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Tax Tips For BC Yoga Studios

It’s safe to assume that Vancouverites LOVE their Yoga. There is no shortage of studios in this city and a most of the time they are filled to the brim with people gaining strength and learning to control their breath. Even though we have a large community of Yoga lovers in the city you can’t ignore the fact that competition is fierce and if you want to remain in the game you have to stay innovative and manage your business well.

Here are our top tips for staying zen and remaining profitable

Outsource Your Payroll  

I know that it seems like we are trying to trick you because we are a bookkeeping company but we can confidently say even if we were in the jump rope industry this would be our advice.

Many studios make the mistake of getting the reception team to take care of duties such as payroll and bookkeeping. Your reception teams number one focus should be providing exceptional customer service so that your customers have a great experience.

Constant distractions and inexperience can lead to costly mistakes by creating the ideal environment for data entry errors. By outsourcing your payroll to a reputable provider you can ensure that you are deducting the correct amounts from your employees AND remitting the correct amounts to the government.

Reputable providers take responsibility for any errors and therefore are much more thorough with their entries. They also know the tax laws inside and out, protecting you from unnecessary penalties.

 

Ensure Your Sales Are Recorded Correctly

This may seem like an obvious simple step but you would be surprised how often businesses set up their sales software and tax amounts incorrectly. Ensure that all your sales (from all sources) are recorded in Mindbody (or whatever software you are using) correctly. Have a professional double check your set up to ensure that you are charging the correct taxes and that the money that goes into your bank is properly recorded as income.

The last thing you want to do is discover after several months of taking payments that you aren’t charging your clients correctly or recording your payments effectively. This can lead to significant losses, especially if you end up having to pay additional taxes from your own pocket.

Pay Your Taxes On Time

One of the easiest ways to avoid unnecessary expenses is to pay your bills on time, taxes included. Ensure that all your PST/GST returns and payroll taxes are filed and paid on time to avoid late filing penalties. If you find deadlines difficult to manage in-house then hire a professional bookkeeper to manage this element of your business. The CRA won’t tell you if you’re early or have overpaid but they will be quick to seriously penalize you for being late.

Save Your Pennies

Businesses tend to ebb and flow. Make sure you have a clear understanding of your fixed costs and create and maintain a monthly cash flow budget so that you can avoid stress during slower periods.

In addition to offering your services create passive income when possible, rent out your space to other professionals and community groups during your down times to maintain your income.

During our time offering bookkeeping services to Yoga studios around Vancouver, we have seen all the common mistakes that Yoga studios make and the great ideas that work. If you have a yoga business and need help with your bookkeeping don’t hesitate to contact us today.

Canada Day: Stat holiday pay. Are you eligible?

Vancouver Bookkeeper(s), Quickbooks, stat holiday pay, stat pay, holiday pay, Tax Return Service Vancouver, Small Business Bookkeepers in Vancouver, Canada Day, Happy Canada Day

And it smells groovy….

Fireworks, road trips, bubbles, smiles and fun. The long weekend is almost upon us with Canada Day celebrations at every corner.

So before you lock up the office to celebrate Canada’s big 150th this long weekend let’s figure out if you are eligible for statutory holiday pay.

In B.C., an employee is eligible if they’ve been employed for 30 calendar days before the stat holiday and have worked or earned wages on 15 of those 30 days. So if your employee, Susie, began work on June 1st and has worked 15 days since June 1st, she gets paid for Canada Day, whether she works on Canada Day or not.

Eligibility is determined by days worked, rather than hours, meaning it applies to both full-time and part-time employees, although the 15-day stipulation rules out most part-time employees.

At Homeroom, if we’re taking care of your payroll, it’s up to you to tell us which employees are eligible or not. This policy might vary from bookkeeper to bookkeeper, so make sure you know!

If you’re taking care of it yourself, here’s how you’d figure out Susie’s stat pay for Canada Day. Take the total hours she worked in the 30 days before the stat holiday and divide it by the number of days worked, then multiply by her rate of pay. Let’s say Susie worked 60 hours in 16 days and earns $25 per hour, she would be paid $93.75 on Canada Day (60/16 x 25 = 93.75).

Now let’s say that Susie is a keener and she agrees to work on Canada Day. Eligible employees are paid time-and-a-half for the first 12 hours on a stat holiday. This is in addition to the stat pay that we calculated in the previous paragraph.

However, all this changes if your employee worked less than 15 days since June 1st. In that case, they’re not eligible for stat holiday pay and if they work a stat holiday, they’re paid as if it were a regular work day.

In B.C., there are 10 stat holidays: New Years Day, Family Day, Good Friday, Victoria Day, Canada Day, B.C. Day, Labour Day, Thanksgiving Day, Remembrance Day, and Christmas Day. As an employer, you can choose to give more, such as, Easter Monday or Boxing Day, and can work out a custom agreement with your employees for these days.

Incorporation Series: How do I pay myself if I’m incorporated?

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Balling! When your wallet fat from all that cheddar…..

 

You got 99 problems and your incorporated small business ain’t one? Great. Now it is time to pay yourself. Because you can.  Unlike sole proprietors, owners of a corporation no longer have to claim all of the income from the business as personal income.

“How do I pay myself if I’m incorporated”

You can pay yourself in a variety of ways.

1. Salary

You can add yourself to the company payroll and receive a T4.

This is a more expensive option as the company will have to pay all required payroll taxes on your behalf. Owners are exempt from EI but must pay CPP like other employees.

However, choosing this option will allow you to accumulate more room in your RRSP’s which you can utilize to save on personal taxes once you are making the big bucks.

Additionally if you are the lower income earner and need to deduct child care expenses from your taxable income you will need to be pay yourself with a salary.

2. Dividends

You can declare the money you have taken from the company as a dividend.

To do this you will need to get your bookkeeper or accountant to figure out how much money you took from the business throughout the financial  year and issue you with a T5 from the corporation.

Your personal tax rate will be lower than if you take a salary.

Important Note

As tempting as it may be to pay  yourself as a contractor WE DO NOT RECOMMEND THIS OPTION.

Anytime the CRA feels they are missing out on receiving taxes they feel they are entitled to ( which in this case would be payroll taxes)  they will, put quite simply, come after you!

For more information about the penalties for incorrect employee classification check out our blog post Employee VS Contractor – CRA Penalties for incorrect worker classification

In the end we recommend that you talk to your bookkeeper or accountant before you decide how you are going to pay yourself so that you can choose an option that is the most tax effective based on your income requirements.

If you are considering becoming incorporated and would like to discuss your options face-to-face with Teya our business consultant and tax expert you can make an appointment by calling us directly on  604-739-9536  or by requesting an appointment through our contact us page.

5 common bookkeeping mistakes

Bookkeeping mistakes

Photograph courtesy of Sam Beckwith

1. Ignoring CRA correspondence

Ignoring the brown envelopes from the CRA won’t make them disappear, and chances are that it might not be as bad as you think.

Having someone who is used to reading these letters can ease your mind by deciphering what needs to be done. From experience, being pro-active and keeping in contact will keep you out of trouble, even if you don’t have the money to pay right away.

2. Procrastinating with your bookkeeping

How good would you feel if your books were up to date and you knew how your business was doing on a regular basis?

Having your receipts pile up creates clutter in your office and your mind. The longer you wait, the less likely you are to remember specifics about your income and expenses. Get it done and save yourself headaches.

3. Not paying employer portion of payroll liabilities

Most new business owners don’t know that as an employer, you need to match CPP and EI that is withheld on the employee’s paycheques.

These amounts can add up quickly, and when your T4’s are filed, you will get a bill for the employer portion which could cripple your business. The payroll division of CRA tends to be the most severe and quickest to hand out penalties. Hand over your payroll to a professional.

4. Annual HST filers being surprised at how much they owe

Did you know that one year’s worth of HST could be $10,000 or more depending on your business?

Setting up an HST savings account is a great way to help you budget for the annual payment. If you work with a bookkeeper, they can tell you how much you would owe each month so that you will be prepared. Alternatively, switching to filing quarterly is another option. 5. Self employed person’s obligation to pay CPP Did you know that all self employed individuals are obligated to pay 9.9% CPP (Canada Pension Plan) on all net earnings over $3500? Many self employed people do not earn enough to pay income tax, however they still owe CPP at tax time, and are unable to pay on time. Avoid unpleasant surprises and plan ahead.

5. Self employed person’s obligation to pay CPP

Did you know that all self employed individuals are obligated to pay 9.9% CPP (Canada Pension Plan) on all net earnings over $3500?

Many self employed people do not earn enough to pay income tax, however they still owe CPP at tax time, and are unable to pay on time. Avoid unpleasant surprises and plan ahead.