4 Important Tax Tips for Small Businesses

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

Deadlines

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

Covid Related

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

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

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

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

Split Income

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

Advanced Planning

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

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

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

- The Capex Team

Proposal Request

Why Hire an Accountant for your Start Up

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

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

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

More than Taxes

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

Focus

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

Balance

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

Guidance

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

Relationships

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

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

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

- The Capex Team

Proposal Request

Federal Government 2021 Budget Changes

The Federal Government issued the 2021 budget on April 19 and its proposed changes' effect on your taxes will depend somewhat on your lifestyle and business interests.  Here are some of the highlights.

Vacant Home Taxes

Homes that are owned by non-Canadians that are “considered vacant or underused” will be subject to a 1% tax.  If the property is leased for a minimum period during the year, this tax is waived.  Still under discussion is whether this would apply to smaller, resorts, or tourism sites.

Cigarettes and Vaping

Cigarettes will now cost $4.00 more for each carton of 200 cigarettes. 

For those who have switched to vaping, a new duty is proposed for next year for vaping liquids made in Canada or imported as long as they are intended for a vaping device used in Canada.  The charge will be a flat rate on every 10 ml. of liquid, or fraction within a container. This will include any liquids even if they do not contain nicotine. This “sin tax” is also designed to be a deterrent to the use of harmful consumption of the products.

 Cannabis-based products are already subject to excise duties and will not fall under this new tax.

Luxury Tax

Vehicles and personal aircraft (planes, gliders, etc.) priced at over $100,000 will be assessed a one-time luxury tax. It will be calculated as the lower of 20% of the vehicle above the $100,000 or 10% of the total value. Boats will be similarly taxed but the price threshold will be $250,000. 

This tax will affect new passenger vehicles (sports cars, sedans, station wagons, SUVs, minivans that set fewer than 10 people, etc.) and personal aircraft.  Motorcycles, RVs, and certain racing cars, as well as construction and farm vehicles, are exempted.

If you are planning a purchase, read carefully for which vehicles, planes, and boats are, and are not, included.

Digital Services

Aimed at companies like Amazon and Disney that generate Canadian revenue but do not pay Canadian taxes, this tax will apply to subscription-based, streaming services that enjoy avoiding commercials.  Right now a standard Netflix Canada subscription is $13.99 per month and the consumer will be charged an additional $0.98 per month.  Over time, this will increase the cost of the subscription.    Parliament is calling this the Netflix Tax.

Child Care Expenses

There are plans to implement a national child care program to subsidize the cost of care at $10 per day.  To accomplish this, it will take $30 Billion in funding for the first five years and $8.3 Billion each year after that. 

This has not been rolled out, but you will probably be hearing a lot of chatter soon. 

Covid-19

Small businesses can still benefit from the current funding and rent and wage subsidy programs are available until September 2021. 

CEWS

Canada Emergency Wage Subsidy program originated in March 2020 for a twelve-week period.  Since then, it has been extended and most recently the end date is June 5, 2021.  The total funding was $110.5 Billion. It has been suggested that CEWS be made into a universal income, but this is just speculation at this point.

Canada Recovery

A new hiring program will run from June to November to help employers offset staffing costs.  This program will create or maintain 330,000 Canadian jobs by 2022-2023 and offer about 500,000 new training and work experience possibilities. 

Federal Deficit

The Canadian tax system funds governmental benefits.  The anticipated deficit will be $30.7 Billion in the fiscal year 2025-2026.  This is a significant amount but with low interest rates is not horrific.  When interest rates begin to climb again, this debt will be more difficult to repay.  Finance Minister Freeland seems to have the situation under control without resorting to a wealth or middle class tax.  There is little chance of our country going bankrupt.

It takes a lot to keep a country running, including social infrastructure, public transit, and traditional services.  The changes outlined in the new budget are slated to provide:

•      Vacant Home - $175 Million

•      Vaping - $3.5 Billion

•      Luxury Tax - $120 Million

•      Digital Services - $680 Million

As a reminder, personal income taxes are due April 30, 2021. If you earned less than $75,000 in income, the tax payment is not due until December 31, 2021 without interest charges. 

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

- The Capex Team

Proposal Request

Accounting Software you Need this Year

There are a lot of good accounting software programs on the market today.  Many have improved their features to appeal to a wide range of customers, especially small and medium sized businesses.  We are going to look at some of the more popular programs and some of their highlights.

FreshBooks

Home grown in Toronto in 2003 this is a simple program for those with little accounting experience.  It works on iPhone, Android and iPad.  It includes payment reminders, automatic calculation for sales tax, bank integration, and tax help.

QuickBooks

One of the most recognized names, QuickBooks by Intuit is another easy-to-operate programs.  It is a very organized system that is fairly tax-ready all year.  It integrates with PayPal, Square, Shopify, and other payment systems as well as your financial institution.  It can scan receipts and attaches them to the invoice.  It is easy to share with accountants or to export to investors.  It can provide customized reports.

Sage

Now called Sage Business Cloud Accounting comes out of Great Britain.  It offers the choice of industry, company size, and other needs.  It can accommodate multiple users and accountant access with no additional fees.  It also integrates with financial institutions with AutoEntry, Zync, and others.  It has tools to be tax compliant and will manage finances, cash flow, payroll, and invoicing.  It will work on all devices. 

AccountEdge Pro

This has a basic version as well as a pro, has a choice of cloud based or their hosting program, and lots of customizing options.  It is somewhat more complex than other programs, so some basic accounting knowledge is best.  It also integrates with banks.  It handled direct deposits, inventory management, can convert a quote to an invoice, and has a full-service payroll.  Some of the features are available as add-ons, so check to see what you want and how much the bottom line will be.

Wave Accounting

Established in Toronto in 2009, this program offers software and financial services that include invoicing, accounting, credit card processing, and payroll.  It is simple even if you have no idea about accounting procedures.  All the data is backed up and your bank accounts can sync any time or anywhere.  Not all the features are free like payroll and credit card processing that are available with a fee.  It can handle multiple users, track income, expenses, and sales tax. 

Xero

Coming out of New Zealand in 2006, this is a web-based system that is cloud-based, easy to set up and use.  It has apps that work with Android and iPhone.  It will work for multiple users with a two-step authentication.  It has a fast bank reconciliation, offers up-to-date financial reports, and real-time cash position.

While price is a consideration, you really need to closely review the individual features and find the ones that will benefit your business the best.  A good source for information is your accounting firm.  They work with a number of business and have experience with a lot of software programs and apps.

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

 - The Capex Team

Proposal Request

Launching An Online Business Without Spending Your Savings

Who hasn’t dreamed about launching their own online business, making your work schedule, and working remotely from anywhere in the world?

But what’s stopping you from moving forward with that plan? How come you’re not doing it already?

Well, suppose you’re like most people.

In that case, the most significant thing holding you back is often the misconception that you’ll need considerable savings to launch the online business of your dreams successfully.

However, this isn’t anywhere near the truth!

There are many different ways to launch an online business without spending a single dollar out of your piggy bank!

Keep reading, and we’ll explore some of the simplest and most cost-effective methods for starting an online business without spending all your savings!

Start A Freelance Business

Freelancing is easily the most essential item on this list.

Why?

Because there are hundreds of different ways you can launch a freelance business depending on the skills you already have.

For instance, maybe you’ve got a craft imagination.

In that case, why not launch a freelance copywriting business, or find websites that will pay you to blog for them?

Or, maybe you’ve just always been super interested in social media, spending more time scrolling your feed than you do with your family.

In this case, you might start a freelance social media marketing agency, where you can work with small businesses from everywhere around the world to promote them on social media!

Regardless, there are many massive freelance platforms, such as Upwork, Fiverr, and Freelancer, where you can build a profile and then start bidding on jobs to earn money!

And the best part is that you won’t need to spend a single dime out of your savings!

Earn Through Affiliate Marketing

Affiliate marketing is a great way to launch an online business without spending any money on building up your inventory.

Essentially, with affiliate marketing, you’ll promote other people’s products and services to your online audience. Then, when one of your website visitors completes the purchase of an affiliate product or service, you’ll earn a commission of that sale.

The best example of affiliate marketing is the Amazon Associates program.

Through Amazon Associates, virtually anyone with a website can promote any product available on Amazon.

You can still create your branding, company logo, and other marketing materials, but rather than having your inventory, you can promote virtually any products you want!

For this, you’ll simply place affiliate links on your website or social media posts that lead your viewers back to Amazon.

But the best part is that they don’t need to purchase the product or service you’ve linked to. Thanks to a tracking cookie, if that person completes the purchase of ANY Amazon product within a 24-hour window, you’ll earn a commission on the sale!

Dropshipping

Similar to affiliate marketing, dropshipping is another excellent way to sell products online without actually investing in an inventory.

Through dropshipping, essentially, you can build an online store, where you’ll display products sold from major suppliers, such as Ali Express. This way, you can set your prices and shipping policies.

Then, when a site visitor buys one of these products from your site, the order is automatically received and fulfilled by Ali Express (or the supplier of your choice) and sent to the buyer.

Online Business Ideas That Don’t Cost A Dime

Of course, these are only a few examples of online business ideas that won’t cost you an arm and a leg to get started.

That said, with affiliate marketing and dropshipping, you may need to make a small investment to launch your site and get things running. This cost, however, is small compared to what you’d typically expect to spend when launching a business.

Then, once you’ve established your website and your process, you’ll be able to sit back and proudly say that you’ve launched an online business without emptying your entire savings account!

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

- The Capex Team

Proposal Request

Why You Should Hire an Accountant in Mississauga

As a small or medium-sized business owner in Mississauga you are probably always weighing the options of doing a job yourself or hiring someone to do the work for you.  One of those decisions is frequently deciding about using an accountant.

Of course, you understand that an accountant would make your life easier but balanced against the expense, it may or may not be feasible.  One thing to consider is your own time.  How long will it take you to complete the tax forms and could you have used that time to better benefit.  If it takes you 10 hours to complete the forms and you figure your time is worth $100 an hour (the amount of money you make running your business and earning income), then preparing the return cost you $1,000.  Is an accountant less expensive?  Probably so.  Not to mention worrying about the consequences of any errors you may have made.

An Accountant can Help in Many Ways 

If you have not already done so, you will need to formulate a business plan.  This is a document that is a map of how you want your business to operate and is a critical piece of documentation when you start looking for loans or investors.  Along with a business plan you will need specific documents like financial projections.  The accountant can help you prepare those papers as well as recommend software that will make the work easier.  Couple that with cloud-based storage and you will have all the information you need with immediate access so that you can see not only the current stage of your company but track it for future growth.

When you are ready to go to a bank or other financial institution to apply for a loan, it is a good idea to have your own accountant on your side.  Banks want to get their money back.  They will only lend to companies they feel are a good risk.  If you have an accountant, you are indicating that you are serious enough about your operation to invest in a professional to assist.  In addition, having an accountant at the meeting means he or she can answer questions the bank may have as well as explain any terms or provide clarification to you.  They are also valuable in finding the right lender for your needs and for recommending whether the terms offered are favorable to you or not.

From dealing with a tax audit to filing compliance documentation, the government is difficult to work with.  A good accountant can help you keep up to date with all the tax laws, help you complete and file any paperwork, help with payroll so that the codes are correct and the appropriate amounts are being withheld and remitted.

As your company grows and prospers, accountants can also relieve you of some of the daily burdens as well as advise on mergers, acquisitions and franchises.

In Mississauga, one of the best choices is Capex CPA.  Contact us today to see how we can help.

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

Proposal Request

5 Productivity Tips to Help Entrepreneurs

Early Twentieth Century mass production taught us to work smarter rather than harder.  In other words, it is good to be efficient which should result in more and better productivity.  Here are some ideas in that regard.

Task List

A to-do list will provide structure and let you prioritize as necessary.  With mobile phone apps, lists are easier to organize and eliminate when complete.  It also allows you to share with others to let them know your availability or focus.

Education

Studies show that successful individuals never stop the learning process.  Today we have access to learning management systems (LMS) to provide training opportunities for you and your employees.   Using the right LMS platform for your company can measure progress as well as performance and be a valuable tool.

Self Care

Physical, mental and emotional health is important for everyone from the entrepreneur to the janitor.  In order to be at your most productive, you need to maintain good habits that provide the energy necessary to navigate the days, weeks, months and years. 

•      Healthy eating – A balanced diet to maintain physical energy.

•      Sleep – The optimal amount of sleep maintains a good mood and ability to focus.

•      Exercise – Consistent and appropriate exercise will help with energy and alertness.

Take breaks.  During the workday it gives you the opportunity to refocus.  When you are feeling unproductive, take a break (but avoid social media).  It is also important to take blocks of time to recharge.  Take a vacation or at least a day trip.  See something new and think about something else.  You will find it makes a significant difference.

Purpose

Remind yourself why you started this venture in the first place.  If it is customer focused, show how you make their lives better or how you employ a workforce that can support their families and improve their status.  If the original goals are no longer applicable or appropriate, re-brand yourself or find a new purpose. 

Technology

Use technology to your advantage.  Find phone apps that you can utilize to make yourself feel better, like meditation apps or MyFitnessPal.  Slack is software that helps improve communication, one of the key elements to a successful enterprise. 

Say No

Learn to say no.  This can be one of the most difficult lessons to learn.  The brain really cannot process more than one thing at a time, so multitasking means you will not give full attention to one thing or the other.  Give priority to people rather than things or tasks.  Developing and maintaining good relationships is important.  Practice kindness to yourself and to others.

Optimize

Find the best time that you are productive and make the most of it.  If you work best in the morning, maximize your schedule accordingly.  A task that will take five minutes when you are at your best will take ten times longer when you are in a slump.

No two individuals are alike.  These are some ideas that you can put into practice or find your own combination that makes you a more productive entrepreneur and person.

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

 - The Capex Team

Proposal Request

Most Common Accounting Flaws for Small Businesses

Running your own business is pretty daunting.  One of the most important aspects is a good and accurate accounting system.  Unfortunately, this is also an area where you can make mistakes if you are not careful. 

Follow the Rules

It is a common mistake to try to “wing it” when it comes to a small business.  Just like a big company, you need to establish and follow some protocols, especially around accounting.  For instance, set up a check list or standard form when setting up a new client or vendor.  This will make it much simpler as you make entries into your accounting system.  It will assure that you have all the information to bill and pay and makes it so much simpler at tax time. 

Typos

Everyone is going to make mistakes.  However, if you set up a routine to reconcile accounts on a regular basis, you will find them sooner.  As an example, reconcile the bank statement within two days of its arrival.  Look at accounts receivable every week or two.  Catching an error quickly is easier than looking through months of data.

Back Ups

Make it a point to perform regular backups on critical information, especially accounting.  If you keep everything on a single hard drive and it crashes, you are in big trouble.  If you backed up the data at least once per week, you only have a week's worth of data to re-enter.  If you haven't backed up in six months, you will have a lot of reconstruction.  Backing up information that is pertinent to the continuation of your business is equally important.  Files do get corrupted through no one's fault.  You need to be sure you can continue operating if that happens.  A really good backup is a cloud system.  The cloud company usually backs up daily, so you will have the best chance toward success. 

Budget

Establishing a budget is the best way to set a standard or baseline to judge how well your company is doing.  It is also a good reminder to keep expenses in check and to track revenue.

Income and Expenses

Recording income and expenses means allocating the proper category for each item.  This will be of most benefit at year end when you are taking your taxes for preparation.  Everything is organized and easily understood.

Delegate

Feeling that you need to maintain control by doing everything yourself can be a stumbling block.  Dole out the administrative tasks.  Whenever possible use a professional rather than rely on yourself.  That includes IT, legal, and accounting.  You will have more time to do what you love, run the company and you can be secure in the knowledge that specialists are covering you where needed. 

For more great ideas about how to avoid errors, typical and unusual, check with your accountants.  If you don't currently use an accounting firm, it may benefit you to schedule a consultation to see how their advice can help you.

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

- The Capex Team

Proposal Request

The CRA is Giving 1 Year Interest Relief

The dreaded tax season is finally here. Tax season is one of the most stressful times of the year. Every time it rolls around, people begin scrambling to get all of their papers and finances in order. Individuals around the nation are particularly feeling stressed after the financial devastation that the Coronavirus pandemic caused, making tax return filing more complicated.

The CRA is Offering Interest Relief

You may have heard that the CRA is giving a one-year interest relief on 2020 income tax. It may sound like a dream, but it's true.

As most of us know, the CRA charges an interest rate for income tax that is owed following the initial deadline. The interest rate leads individuals to pay more money that they may not have. This year income taxpayers are being given tremendous relief with the CRA wavering their interest fees until April 30th, 2022.

If you have not filed your yearly income taxes yet, we suggest you read this article and see if you are eligible for this fantastic money-saving offer.

Are You Eligible for Interest Relief?

Interest relief is one of the best ways you can save money during tax season. But first, you have to see if you meet the eligibility requirements the CRA has put in place. Below you will find the two main conditions that determine if your eligible for this offer.

●      You made less than $75,000 of taxable income in 2020

●      You received certain COVID-19 benefits in 2020 

Those benefits include the following.

●      Canada Recovery Sickness Benefit

●      Canada Emergency Response Benefit

●      Canada Recovery Caregiving Benefit

●      Employment Insurance Benefit

●      Canada Recovery Benefit

●       Canada Emergency Student Benefit

You must meet both of these requirements to receive a year of interest relief from the CRA. Taxpayers should also be aware that the interest relief offer does not apply to outstanding debts.

You Can Still Receive a Penalty

The CRA is still issuing a 5% penalty for late income tax return filings. Consequently, this will increase the amount of your overall tax bill. If you continue to fail to file your income tax returns, the CRA will add an additional 1% penalty for up to twelve months. 

To stay on the safe side, make sure your income tax return is filed by the deadline. Mark the deadline on your calendar. 

What is Considered Tax-free Income?

One way you may have received tax-free income in the year 2020 is by receiving COVID-19 benefits and placing a portion of it into a Tax-Free Savings Account (TFSA).

This one-year of interest relief may be able to help you recoup from the financial devastation of 2020. Always continue to do research on other accommodations the CRA may have to offer income taxpayers.

If you need further help keeping your financial matters in order, consider enlisting the services of an accountant. Accountants are not just for business owners. They can also help everyday people just like you keep track of their income, personal expenses and interpret financial documents.

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

- The Capex Team

Proposal Request

What to Look for in an Accounting Company

Not all bean counters are the same and if you find yourself in the market for an accountant, here are some tips.

Needs

Will you need someone to keep your books and file taxes, or are you looking for more in depth service.  If you want a person or company that will assist in strategies, long-range planning, or legal associated issues like franchises, you need to screen for those skills.  You may also want to consider an accountant that has experience with the particular type of industry or service you deal in.

Credentials

There are different designations for accountancy.

• Chartered Accountants (CA) whose skill sets include startup through bankruptcy.

• Certified Management Accountants (CMA) who have advanced management skills.

• Certified General Accountants (CGA) who have a broader range of expertise.

Each of these categories has specific educational requirements and experience.  Think about what your needs are and will be and then choose appropriately.

Cost

Fees are usually an hourly rate.  Find out what those charges cover and what they don’t.  Ask about minimum charges or for calls outside of regular business hours.  Bring along tax returns and any other paperwork the accountant might need to review in order to determine what the cost will be.  Understand as much as you can to avoid a surprise when you see their invoice.

Personality

Make sure that your personalities don’t clash.  You should feel as though you are treated with respect and your opinion matters.  Read online reviews and evaluate the pros and cons of the statements.  If you are ultraconservative but your accountant keeps recommending aggressive approaches, especially without enough data to back it up, you will come away from each meeting discouraged.

References

Ask for the names of other clients that you can speak with.  Professional associations can provide information on any complaints or actions.  Talk with other business owners for recommendations and find out why this particular accountant is preferable over someone else. 

Accessibility

Find out how often the accountant expects to meet with you and a general idea of the agenda at each encounter.  If it is a solo accountant, they may or may not have availability when you need them.

Experience

Understand their background, especially whether or not this person has owned their own business.  If they have real world experience, it may be advantageous to you in the long run.  

Technology

Be sure they keep up with technologic advances in the accounting programs they use as well as digital and offsite storage.  Will they be able to respond to a quick turn around request for information from a funding source or potential customer?  Are their systems secure or will you need to be concerned about hacking?

Choosing an accounting partner is not always easy.  It will take some research as well as having a strong knowledge of your personal and business requirements.  Try to take as much time as you need to find the best fit.  It will pay off in the long run.

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

- The Capex Team

Proposal Request

Ways to Save on Taxes in 2021

Somehow it seems that April 30 comes faster every year.  Of course, that is the day Canadian tax returns are due.  Besides RRSP, TFSA, and RESP, there are some legitimate ways to reduce the amount of tax. 

Deductions

• RRSP – In addition to being a great way to save for retirement, these contributions reduce the amount of taxable income.  Under the current tax laws, you are entitled to contribute to your RRSP in the first two months of the calendar year and still apply that deduction to last year’s return that you file on or before April 30.

• Child Care – Generally child care expenses are a deduction for the parent with the lower net income and there are limits.  However, many overnight camps and summer day camps are eligible for this deduction as well.

• Moving Expenses – If you took a new job, or attended an educational program, look into deducting expenses for:

  • Temporary accommodations and meals

  • Vehicle expenses

  • Utility reconnections and disconnections

  • Title transfer expenses for a new home purchase

• Other – Consider whether you are eligible to claim other items like union or professional dues, support payments, and others.

Credits

Note that there are two different types of credits:  refundable and non-refundable.  Refundable tax credit like GST means you can take the credit even if you have no tax to pay.  Non-refundable means you can only take this credit if you have tax owing on the return.

• Basic Personal Amount – For the taxes filed in 2021 the amount is $12,069.  That means that your annual reported income is reduced $12,069 and that reduced amount is what the tax is calculated on.

• Spousal Support – You can claim the support you provide your spouse or common-law partner, reduced by the net income of that spouse or partner.

• Age – If you are 65 or older at the end of the taxable year, you are entitled to a tax credit.  If the person claiming the tax credit can’t use the entire amount, the remainder can be transferred to the spouse.

• Other – There are additional credits available depending on your circumstances, including adoption expenses, education costs, medical, donations, and others. 

Overlooked Items

There are some deductions and credits that are commonly overlooked.  See if any of these apply to you:

·       Brokerage fees

·       Capital losses

·       Caregiver amount for those who had a parent move in for care

·       Child Disability

·       Charitable donations

There are other deductions and credits that are frequently overlooked as well.  Be sure to check all the criteria and restrictions to see if you qualify and for how much.

To be sure you get all the tax breaks you are entitled to, you can use one of the software products on the market.  Or, you can hire an accounting firm.  If your situation is complex, like owning your own business, you definitely need to visit with a qualified accountant who can not only complete your taxes, but advise on other strategies for the coming year.

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

- The Capex Team

Proposal Request

Ways a CPA Can Help Save Your Small Business Money

As a small business owner, you are probably aware that it will be necessary to file an annual business income tax return.  In order to successfully take advantage of all the legitimate deductions, it is recommended that you engage the services of a qualified CPA.

Knowing which deductions to apply and how to capitalize on them you first need to know what category your business is:  sole proprietorship, partnership, or incorporated.  Once the CPA understands the structure of your business, he or she will be able to properly prepare your T1 and possibly a T2.

Home-based Canadian businesses can capitalize on the deductions for home maintenance and home ownership.  A CPA will be quite familiar with all the rules that govern those issues.  He or she will be able to tell you whether or not you are able to consider that a business expense and how best to apply the maximum amount to defray a portion of any tax you may owe.  

There are other Canadian deductions to consider:

• Capital Cost Allowance (CCA) – This is a deduction for equipment that is depreciable.  First you need to understand what is depreciable like computers and what is not like land.  There are almost 20 different items that can be considered for depreciation and a CPA will know which are applicable and which are not.

• Registered Retirement Savings Plans (RRSP) – These are only appropriate for sole proprietorships or partnerships.  There are limits to the amount that will qualify as a deduction.  Your CPA can also advise on how to structure and time your RRSP contributions so that you will have the best tax advantage.

• Employee Gifts – There are very specific rules about what is fully deductible and what is considered a near-cash gift.  The details of these gifts become highly important when trying to claim deductions on a business tax return.  Your CPA will understand the nuances and be able to guide you in advance about what to give and how to give it.  If you have already been kind enough to give a gift to an employee, the CPA will know how much, if any, can be declared on your return.  This is tricky.

Obviously, all of this requires detailed and specific knowledge of the regulations governing business tax returns, which is the expertise of a CPA.  It also means you will be freed from the tedious task of preparing the return and hours of research to know what you are entitled to and what is not allowed.  It also provides a greater security for the accuracy of your returns avoiding an audit. 

A CPA can also give you advice about incorporation benefits and disadvantages, if you are not already incorporated.  They can provide suggestions about what to do in your next fiscal year to take better advantage of the deductions allowed.  Knowing which receipts and documents to keep and have ready and which are extraneous will also benefit you in the future.

In short, if you were on the fence about whether or not to use the services of a CPA for your business tax return, this information should help you decide.

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

- The Capex Team

Proposal Request

Can I Do My Own Accounting?

It is very important to realize the importance of bookkeeping, especially if you are a small business owner or entrepreneur.  First, good record keeping is necessary for you to accurately file your income tax return with the CRA.  It also lets you know:

• If you are making a profit

• Cash in, out, and on hand

• Changes to make like product lines or employees

• If you are growing, shrinking, or staying put

Bookkeeping is not especially difficult, particularly with the variety of applications and programs available.  But it is a task that many prefer to avoid or to outsource. 

Keeping your records up to date lets you know where you stand at any point in time.  It is a picture of the health of your company.  It will let you plan on how much money you will need for sales tax and income taxes, as well as how much you have to pay employees, order supplies, and overhead.  You can also see who owes you how much.  Good cash management means you know when you can make early payments to capitalize on discounts. 

Deposits are equally important to track.  Money comes into the business from sales, loans, and even your own personal savings.  Correctly allocating each deposit gives you an advantage at tax time and will help avoid paying taxes on money that came into the business not through generated income. 

If you do choose to do your own bookkeeping, there are some things to keep in mind.

• Separate accounts – Be sure to keep your personal accounts separate from business.  This includes checking and credit cards.  If you don’t it will become a nightmare at tax time or when you pursue outside financing.

• Transactions – You need to know how transactions are categorized.  This will let you take full advantage of tax deductions as well as pinpoint how the money is spent.

• Self realization – You know whether you enjoy working with numbers and the detail it takes to maintain a set of books.  Another issue is time.  Will you have sufficient hours in the day or week to keep up with the entries?  Will you procrastinate in favor of providing the product or service you are selling?  Saying yes to either of these last two questions will leave you in almost as difficult position as not keeping books at all.  Are you adept at learning the programs or apps available?

• Mistakes – Are you willing to take on the responsibility of mistakes due to distraction, misinformation. or simple lack of experience and knowledge?

So, at this point you have either decided that you are up to the task of keeping your own books, or are considering some help.  While it will be considerably less expensive to maintain your own records, hiring a CPA in Brampton or Mississauga

has definite advantages.  They also can provide valuable advice for planning and tax advantages.  Additionally they are available to help you make the best decisions regarding your business and how it interrelates to your personal finances.  

If you have any questions about this topic, or finances in general, we are happy to consult with you about your particular circumstances and how we can be of assistance.

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

- The Capex Team

Proposal Request

Financials You Need to Know so the Doors Stay Open for Your Business

As a small business owner there are probably a lot of things you didn’t realize you would need to know when venturing out on your own.  One of those is how to make sure you have enough funds to stay in business, either in slump times or when you are planning an expansion.  There are some common sense things you can do to help assure you have sufficient cash flow to pay your bills.  You need a budget.  If you are using a software program, it should be easier.  If not, go old school with a pencil and columns on a piece of papers.

Expenses
First you need to know how much it is costing you.  Sit down and write it out; don’t approximate.  That means you go through all the receipts and find out all your expenses.  Start with overhead.  Those are the costs that will go on whether you sell anything or not.  Usually they are rent, utilities, computer fees, salaries, insurance, etc.  Then list anything that is directly linked to your product or service.  Next list any other expenses.

See if there is anything you can cut.  Look at that last column of “other”.  There probably are no luxuries there but check anyway.  Can you negotiate a lower cost for the materials you need to do business, while maintaining a reasonable quality of product?  For example, if you were setting up a household budget, you would compare the prices of a loaf of bread and jars of peanut butter and jelly to pack a daily lunch versus the $10 super size fast food meals.  

Keeping down costs, especially in the beginning and during transitions, is a key component to your success.

Income
This is where you look at what you are making in sales.  If your business is in trouble, this is probably where you recognize that your price is not high enough to cover your expenses, or not enough to pay the salaries, or no profits.  

From this point you need to see if you can reasonably raise prices.  If your prices are set to make money as compared to what you pay for the goods, then there are two scenarios:  you need to attract more customers or diversify to sell similar items to existing customers.  A crafter who makes Christmas wreaths could expand into centrepieces.  If those work well, the crafter can expand to wedding table décor and market to small or mid-sized wedding planners.

Reports
Review the numbers every day.  Don’t let accounts receivables get away from you.  Make polite reminder calls.  If possible pay your bills in time to take advantage of discounts or at least avoid late charges.  

At the end of all of this you need to decide whether to try for an infusion of cash through a loan or an investor, or whether it is really worth the anguish to continue in this enterprise.  As difficult as it might be, it may be to your advantage to step out; digest all that you have learned, and then try again with better preparation and knowledge.

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

- The Capex Team

Proposal Request

2021 Accounting Checklist

At the end of each year or beginning of the next, there are tasks to be handled and they involve more than storing away the holiday decorations.  There are a number of things to consider.

Documentation for the Accountant 
If you have been diligent, all your bookkeeping is in order.  If not, now is the time to catch up.  Small business taxes are due three months after year end, so it is a good idea to have everything ready for your accountant to complete the T4 andT5s.  Be sure to include the last bank and credit card statements and invoices.  If the business has made investments, that should be included also.

Bank Statements 
Make sure your bank balances agree with your records.  Also account for any outstanding checks so that they will reconcile correctly.  

Receivables 
You should always have an eye to late receivables, but particularly now.  If you need to initiate collection or simply write off the amount, include that in your comments to your accountant.  You can reclaim HST on the unpaid invoice as a corporate tax deduction.

Payables 
Look at the payables with an eye to any appropriate expenses that can reduce your tax bill.  Are there any vendors you are not particularly pleased with?  Are there additional discounts to be negotiated?  It might be a good idea to simply ask for new bids from companies you haven’t worked with before.

Reports 
Run a complete set of your reports including balance sheet and income statement.  Compare them to previous years to see if there is anything that should be addressed.  Think about what changed and why.  Did you add a new product line or change your marketing technique?  If not, should you?

Inventory 
If you work in hard goods, it is a good idea to take inventory and value what is left.  If you work in a service, look at where your sales came from.  In either event, it is important to take stock of what is selling and what is lagging. 

Think 
It is a good time to reflect on the past year.  Look at the financials and see what has changed and whether it was what you expected.  Find out what worked and what may need a tweak or a major overhaul.  Were there peak periods that can be evened out or are you happy with the ebb and flow?  For the coming year, establish some goals.  Write them down.  It is found that written objectives are easier to achieve.  Just like new year’s resolutions, review them periodically to see if they are still valid and what decisions might be needed to improve.  Try to get a perspective on the big picture.  Plan for next year’s taxes.  

 If your to-do list includes finding an accountant, start shopping around.  If you don’t currently have someone, don’t hesitate to contact us.  One of our professional accountants in Brampton will be happy to discuss the services we offer to small business owners like you.

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

- The Capex Team

Proposal Request

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

Proposal Request

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

Proposal Request

 

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

Proposal Request

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

Proposal Request

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

Proposal Request