Common Accounting Mistakes Newbies Make

Starting out a new business many people decide to economize and do their own accounting.  To avoid any mistakes, here are some tips.

Organize
Record everything…each sale and each check or payment.  Store the receipts safely and neatly.  If you store electronically, be sure everything is labelled so that you can easily retrieve it if there is a question about whether an invoice has been paid or a customer owes you money.  This is also a huge benefit at tax time. 

Budget 
Just like household expenses, it is critical for a business concern to establish and maintain a budget.  It will give you a clear picture of your expenses and projected income.  With your weekly, or at least monthly, reviews, take a peek at your budget numbers and see how you are stacking up with the numbers you originally generated.

Regimen
As odious as it sounds, work on the books at least once a week.  Procrastinating only makes the task feel worse and with more volume, it is a recipe for mistakes.  Also, looking over the accounts once a week will let you know if you are on or off track in any area.

Do the Math
Review your bank accounts against your business accounts.  If there is a discrepancy, you want to deal with it as soon as possible.  Moving quickly means that the data is fresh on hand for all parties and easier to resolve. 

Everything is Important
Even small transactions can add up.  If it is business related, keep a receipt and record it.  If there is an audit, you are ready and organized. 

Back Up Plan
Keep backups of all financial information.  In this case redundancy is good.  Hard drives can crash and even clouds can be infiltrated.  Back up all data on a regular basis and keep your financials secure. 

Use Technology
Working off an Excel spreadsheet may be easy, but there are a lot of really good software programs available for small businesses and start-ups.  If you find the right program for you, it will save you time and energy and can even provide some valuable suggestions for improvement.  These programs will also help you keep everything in its correct place.  Putting the financial data in the wrong box can affect other entries and totals. 

Integration
Many of the software accounting apps will interface with your bank accounts.  If you decide to work with an accounting firm, you will have an easy package to transmit, plus all of the history of your transactions in a single location.

Outsourcing 
If it is truly beyond your capabilities or time constraints, consider hiring a bookkeeper or accounting firm.  Professionals can also help you with long-range planning and tips about compliance and reduction of tax liabilities.

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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Year End Small Business Tips

Running a small business means you wear a great number of different hats.  There are times when you need to just take a few minutes and focus on the big picture by doing a little housekeeping that will give you an idea of where you are and help you plan for where you want to go.

Financials – There is no doubt that financial reports are critical to running a successful operation.  Put together profit and loss statements, balance sheet, and cash flow reports.  This should tell you how you spent your money and if you have enough for the cash flow needs coming up.  If you compare numbers from one quarter to another and then the annual reports, you can see where the low spots occur and strategize how to improve those areas and even out revenue.  Also look at the profit margins to see if they are where they should be.  Review vendor pricing and quality.

Vendor and Customer Lists – Make sure all the addresses, phone numbers, and electronic data is up to date.  Include contact names and any notes that are pertinent. 

Employee Lists – Check your human resources files to be sure everyone’s information is correct.  People marry, divorce, and add dependents.  You can also remind your employees to review what they have on file with you for emergency contacts, beneficiaries, etc.  If you provide bonuses, this is a good time to think about how much and how it will be paid out.

Back ups – It is a good idea to back up all digital items including computers and mobile devices.  In addition to cloud storage, use an external hard drive that can be stored in a safe place, and even old-school hard copies.

Website – Take a look at your current site and click on every link to be sure everything is still operating the way it should.  Check out your competitors’ sites and see if you need to update. 

Inventory – Yes, a physical inventory of equipment, especially mobile devices to see if they need updates.  Also, any products or supplies you need for your business to check for theft and what really isn’t selling well or is obsolete for your needs.  Most importantly, review your company’s goals to be sure you are still focused properly for the coming months and year.  Make a list of your company’s accomplishments, including highlights and low lights.  Look at the problems the company overcame.  Share this with your employees and give them credit for all their work and ideas.

Meetings – It is time to schedule “check-up” meetings with your accountant, attorney, and any financial advisors.  Plan for the next fiscal and tax year.

Staff – Decide whether you will need to expand your staff or reduce employment.  If you are going to hire, think about recruiting, freelancing, etc.

Customers and Clients – Be sure you are not focusing all your attention on a single client.  If you are thinking about diversifying your interests, start looking at new customer sources.

In general, just take stock on where you were over the past year, where you are today and where you want to go.

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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Preparing Your Business for 2021

Starting a new decade gives many small business owners pause to consider their place in the economy and where they should be headed.  There are a number of ways to help position your company for the future.

Trade Shows – Don’t overlook the human element when you are planning your marketing efforts.  There are a number of industry events, trade shows, expos, association meetings, etc. where you can forge relationships and mingle with suppliers, partners, customers, and competitors. 

Social Media – Especially millennials are using social media to base their purchasing decisions.  This can be a good time to review your online efforts and the statistics related to hits and conversions.  Search Engine Optimization (SEO) is always developing new strategies and techniques.  It is possible you need to hire the services of a company that specializes in SEO to enhance your website and posts.  Don’t overlook email.  There are still a large portion of the population that relies on that for communications.

Competitors – Keeping a careful eye on your competition means that you won’t lag as they move ahead with new products or selling methods.

Security – Never underestimate your need for electronic security.  Cybercrime doesn’t stop.  Make sure your websites and systems are as protected as possible and check for possible breaches periodically.

Go Green – More and more consumers are basing their decisions on environmental concerns.  When faced with a choice, they will favour the company that supports sustainable products and will happily pay a premium for the opportunity.  If you are currently participating in ecologically preferred products or services, make sure the public knows about it.  Look at energy efficient power sources will save you money on utility bills and make you more appealing to potential customers.

Automation – Sitcoms may make light of robots in the business world, but it is a reality that entrepreneurs need to face.  A good starting point is with routine or tedious tasks that keep your employees occupied but are blocking them from the work you hired them to perform.  You will have a happier staff and still get the work done. 

Work Force – Remote work has been shown to increase productivity and can mean reducing the size, or eliminating, office space for clerical and administrative personnel.  Video conference calls will reduce travel costs but still experience the face time necessary to build good employer-employee relationships.  Many new programs are now available to help with tracking and reporting the numbers involved in your business.  Freelancers are working through online services that can make selection and payment much simpler than hiring a labour pool.

There are no crystal balls to help you plan for the future of your small business.  But there are a number of resources you can rely on.  Good accountants, solid financial advisors, and capable attorneys are all ready to help guide you in long-term planning and thinking.  Careful application of cutting-edge technology and methods should help the entrepreneur survive and even thrive during the next decade.

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

- The Capex Team

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Unnecessary Startup Expenses to Look out For

Starting a new business is exciting, and frightening, and expensive.  There are some things to avoid in order to save a few dollars here and there.  Don’t spend money before you make it.  Just like in your personal life, list expenses and live within the budget constraints. 

Office and Equipment – The expenses involved in leasing space, furniture, and equipment add up quickly.  Purchase only what you need as inexpensively as possible.  Work from your home until you have established yourself.  Don’t invest in stationery.  With a solid printer and some computer skills you can create your own logo and letterhead with no problem.

Employees – Don’t hire unless you must.  There are a number of services, including online, that can supply you with freelancers at a pretty low cost.  You will also be saving the headache of letting someone go when things don’t work out.

Software – Opt for the free versions of software or other subscriptions.  When you come to a point that only paying the fee will get you what you need, shop wisely.

Marketing – Don’t purchase marketing lists or social media followers.  Many are legitimate, but many are not.  When money is an issue, don’t spend it if you can help it.  That includes PR like hosting parties and branding services.  Don’t think you need a whole new wardrobe.  Clean and neat goes a long way.  If you do feel it is necessary to purchase a business suit, shop at a quality store and try things on to see what will be the best choices, but tell them you are only on a preliminary expedition.  Then buy at consignment stores or high-end thrift stores. 

The good news is that in Canada there are a number of items that can be considered start-up costs and eligible for tax deductions.  These costs must occur after the official start date.  The start date is the day you have a significant activity that is a legitimate part of the attempt to make a profit.  This can be your first sale, or it can be when you purchase inventory.  If you had a computer or a copier prior to that time, that is not a legitimate expense since it was owned prior to the start date.

The Canada Revenue Agency (CRA) publishes a guide about what are legitimate business expenses and it is strongly suggested that you review this list carefully before starting out.

A good place to start is with a solid business plan.  This is a road map of where you want to go and is necessary if you are planning to seek funding either through loans or investments.  Do your homework and understand the market you are trying to enter.  Know its values as well as pitfalls.  Networking is a valuable tool to educate yourself and to spread the word about your business.

You may want to budget for professional consultation fees with an attorney and tax consultant.  Very often these people will also be able to give you good advice about how to go about starting your business safely from the outset.

Careful spending and advance planning will help you become the successful entrepreneur you dream of becoming.

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

- The Capex Team

New Year’s Small Business Checklist

One year is closing and another is yet to be.  As a small business owner there are some positive steps to take to stay motivated.

Creativity

Seek out friends and relatives who are willing to give you advice.  Many small businesses have found it advantageous to form a creative alliance with someone else who can bring a new perspective to your business.  Whether your operation is booming or dragging along, everyone can use some inspiration.  You may even want to collaborate with someone else in a similar or complementary field.  For instance, if you are ecommerce, try working with a local brick-and-mortar store to expand your merchandise.

Website

Security is always a hot topic in the digital world.  Make it a point to confirm that your site and data are safe.  Even if you feel confident in your current situation, see if there are some additional ways to help you and your customers be safe.  Some options might be having a clear privacy policy on how your website collects data from customers.  Another choice might be to get an SSL certification (HTTPS versus HTTP) if you have not already done so.  Checking the effectiveness of your antiviral program, looking for loopholes, and tightening things up.

Engage Customers Differently

Look for new ways to connect with your current customers and to attract others.  That may be striking a new tone in your blogs or social media.  It is very easy to drop into a rut and use the same style of writing or posting.  Find someone who has a new perspective and ask for guest posts while you do the same in return for their website.  See how cleverly this works into our earlier point of creativity? 

Be sure to keep current on SEOs and how to make the most of them.  SEMrush is a tool many people are turning to in order to boost your visibility in search engines. 

Financials

Get your books up to date and review all the reports you can generate.  This will help you with an overview of the previous year and help you establish viable goals for the next.

• Balance sheet

• Income statement (profit and loss)

• Cash flow statement

  • Operating activities, such as revenues and expenses

  • Investing activities, such as assets purchased and assets sold

  • Other financial activities, such as new loans taken, loan repayments made, and partner or shareholder investments or distributions

Taxes

In addition to gathering everything you need to prepare your return, look at how you can reduce your tax burden by income splitting, depreciation claims, and others.  If you took advantage of some of these methods last year, review how well they worked.  Consult with your tax advisor and/or accountant. 

All of these items can be placed on your agenda to take care of in the last month of the year, or to implement very early next year.  They are viable strategies that will make your business life easier going forward.

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

- The Capex Team

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