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Save money on your bookkeeping, Wonder Woman-style!

Wonder Woman Super Hero Vancouver

When you are juggling a small business or startup…. every penny counts.

Here are our top four tips for saving money on you  bookkeeping:

 

1. Organize your receipts

Keeping your receipts well organized can sometimes be difficult when you are busy running your business. As bookkeepers we are never surprised when a new client brings in bags or boxes of mangled receipts. However, if you are looking to make your bookkeeping as cost effective as possible then the easiest way to save money is to make sure your receipts are well organized so that the bookkeeper does not have to sort them for you.

In addition to sorting them, make sure they aren’t scrunched up into little balls. You may laugh but a lot of people do this and it takes a lot of time to un-scrunch them. Additionally scrunching them up can cause the ink to wear off which means that you are paying us to un-scrunch receipts that turn out to be blank pieces of paper.

Also if you want to claim the GST you paid on a meal as well as the tip (in addition to cutting down the amount of time we spend entering your data) make sure you staple together the original itemized restaurant bill to your credit/debit slip.

Sole Proprietors:

A common mistake a lot of first-timers make is arranging their receipts by month instead of by category.

The fastest way for your bookkeeper to enter your bills into Quickbooks is if they are sorted by category. If you want to go one step further and really limit the amount of time a bookkeeper spends on your file, organize your receipts by category AND company eg. Under transport put all your Translink receipts together.

Corporations:

If you are incorporated then you need to organize your receipts by payment method (eg. Visa account, cash, business savings account) rather than by category so that it makes it faster for your bookkeeper to enter your bills and reconcile your accounts.

2. Keep your receipts/documents in one place

Create a filing system for your receipts/ documents and utilize that system so that you can ensure all paperwork is easily accessible.

Keeping your receipts all over the place can result in two issues.

  1. You will lose some receipts. This means your reporting will be inaccurate and you may miss out on including significant write-offs in your tax return.
  2. You will need to keep contacting your bookkeeper to let them know about additional receipts you have found or to ask them to hunt down important documents for you. This means that you will utilize more of their time and your fees will increase.

3. Save your online receipts to a flash drive, or upload them to LedgerDocs

These days a lot of businesses send email receipts. Although you have the option to forward all of your email receipts to your bookkeeper we recommend that you download your invoices and save them onto a flash drive that you can submit with your paperwork. This saves your bookkeeper time as they do not have to sort through all of your emails, in turn saving you money.

It also means that if your email crashes you have all of your important documents saved elsewhere.

If you’re using LedgerDocs, snap pictures of your receipts and forward them to your unique email address in real time. We’ll take care of the rest! Contact us here if you are interested in signing up!

4. Don’t keep receipts you can’t claim

Know what you can and cannot claim and know your categories. For example: in most cases YOU CANNOT CLAIM CLOTHES as an expense unless they are branded with the company logo or required safety wear.

Additionally, you cannot claim haircuts, facials or any other kind of personal maintenance even if you are a TV personality or the face of your company.

Placing receipts into your file that you can’t claim just means that your bookkeeper spends extra time sorting through receipts, remember time is money.

 

Regardless of what state your bookkeeping is in we are happy to help you. That said, we always recommend that you consider these points because it not only helps you save money it keeps your bookkeeper happy and guarantees that you will be added to their secret list of favorite clients.

If you need help getting organized contact us today.

The truth and lies about GST/ HST

GST pinata

Launching a small business can feel like swinging blindly at a big, colourful, juicy piñata: a hit or a miss, but if it’s a strike, you get all the yummies and toys inside, along with some lame confetti and papier-mâché filler.

The lackluster, more boring, of the bunch become the key steps and financial decisions to starting a new business. But, without careful planning, you might as well be that person with their eyes shut, hopelessly flailing their stick into open air.

One of the things you need to consider is whether or not you need to charge Goods & Services Tax (GST).

We hope our handy tips and our clarification of some common myths helps you move forward in your small business planning.

 What is GST?

  • GST is an input tax: Meaning that the amount that you PAY to others reduces the amount that you OWE.

Why would you register for GST before making sales of $30,000?

  • If you are starting your small business and incurring high start-up expenses. You can get a refund on the GST that you pay on those expenses.

  • Some potential clients might not want to do business with you if you don’t have a GST number.

Why would you hold off from registering?

  • Keep your paperwork simple for as long as possible. If you register you will need to hire a bookkeeper to make sure your returns are correct, filed properly and on time.

  • When you bill your clients your total will appear cheaper than a competitor who charges GST.

 It’s July and I’ve just made sales of $30,000. What do I do now?

  • By law you have 3 months AFTER you have made sales of $30,000 to register and start charging GST.

  • You must include your GST number on all your invoices.

  • You must keep all records of GST charged and paid for 7 years

Here are four common myths about Goods and Services Tax:

Myth: Every small business must register for GST.

Fact: Every small business that has made GROSS SALES of $30,000 in a calendar year must register.

Myth: I am registered for GST but my sales are less than $30,000 so I do not need to charge my customers the tax.

Fact: If you are registered, then you are obligated by law to charge all of your customers GST.

Myth: GST and HST are two different taxes.

Fact: In fact they are the same tax being paid to the same agency (Canada Revenue Agency). The only difference is that in BC we now charge GST of 5%; before we charged HST of 12%.

Myth: My Business number is different from my GST number.

Fact: Your GST number is your Business number (9 digits) with the ending RT0001.

Self-Employment; The possible answer to your job search woes

Self-employment

Photo courtesy of David Martyn Hunt

In our current economic climate the chances of finding a job doing exactly what you are trained to do, or would like to do, can at times seem impossible. The market is competitive, wages are decreasing and quite often the battle to find the ideal position leaves you feeling deflated and pessimistic.

However, in my opinion it is not all doom and gloom!!

I believe that if you have a marketable skill, and you feel that you are disciplined enough to work from home (to keep your overhead low) you may just be able to create your dream job by going out on your own.

That’s what I did. Now I have 3 employees, 65 clients and enough work to keep me strapped to my computer even while on holiday! (Not that I am complaining)

Don’t get me wrong, starting your own business is not an easy solution but thankfully we are lucky enough to live in a country where the growth and development of small business is encouraged, making it a viable option.

So now that this blog post (which was Item number 433 on my to-do list) has compelled you to take the plunge towards self-employment, the next question I should answer is:

‘What do you actually need to do to get started?’

Here are Teya’s top 3 tips (say that 5 times fast)

  1. Get some memorable business cards printed (I recommend a thick card stock with rounded edges)
  2. Perfect your elevator pitch (describe what you do and your competitive advantage in 30s – 1 min)
  3. START NETWORKING.

How to grow your idea into a business

  • Make sure you tell all your friends and family what you are doing because they will be your first clients.
  • Be persistent and don’t give up hope.
  • When you get your first client, WOW them.
  • Don’t forget to ask for referrals.
  • Talk about your business (even if it isn’t really a business yet!) to EVERYONE you meet. You never know who can give you a huge break.

The best advice I received was from a local successful entrepreneur and Author, Steve Jagger. He suggests that as a new entrepreneur you should always ACT AS IF… you have a hugely successful company even if you are just starting and have no clients.

If you are confident no one will know the difference.

I will never forget the first networking event I went to, I was SUPER nervous and desperately wanted to make a lasting first impression.

I later discovered (through friendships that had formed as a result of my attendance to that event) that I had convinced everyone there that I was very experienced and had a viable company. The actual fact was that I had printed business cards from my computer the night before, and didn’t even have a single client.

I really do believe that the possibilities for success are endless. So long as you are prepared to work hard.

What you need to know about PST

PST calculator

On April 1st, 2013 BC eliminated HST and returned to PST, a retail sales tax that applies when a taxable good or service is acquired for personal or business use unless a specific exemption applies. GST will be 5% and PST tax rates will be:

  • General rate: 7% of the purchase or lease price.
  • Liquor: 10% of the purchase price.
  • Accommodation: 8% of the purchase price.
  • Vehicles: 7% – 12% of the purchase or lease price (including the surtax for passenger vehicles valued at $55,000 or more), or 7% – 12% of the fair market value if received as a gift.

 

What’s taxable and what’s not?

  • Retail sales tax on a taxable good or service acquired for personal or business use
  • Purchase or lease of new or used goods
  • Taxable goods brought, sent or delivered into BC for use here
  • Software, services related to most taxable goods
  • Accommodation, legal services, telecommunication services
  • The lease of tangible personal property (goods) in BC for personal or business use, unless a specific exemption applies.

All former exemptions will be re-implemented, including but not limited to:

  • All food for human consumption (e.g., basic groceries and prepared foods such as restaurant meals)
  • Bicycles
  • Dry cleaning and tailoring
  • Newspapers and magazines
  • Exemptions for business (e.g., purchase of goods for resale, eligible machinery and equipment).

PST does not apply to most services, so transportation services, personal services such as haircuts or massages and most professional services such as accounting or engineering services should not be cha.

Download a detailed list here: What’s taxable?

Reporting and Remitting

Any PST that you charge must be paid and reported to the government regardless of if you have collected it from your customer. You must remit all PST charged within a reporting period no later than the last day of the month following the reporting period. For example, if you are reporting for a period ending June 30, you must file your return and remit the PST charged in that period no later than July 31.

Your reporting frequency will be determined at the time of registration based on how much PST you are estimated to collect per reporting period on sales and leases in BC. Reporting periods may be monthly, quarterly, semi-annual or annual.

Tax Collected per Year

Filing Frequency Options

More than $12,000

Monthly only

$6,000 – $12,000

Monthly or Quarterly

$3,000 – $6,000

Quarterly or Semi-Annual

Less than $3,000

Quarterly, Semi-Annual or Annual

If the amount of PST you regularly collect changes, you will be notified by letter by the government and your reporting frequency may be adjusted.

How do I pay?

·   Online: You are able to file your PST return (including Nil returns), make payments, manage your accounts and more online.  eTaxBC, is intended to streamline business processes around reporting and remitting PST.

·   Internet Banking: Check with your financial institution to see if you can file your tax returns and make payments online through their website.

·   Mail: Send the remittance coupon, your payment and any required documentation to: The Director, Provincial Sales Tax, PO Box 9443 Stn Prov Govt, Victoria BC V8W 9W7

Commissions

Collectors who are registered as required are entitled to a commission for each reporting period in which they remit PST as required and on time. Collectors with more than one PST account may only claim commission on one of those accounts.

Tax Collectable

Commission

$22.00 or less

The tax collectable

$22.01 – $333.33

$22.00

More than $333.33

6.6% of tax collectable, to a maximum of $198.00

 

Retaining Books and Records

You must keep sufficient books and records to provide details of all the following:

  • all sales and leases (taxable and non-taxable)
  • all tax collected, remitted and commission taken
  • all purchases and leases for inventory and for your own use
  • all applicable supporting documentation to show why tax was not collected on taxable goods and services.

You must keep books, records and any documentation relating to your business for five years.

Need more information?

Toll free in Canada: 1.877.388.4440

Email: CTBTaxQuestions@gov.bc.ca

http://pstinbc.ca/