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Fall back into bookkeeping mode with three tips from the Number Cruncher

back to school, bookkeepers, bookkeeping, catching up on bookkeeping, entrepreneurs, financial organization, personal finances, September, small business owners, Small Business Bookkeepers in Vancouver, Quickbooks, Ledgerdocks, Tax Return Service Vancouver, Vancouver Bookkeeper(s), Tax Return Service Vancouver, Spiderman

Summer weather is a slowly-fading memory. Your bookkeeping needs some TLC. Spidey senses tingling…..

Look at the pile of receipts grinning sheepishly from across the room. Stare super hard. Concentrate. Envision the end result of turning it into a neat, categorized little accordion file your bookkeeper will love you for, and focus. Still there? Leave it to us, your cool and keen Bookkeeping Super Heroes!

Slay your bookkeeping this fall (before the holiday craze kicks in November), and be ahead of the ball for tax season 2017.

Whether you’re a small business owner or an awesome human living your life, here are three tips on how to catch up and stay organized, from Homeroom’s very own super hero Allysia Lewis, the Number Cruncher:

Allysia-

  1. If you are NOT already utilizing the fabulous LedgerDocs to take care of all your receipts digitally and you feel like you’re living inside of a bill blowing booth, do this: Get a swag organizational folder. That is, anything to hold all your documents neatly together. Preferably, with separators/ pockets. The Number cruncher recommends you hit up Dollar Store, Staples, London Drugs or Walmart.
  2. Collect ALL your documents (expenses, sales, bank and credit card statements). Look HARD to ensure no scrunched up bill welcomes New Year 2017 in between your car seat. Your tax preparer will not want late receipts once your tax return is in progress or has been finalized.
    1. IMPORTANT: Small business owners: Separate your business expenses from your personal expenses. 
  3. Organize all your receipts by category: Meals. Utilities, Auto (Gas, Repairs, Parking), Office Expenses, etc.

We file tax returns for self-employed and employed individuals! We might have the power to revive even the sloppiest bookkeeping, file 12 years worth of tax returns, but you will save money by following the steps above, and help yourself stay up to date with your bookkeeping! The true power lies in you!

Contact us today here to learn more about our bookkeeping services, or request an e-return here.

7 ways the Liberals’ majority affects you

CRumD2EUsAAgUCjOut with the old, in with the new. Monday night’s unpredictable election results overwhelmingly proved that Canadians wanted change.

And change we will get. With the Liberals in power, there’ll be changes to the country’s economy and your personal finances.

Besides having a Prime Minister the rest of the world seems smitten by, here are some ways the new government will affect you:

  1. TFSA limit: The Liberals will likely change the annual contribution limit back to $5,500.
  2. Tax cuts and increases: Prime Minister-designate Justin Trudeau has pledged to give greater tax cuts to the middle class (those earning $44,700 to $89,401) and increase income taxes on higher earners (those earning over $200,000).
  3. Family affairs: The Liberals will get rid of the Family Tax Cut and replace it with the Universal Child Care Benefit that provides about an extra $2,500 per year for a typical family of four.
  4. Students: Grads won’t have to start paying back their student loans until they’re earning at least $25,000 per year.
  5. Seniors: The age of eligibility for Old Age Security will not be raised. The Liberals have also talked about increasing Canada Pension Plan benefits.
  6. Small business: The Liberals promised to reduce the small business tax rate from 11 per cent to nine per cent and to improve access to skilled labour. However, president of the Canadian Federation for Independent Business, Dan Kelly, has expressed concerns that payroll taxes will be raised in order to find increases to CPP.
  7. The economy: If the Liberals legalize recreational marijuana, the industry could turn into a $5-billion market. The infrastructure building sector will also see growth, as Trudeau pledged to spend $60 billion to update Canada’s roads, bridges, and railways.

3 ways to profit from your construction business

giphyRunning a construction business can be a daunting task with its own unique set of complexities, as many business owners struggle to make a profit once they’ve taken into account their fixed and variable costs.

Below are three ways to help raise that bottom line!

Fixed vs. Variable costs

Fixed costs are those that need to be paid, no matter if you’re getting jobs or not. These include payments such as auto, telephone, rent, and insurance. Make sure you’re fully aware of what your fixed costs are, as this will help when deciding if you should take a job or not (more on this below).

Variable costs, on the other hand, are directly related to income. A big variable is your Cost of Goods Sold (COGS). COGS are the direct costs associated with the production of goods sold including materials used and labour, but not distribution and sales cost.

In an ideal world, COGS should only be costing you 50% of your total income. You can work towards achieving this through marking up the cost of materials by about 10-15% in order to cover both their variable and fixed costs over the long-term.

Subcontractors vs. Payroll

Many construction business owners are reluctant to put workers on payroll and opt for subcontractors instead. Although it varies from company to company, it’s worth considering payroll. The price of subcontractors can add up, as many business owners end up absorbing the costs of WCB (if their subcontractors don’t have a number). Subcontractors have to pay their own taxes so tend to charge the busines owner a higher hourly rate.

However, putting employees on payroll also comes with its own set of taxes and additional charges (you’ll need to hire an accountant to take care of it).

Look at the bigger picture

Although it’s a hard decision to make, sometimes it’s better to turn down a job if it’s not worth it — the income barely covers the variable costs or you’re breaking even. In these situations, it’s wiser to use your energies towards finding a more profitable job.

If you look at your income and expenses on a month to month basis, rather than a job to job basis, it’s easier to see the bigger picture and make these decisions. It’s helpful to look beyond whether the money you’re making on a job covers the expenses for that particular job. Although you’re making a profit in that case, it doesn’t necessarily mean it’ll be enough of a profit to cover your fixed costs as well.

Check out a great example of a construction company’s P&L statement here. It should be noted that this particular business has three partners.

 

 

 

 

 

Refer a construction client, get a gift card

construction_blog‘Tis the season for construction! That’s right, October is construction and trades month at Homeroom, which means we’re turning our focus on YOU, owner of a construction business. The time is now to get those books organized.

Over the next few weeks, this blog will be filled with helpful tips pertaining to your unique and complicated industry. We’ll discuss the basics such as Cost of Goods Sold, inventory, and how to price your services to ensure you’re covering your bases. We’ll also break down the difference between an employee and contractor, and how to deal with payroll.

But wait, you’re not in the construction business, but know people who are, you say? We want to hear from you too! If you refer a prospective client in the construction or trades industry to us and they book an intake call in October, you get a $10 gift certificate to your favourite coffee spot. All they need to do is say who referred them during their intake call and we’ll get in touch with you.

So stop delaying and start getting organized!

 

 

 

Get your ship in order before tax season!

Vancouver Bookkeeper(s), Tax Return Service Vancouver, Small Business Bookkeepers in Vancouver, QuickBooks Online, QuickBooks, Jennie Moore,

Photo of Jennie Moore courtesy of TD Accounting Services

(Guest post by Ontario-based bookkeeper Jennie Moore)

Yes, for those of you who are candid like me, the title is a play on words!

And I’m sure you get the message: Organize your stuff before giving it to your income tax preparer. Let me guess, you vowed last April that you would get your books in order and be a good little taxpayer.

But you didn’t, right? I’m not going to shame you. You’re likely already feeling guilty. But now it’s time to report to Sergeant Jennie Moore. You are now entering Bookkeeping Boot Camp!

Are you up for the challenge? Grow up and take control. Follow these steps and your income tax preparer will become your new BFF.

  1. Day One: Collect all of your source documents (i.e., sales, expenses, and home office expenses, if applicable)
  2. Day Two: Start with your sales. Organize them by date. Total them and sign off on the tabulation page or spreadsheet to attest they are accurate.
  3. Day Three: Find every expense receipt. Every one! No more excuses. You are not allowed to give your tax preparer more receipts once your tax return is in progress or finalized. Take it seriously.
  4. Day Four: Organize by date and tabulate all of your home office expenses by expense category, like Utilities, Telephone, Office Supplies, Advertising, etc. If you aren’t sure if an expense is deductible, categorize it as “Unsure”. Be sure to include details.
  5. Day Five: Write a list of any changes in your personal life since your last tax return. Your tax preparer isn’t physic! He or she won’t know you had a new baby that keeps you up at night unless you say so. The list is endless. So be detailed: you never know, you might be entitled to a tax credit or deduction.
  6. Day Six: Realize that that was a lot of work! Think of ways to make it easier next year.
  7. Day Seven: Make an appointment to speak to your tax preparer or schedule a drop-off, but understand this is a busy time for him or her. Your tax preparer cares deeply about your personal bookkeeping story — as well as everyone else’s. Avoid drop-ins or multiple emails and calls. Organize your thoughts, document them, and forward a nice package with a lovely bow on it. You may find the turnaround time is much quicker.

Congratulations! You have survived Jennie’s boot camp.

Your challenge: Evaluate every bookkeeping transaction you do and find an easier way of doing it…automatically! Talk to the people in the know. We have the answers. The solutions may surprise you. Stop being afraid!

Now do 20 push ups.

Just kidding.

This post originally appeared on QBO Adventures. Jennie Moore is an Ontario-based bookkeeper. Find out more about her and check out some of her other posts on her blog.

Catch up on your bookkeeping NOW

Bookkeeping, Vancouver, Small Business
Boo. It’s a hard-knock life….when you’re WAY behind…..

Does it feel like there’s never enough time to get to your bookkeeping? With the business expanding, do you find bookkeeping moves lower and lower on your To-Do list until it’s relegated to that nagging voice in the back of your mind?

Worry no more; Homeroom’s got your back. Come see us this fall to get on track and organized for 2016. Let’s get to know each other over a bookkeeping intake call where you can tell us what you need and we’ll tell you about Homeroom. If you like what you hear, we’ll set up an in-person meeting with the Lady in Charge.

Having organized books is important and helps you avoid an audit or limits the pain of an audit if it happens — with clean books, the CRA are able to finish sooner. It also saves time when you file and gives you a clear picture of your business’ financials.

Professional bookkeepers make sure you aren’t missing anything and that you’re getting as many breaks as possible, while keeping you aware of your business’ overall financial health by sending profit and loss statements and balance sheets.

Let us focus on what we love — your books! — so you can focus on what you love — your business!

Homeroom New Client: Capture the Moment Media

CTM-New Client FeatureEvery month we’re going to be featuring a new Homeroom client, so that you can get to know some of our newest members.

This month’s New Client is Capture the Moment Media, founded by Mathew Collings and John Hilhorst. This fun group of film producers against cliches work in both Vancouver and Victoria. They’re passionate and find inspiration through collaborating with individuals, couples, and corporate clients with open minds and adventurous hearts.

Co-founder Mathew Collings talked to Homeroom about the team’s passions and vision for the business.

When did you open your business?

2012

What do you enjoy most about being a business owner?

The freedom! We love making films and telling stories. We have been doing it our entire lives! It’s rare to find a career that is also your passion. If you can do that and make it work, then you are well on your way to a happy life! It is really rewarding to put work you are truly proud of out into the world. Also, not having to work a 9-5  and being able to find more time for family and friends is such a huge bonus!

What motivated you to start your own business?

Both John and I started CTM Media because we wanted to make films we thought were important and we felt that this was the fastest, most creative way we could do that. It has been challenging, but so rewarding and so much fun!

What’s your vision for the business?

We want to have enough projects coming through to hire a few more passionate filmmakers so we are able to take on more exiting creative projects. Our goal is to continue to make films and live comfortable lives that fulfill us personally and professionally!

What do you like about the film medium?

We love the ability to create emotion in our films. That means making people laugh or cry or maybe even get up and take some action to make a change. Film is a powerful tool!

What advice do you have for future business owners?

You need guts, but you also need to take the time to understand the business side of your career. We are still working hard at figuring out how to spend our money wisely and make a profitable business. When we first started out we mainly just made videos and deposited the money we made into our account, but never really thought about all the different ways we can save money and also make more. Learning how to be good with your income is so important right from the outset. If you don’t figure that out off the hop, you’ll always be playing catch-up.

How do you achieve a work/life balance?

This is something we are always working hard at and it can be a struggle. When you love what you do you can sometimes do it too much and that can make it hard to take the time to spend with the people you care about. Running a business is hard and takes time. It is a huge commitment and can mean you have less time with family and friends. We try to be more organized and work hard to not say yes to everything if it means we will miss out on family time. We book vacations well in advance and try not to let anything get in the way of that. We also have an incredible team and communicate very well. This allows us to spread the workload and not take on all the heavily lifting alone.

Who could benefit from your services?

We always say, if you’re passionate about what you do and the people around you, then you have an interesting story to tell! We love working with anyone who loves life and lives every moment as it comes. Passion is the most important thing we look for when we work with anyone. Nothing looks better on film than people who have passion in their lives!

Connect with Capture the Moment on Twitter, Facebook, or Instagram.

Homeroom New Client: Green Earth Organics

Banner JPEGEvery month we’re going to be featuring a new Homeroom client, so that you can get to know some of our newest members.

This month’s New Client is Green Earth Organics. Green Earth Organics brings organic food right to your doorstep, making healthy eating convenient. The team at Green Earth brings in the best certified organic fruits and vegetables available, focusing on seasonal and local items. They post the new produce every Thursday at 6 p.m. on their website.

Green Earth’s president, Daniel Henry, talked to Homeroom about the origins of his business, finding that elusive work/life balance, and more.

When did you open your business?

I started Green Earth Organics out of my home in June 1998. With $200 and a credit card, I knocked on my neighbours’ doors to see if there was any interest in an organic grocery delivery service. The following week I had seven deliveries, the next week 19. Now, here I am 17 years later, delivering to hundreds of homes throughout the Lower Mainland.

 

What do you enjoy most about being a business owner?

I enjoy the challenge that being a business owner brings. I also enjoy being able to watch ideas I have for my business come to life.

 

What motivated you to start your own business?

Before starting GEO, I worked for an environmental group. I have always had an entrepreneurial side to my personality so I wanted to start a business that fed these two aspects of who I am.

 

How did you come up with the idea for your business?

I heard of a company in England doing something like this. I did a little homework and thought this is something I could get behind and a business that, at the end of the day, I’d be proud of. I’d like to see several Green Earth Organic locations throughout B.C. and possibly across Canada.

 

Why is promoting healthy eating important to you?

Eating healthy is one of the more important choices we can make in our life to live a long, healthy, and hopefully happy life. There are a lot of things in life that we can’t control, but we can control the food we put into our bodies.

 

What advice do you have for future business owners?

I think you need to be comfortable with a certain amount of risk. Hopefully you have done your homework and you have a viable business idea which will reduce this risk, but the reality is that it takes a lot of grit and hard work.

 

How do you achieve a work/life balance?

I spend as much time with my family as I can and I take at least two vacations with them every year. I make a point of having a coffee with my wife every morning before I head off to work and I make sure I spend quality time with my son every day. I also coach my son’s soccer team and play twice a week.

 

Who could benefit from your services?

Green Earth Organics is great for people who are busy, but want to eat healthy. On average, it only takes about seven minutes for our customers to do all of their shopping from the comforts of their home. That time saved is worth something and could be used to do something other than driving through traffic, finding parking, lining up in stores, and carrying heavy grocery items out to the car.

Connect with Green Earth on Twitter or Facebook.

Are lower taxes for small businesses a good idea or bad idea?

Why small businesses and economists differ in opinion

small business, entrepreneurs, taxes, tax breaks, budget 2015, federal budget, Tories, CanadaAlthough the federal budget was largely praised by the Canadian Federation of Independent Business (CFIB) and by small businesses themselves, not everyone is on board with what the Tories are proposing. Lowering the small business tax rate is great for owners and entrepreneurs, but remains a sticky point amongst economists.

So, why the difference in opinion?

The reduction of the tax rate is something the CFIB and independent businesses have been lobbying for for several years. The reasoning behind the government’s decision is to help small business owners retain more earnings that can in turn be used to reinvest and create jobs. Over the four-year period, owners are expected to save about $2.7 billion in taxes. Almost 700,000 small businesses will benefit.

However, economists looking at the bigger picture and the greater Canadian economy have a problem with this reasoning. According to UBC economics professor Kevin Milligan, many people set up small businesses to avoid taxation on a personal level, meaning not many jobs will actually be created.

The new tax rate also increases the tax gap between large and small companies, providing an incentive for businesses to stay under the $500,000 profit threshold, which is bad for the overall economy, says Jock Finlayson, chief economist with the Business Council of British Columbia.

Regardless, small businesses still need support, but Milligan would rather see a simplification of their administrative burden, and imports and exports, or a reduction of tariffs.

The next post in the series looks at how the budget affects female entrepreneurs.

 

 

Personal finances and the federal budget

How the budget affects your personal finances and family

federal budget, Family Tax Cut, TFSA, budget 2015, ToriesWhen announced in April, the Tories’ latest budget was lauded for how it helped small business owners. As any entrepreneur knows, not only do you have to take care of the business side, you need to keep your personal finances organized as well.

Luckily, we’ve got your back. Let’s review the three major changes to personal finances: Tax-Free Savings Account contribution limit, the Family Tax Cut and other measures, and the Registered Retirement Income Fund.

Tax-Free Savings Accounts (TFSAs)

The new TFSA contribution limit is now $10,000, up from the original $5,000. So, who benefits from this?

  • Those who use the full limit will save $3,708 in taxes over 10 years. However, the limit will no longer increase with inflation, meaning any further changes have to be legislated.
  • The change could make TFSAs more desirable than RRSPs for lower income households and retirees.
  • Wealthier Canadians can now move non-registered savings into TFSAs.
  • The middle income bracket (earning $50,000) won’t be affected as much, but it allows their financial advisors more creativity when planning.

The new limit is estimated to cost the government $1.1 billion in taxes by 2020.

The Family Tax Cut (FTC) and other personal touches

The Family Tax Cut is for two-parent families with at least one child under the age of 18 living at home. It’s based on income-splitting, but does not actually include the travel of of income from one partner to the other. One spouse receives a credit (up to $2,000) based on the tax they would have saved if income had travelled from the higher earner to the lower. So, who benefits from this?

  • The greater disparity of income between the earners, the greater the savings. If one spouse earns $100,000, and the other isn’t earning anything, they benefit the most. The higher earner “transfers” up to $50,000 (the limit) to the other. Both individuals are taxed in the $50,000 income bracket, which equals a lower rate and higher savings.
  • Other scenarios still benefit such as that between a $100,000-earner and a $75,000-earner who would save roughly $484; or between a $50,000-earner and a $40,000-earner who would save about $277.
  • Those in the same income bracket would not benefit from this. It only works if you’re shifting income to a lower tax bracket.

The FTC has been met with its share of controversy, as critics say it benefits the wealthy and only 15 per cent of households. Others believe it will lead to a small drain on the workforce, giving incentive for lower-income workers to stop working, particularly women.

Other family measures include expanding the Universal Child Care Benefit and raising the Child Care Expense Deduction limit.

Seniors and RRIFs

The budget proposes to reduce the minimum withdrawal rates on RRIFs for seniors 71 to 94 years old. This takes into account the longer life expectancy of Canadians living today. Seniors and disabled people can also use the Home Accessibility Tax Credit (HATC) to pay for renovations that make their homes safer and more accessible.

If you’d like to learn more about the changes, PwC outlines all the changes of the 2015 federal budget.