulfilling all the obligations.  If you are the auditor, be persistent and detailed on the data you need.

Tax Filings
It is critical that all required filings be complete and on time.   

Controls
You can help with the internal checks and balances to avoid fraud and help keep everyone associated with the organization above suspicion if numbers don’t exactly match.

In the long run, it is important to emphasize that the accountant is part of the team and one of the “good guys”.  The role of accountant is every bit as important as the volunteers who are helping the cause. 

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

- The Capex Team

Best Ways to Back up Your Small Business Data

Operating a small business often feels like it is hanging on by a thread.  That thread is often its data.  From client lists, inventory, history, billing, all of this information is critical to the continued operation.  All too easily data can be corrupted, erased, or mangled in some way.

There are a number of reasons you should be sure to have backup for your information.  Some of the more common are fire, employee tampering, antivirus software isn’t updated regularly, and hacking.

Small businesses often overlook the necessity to back up their data or do not perform backup frequently enough to cover a catastrophic loss.

Back Up

Initially you need to determine what needs to be backed up.  While that sounds simple, various pieces of information can often be filed in:  file server, hard drives, USB hard drives, USB thumb drives, CDs or DVDs, laptops and tablets.  Because some of these items are highly portable, they can easily be lost or stolen, leaving you without data and possibly leaving you vulnerable to the loss of confidential information from your clients.

 The only way to be sure you know where all the data is stored is by talking with each of your employees and making sure every piece is backed up in some way.  Especially as your company grows, this can become difficult.

Cloud Storage –

This is one of the best options today.  It can accept feeds from multiple devices and provides automatic back up.  There are a number of services to choose from.  Don’t make your choice solely on price.  You probably should check on the ease of recovery and any costs that might be involved.  A good place for advice is your accountants.  They work with many small businesses and are able to make a good recommendation based on your business type and needs. 

Tape –

This is one of the traditional methods and is used in most larger companies.  It will hold a great deal of data and will last for some time.  Tapes will require a bit of time to complete the back up and probably multiple tapes. 

Disk and DVDs –

You can use a series of independent hard drives to store your information.  This can be expensive but you have a quick recovery of data.  To keep costs low and simplify the issue, some small operations just back up to a DVD.  Just remember that DVDs won’t last forever. 

Tape, Disk, and DVDs need human intervention.  That means someone needs to sit down at the device and purposely download the data.  It is also important that they be stored safely, usually offsite.

As you can tell, there are a number of options.  Whichever you choose, review your backup and data recovery plans at least annually.  Situations change and technology is evolving. 

If you are interested in cloud based accounting storage, contact us at Capex.  We are happy to discuss how we handle storage and retrieval of your important data.

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

- The Capex Team

Top CRMs of 2020

Customer Relationship Management (CRM) is software that helps the business owner develop new clients.  It is more than a contact program.  It holds basic client information plus a history of the relationship.  This includes phone email and social media.  It is used for cross selling and introducing current clients to new products or services.

 Small businesses try to save some money by simply managing their client lists through a spreadsheet.  For a company to prosper, this is way too basic.  CRM can manage calendars and set reminders.  Some will also work with a messaging system. 

Zoho

One of the forerunners, this offers a full range of options.  Besides CRM applications, its office suite has the basics of word processing, spreadsheets, databases and presentations.  It also includes web conferencing, wikis, project management and others.

Zendesk

Base CRM was purchased by Zendesk and is now Sendexk Sell.  Designed for the sales force, this tool will direct questions about new product lines straight to sales.  A real-time operation it can filter information quickly allowing your rep to close the deal quicker.

Freshsales

This program will allow you to personalize including renaming modules to correspond to your company’s lingo and creating custom fields.  It can also handle foreign currencies and languages.  It has companion programs of Freshcaller and Freshdesk.

Salesforce

This program will automate a lot of the routine and boring functions of the ordinary day to leave you to the fun stuff.  It allows customization so your sales team can function well. 

Close

Autodialing is one of the features that the sales force likes because it produces the phone numbers in groups, increasing the chance of the sales rep making the sale.  It also includes a pre-recorded voice mail.  It also assimilates with other programs like Mailchimp, Zendesk, and Facebook. 

Agile

Will merge your appointment calendar with the phone system so you have an automatic system for new calls, plus follow ups.

 All of these features can be tempting.  However, you may want to sit down and decide which features you will actually use and are beneficial to your operation.  There is no reason to pay for something that is extraneous or that your team won’t use.

Also, don’t overlook the tried and true methods that work for your business.  For example, email.  If you are successful in your email campaign, don’t ignore it.  Be sure that your CRM software will integrate and enhance your successes.

Pricing will always be an issue.  Most CRM software is priced per user and has a specific laundry list of what is included.  Be sure the features you need and want are in that menu, or you will need to adjust accordingly.

Beyond the upfront cost, there can be costs for training.  You also need to be sure you have the correct hardware for this program and if it will integrate with your existing software.  This can boost the cost significantly.  Then you need to budget for upgrades and sometimes there is a cost for the ongoing support.

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

- The Capex Team

How to Stay Organized When Working From Home

More and more frequently people started working from home.  With the social distancing required during the Coronavirus outbreak, employers were finding it necessary to ask more of their employees to telecommute. 

Working from home offers its own challenges, including staying organized and maintaining productivity.  Here are some ideas.

Scheduling

To be fair to both your employer and to your family, it is critical that you establish a firm schedule.  This should include start and stop times.  During work hours you should make every effort to only deal with employment related tasks.  After the work day is over, you should not interrupt family activities to finish a project.

Part of staying organized includes prioritizing tasks.  A written list is a good guideline.  Sometimes you can end your day by writing out the next day’s projects.  Just leave enough wiggle room for emergencies and unexpected phone and email messages.

If you turn off social media notifications and silence your personal phone, you will be less distracted and able to avoid distractions as much as possible.

Rules

Spouses, children, roommates, etc. all need to understand the rules of when you can and cannot be interrupted.  This also includes you.  It is very tempting to just throw in a load of laundry or to prep for dinner, but you should actually give your job the attention it deserves. 

This includes a designated work space.  Work comfortably but as professionally as possible.  The bed is not a desk.  Good posture will also help you concentrate on the task at hand.  Keep your area tidy.  Find a way to organize any paper files you need. 

Keep your workspace separate from your living area.  Physically leaving the area at the end of your workday will help separate work and family time.  Another separation technique is to dress differently during your work hours and your relaxation hours.  This doesn’t need to be a three-piece suit, but certainly something better than sweatpants.

Connections

Keep in contact with coworkers.  Regular video conferences can help maintain a connection with the rest of your professional world.  If that is not possible, check in by phone to see if they are having any difficulties you have already solved.  Just like you would share work tips or shortcuts if you were sitting at the next desk or cubicle, you should maintain a continuing dialog with your colleagues.

Single Tasking

Keeping focus on the task at hand can be difficult.  You may want to consider headphones to reduce the impulse to avoid your day’s priorities.  Make sure your computer’s toolbar is organized including bookmarks for frequently used sites. 

Maintaining productivity and motivation on your own can be a struggle for some employees.  However, with a little organization and dedication it can become a good routine.  If you continue to be good at your job, your manager will notice and that can only help your career.

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

- The Capex Team

Are You Avoiding These Economical Consequences?

As an Accountant it's my fiduciary duty to help hedge you from the economical consequences from our government policies. I have been following the government programs very closely and the type of printing of money that is going on in the last 6 months has been insane. 

To put this into perspective for you. The amount of money spent in the USA/Canada in the last 6 months was more than the entire world war 2 spending where the war lasted 6 years. If this pandemic is going to continue a couple of things could and might happen. 

1) Negative interest rates are expected to come in Jan 2021 which is an economical concept that has never happened before. This means that you will be charged to keep money in the banks. The banks would be more willing to lend which is good. Logically speaking this should entice people to spend more in the economy but I feel it will have another inherent impact which is that it will spike up the price of Gold and Silver. This is possible considering that oil has gone negative $37 a few months ago and that was considered impossible. I don't discount anything to be impossible anymore. Any money that you are not using and is sitting in your bank accounts I would recommend diversifying into Gold/Silver through your banks. 

2) A look back into economical history. Fiat currencies have failed every single time. The Romans did the exact same thing that our governments are doing and the currencies broke down. This is not a question of what if but more of a when this will happen. I expect our entire economical currency structure to go bankrupt within 2 years. This means the gold and silver prices will go sky high. In order to match the inflation that has occurred over the last 50 years the US government (reserve currency) will have 2 options. 

• Increase the prices of all goods and services to match the printing of money that has taken place. This is impossible to do by      design as you can't control the prices of goods and services across so many industries and sub-sectors. 

• Increase the price of gold and silver to match the inflation that has taken place in the last 50 years. I expect Gold prices to hit around the $7k to 8k. I know it sounds crazy but if you asked someone if Gold would hit $1800 in 2002 they would have called you crazy too. 

Side note Silver is 50% below the all time highs so I would go silver heavy here and have Gold exposure. 

3) As many of you know, I'm a very progressive Investor and Accountant. I have been tracking a crypto currency which many of you would know about called "Bitcoin". I consider bitcoin to be an insurance policy for the future. It's a very risky investment and not for the faint of heart but what it does do for you is it gives you insurance in the case scenario that our economies go completely bankrupt and our currencies are destroyed then at least you have a hedge with Bitcoin. I think everyone should have some exposure to bitcoin 

4) Stock securities are great and if you're looking at investing they should be carefully selected. The simple question I need you to ask yourself is the business you are investing in is it pandemic proof? This isn't the first pandemic and it won't be the last. Invest rationally not irrationally. So investing in airlines is probably a bad idea but maybe investing in Costco/Walmart is a solid idea. Remember investing has risks and be careful when treading the waters. The S&P500 has always gone up over the long term horizon and is one of the best index funds I can recommend for newbie investors. The stocks should do well for as long as the government keeps pumping money into the markets and I expect this to go on until 2022. More liquidity in the markets means that the chances of bankruptcies are eliminated to close to zero for as long as Uncle Sam has the money printing machine on which they have confirmed they will have on until at least 2022. 

5) Inflation is a real thing. It's probably the worst tax you are paying without even realizing it. Federal, Provincial and Personal taxes are nothing compared to Inflation. To understand inflation simply think about the price of groceries 20 years ago and compare to the prices of groceries today. The first sign that you will see that inflation is hitting you is when your grocery bill is going up. If this starts to happen please remember to buy gold/silver and buy aggressively.  

6) Housing crisis is coming. I am predicting there will be a big correction in real estate commercial units and some high end residential properties. What the banks did for Mortgage backed securities in 2008 for residential they did the same thing for commercial lending in 2012 to 2020. The reason for this is attributed to human greed and banker bonuses. I know many people who have invested into real estate who are over leveraged and are house rich and cash poor. During recessions cash is king and a lot of these types of investors will be squeezed out of the real estate market as they invested with less than 20% down payments to buy houses for investment purposes. Most have even picked up line of credits to pay for those down payments which I think is the perfect recipe for a financial suicide. However, for those smart investors that will have cash ready and are ready to strike the time will be coming soon for real estate deals. Don't get fooled with the current deals in the market the real deals are coming in October 2020 to September 2021. That would be the time period to buy real estate and if you can buy, buy aggressively. 

7) Generally, it's a good idea to buy Bank stocks or REITs during a recession as they are considered 'safe investments'. Remember this is not 2008 recession this is a Pandemic Recession and the rules of the game have changed. I am confident in the Canadian banking system but I would not keep more than $100,000 in any one bank. I believe RBC is the strongest bank in Canada and TD follows as a close second. The rest have a big question mark. The USA banks are pretty much doomed minus Bank of America, JPMorgan and Goldman Sachs.

I don't want you to think that I have a bearish look on the economy but I am being proactive to hedge against a future down-turn. I think it's imperative that you make some financial moves today to help secure your future. 

It took me a long time to decide to write this post and send to you all as my Accountant reputation depends on it. I take my reputation very seriously. I would rather be wrong and the economical consequences I am predicting do not unfold but if i'm right at least your financial fortunes will not be destroyed. The downside of me being wrong is you will end up with a lot of silver and gold that would have appreciated in value and you can liquidate for cash at any time. So no damage done!

Enjoy your day and just as a reminder: More millionaires are made during recessions when the times are bad and everything seems like it's never ending chaos. During these times you need to stick to your plan and stay the course. I understand the trust you have all put in me and I don't take it lightly and take that responsibility very seriously. Look forward to seeing you all grow and come out stronger from this Pandemic.  

p.s. I have been considering to set up a Hedge Fund to help clients with investing. Still toying with the idea but if you're interested let me know and i'll put you on a waiting list. 

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

- The Capex Team

How to Plan for Better Client Meetings

When a client calls you up unexpectedly, it is hard to plan for the conversation.  But when a meeting is planned, either over the phone, in person, or through another medium, it is good to be prepared.  To do that, you should have an old fashioned agenda written, not just in mind. 

 A list of discussion items is really important to stay focused and to cover all the topics you need to cover.  Without them you can easily miss important issues, or even minor ones that can affect how you work with the client.  Also realize that both you and the client have other things to do.  Even if the client is retired, their time is valuable too.

Opening
Start with pleasantries, but move into the reason for the meeting.  It could be a regular occurrence, annual or a special circumstance. 

 Updates on Both Sides  
If you are dealing with a business, you will need to know any planned changes like expansion, or a new product.  It can also include market trends in the industry.  For a personal account, you should be aware of anything like a job change, an impending marriage, closing in on retirement.  Pretty much anything that can affect income.

On your side, you need to discuss any changes in investments, general economic trends, new laws or regulations that would affect the client’s processes, investments or lifestyle. 

Heart of the Matter
You need to get to the reason the meeting is being held.  If the client asked for the event, let them take the lead.  Listen to what they have to say.  If you instigated the appointment, go over the points you need to discuss.  Gather as much information as possible that relates to the accounting functions you perform for the client.  

Record Your Notes
Don’t trust your memory.  Also jot down any follow up questions.  Try to avoid interrupting the client.  Make the meeting as productive and meaningful as possible. 

Making Decisions
Depending on the circumstances, discuss what decisions are looming.  Perhaps they don’t need to be made immediately, but then again, perhaps they do.  As a financial advisor, it is your job to make the process as easy as possible outlining the pros and cons of each situation.

Recap
This is where both, or all, of you go over the next steps, including any due dates and who is responsible for what.  Probably the hardest is setting action dates.  Everyone is busy and it may take some careful planning.

Plan Your Next Meeting
If this is only an annual event, neither party can probably set a firm date.  In that case, calendar a reminder closer to the date to set something up.  If it is a short term deadline, set a date, even if the client isn’t sure if he or she is free.  Set it anyway with the idea that the time or date can be adjusted.

Closing
Remember to ask if there is anything that hasn’t been covered or if anything needs to be gone over another time.  End on a cordial note with some mention of the client’s upcoming personal events or chatting about a common interest.  It is nice to follow up with some sort of written summary or just a thank you for the client’s time and effort.

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

- The Capex Team

HST on Investment Properties | How Does it Work?

Harmonized Sales Tax (HST) is a hybrid of provincial and federal sales tax.  It combines Canadian Goods and Services Tax (GST) and Provincial Sales Tax (PST) and is paid by the buyer when the sale is closed.  The seller in turn pays the tax to the Canada Revenue Agency (CRA) at year end.

There is a growing interest in purchasing real estate for investment purposes.  When a novice investor is interested in obtaining a newly built property from a builder, they may not be aware that HST is due at the final closing.  If it is not remitted, the entire sale can stall on the spot.  HST on new property can be a significant amount of money. 

Rebate Opportunity

The good news is that CRA is offering an HST new housing rebate for investment property.  The bad news is that the HST must still be paid at the time of closing; appropriate filings made with the CRA, and then wait for the CRA to review the application and a refund to appear. 

Rebate Loan

Banks are generally unlikely to offer the interim loan necessary to cover the HST.  Recognizing this dilemma, HST relief companies are cropping up to offer some options.  This is a lender that offers a short-term second mortgage on the investment property in question.   

The buyer is responsible for the amount of the second mortgage, any accrued interest, and any fees associated with the loan.  HST relief companies are also offering to file the rebate application with the CRA on behalf of the investor. 

Loan Eligibility

There are, of course, requirements to qualify for the loan.  These include a property value under $450,000 on new construction or considerably renovated property that is intended for long-term residence.  There are other specifics that can be discussed with the lender.  For property in Ontario that exceeds the $450,000 cap, there is a provincial rebate. 

Paperwork 

There is always paperwork.  There are certain documents that need to be submitted with the application.  If any of these are incomplete or missing, or the amount is miscalculated, the rebate is denied.  So it is important to double and triple check everything.  You might also consider a consultant to review your work.

Be sure to keep copies of all the completed forms including receipts, invoices and contracts.  You can be audited for up to six years, so be sure to have everything in order and in a safe place for at least that amount of time. 

Repayment 

There are conditions where the rebate may need to be repaid to the government.  If the transaction involved a Type 6 lease, plus various criteria like the property was sold within a year after the initial purchase by a resident, or it was not used as a primary residence.  It could be that you will need to repay not only the rebate, but an interest that accumulated.

Bottom Line

Like most complicated financial transactions, it takes careful planning and research but it is certainly achievable.  Just read everything and be certain that you qualify.

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

- The Capex Team