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Oh, snap! Submit your receipts electronically

Vancouver Bookkeeper(s), Tax Return Service Vancouver, Small Business Bookkeepers in Vancouver, LedgerDocs, receipts, bookkeeping, Quickbooks Online, QBO, Quickbooks

Got a receipt? Capture it. Send it. Leave the rest to us, your #1 bookkeeper!

It’s that time of the month. Remember the often cumbersome task of lugging bags of receipts to drop off your bookkeeping at the Homeroom office? The days of collecting paper are over.

We now have an option to submit your receipts electronically to us using the LedgerDocs app, while still getting regular accurate and timely reports.

Here’s how it works:

  1. Snap pictures of receipts and income invoices with your phone OR email them to your unique email address.
  2. Save yourself a trip to our office.

Keep in mind, you only need to get documents to the inbox and our bookkeeper will take it from there. LedgerDocs works great with QuickBooks Online (QBO). We’ll sync your LedgerDocs account and publish all your expenses and income to your QBO file for instant use.

You can even chuck the receipts once they are in LedgerDocs. Canada Revenue Agency (CRA) officially accepts PDFs as supporting documentation. We will provide you with a back up of ALL your receipts if you decide to move on down the road. Hey, bookkeeping just got WAY cooler.

Three ways to get your documents to LedgerDocs:

  1. Upload within LedgerDocs. Log in at www.ledgerdocs.com with your user ID and click on the green “upload to inbox” button.
  2. Use your cell phone (iPhone, Android, Blackberry, etc) by taking a photo and emailing it to the necessary email address. Download the LedgerDocs app on your phone for free.
  3. Forward attachments directly from your email (Gmail, Hotmail, Yahoo, etc) using your unique LedgerDocs email address, which we will provide.

Contact us here if you would like us to set this up for you.

Happy snapping!

 

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.

5 Items that are NOT business expenses

A lot of business owners are guilty of keeping receipts for items that cannot be claimed as a business expense. To save money on your bookkeeping, by limiting the amount of time your bookkeeper spends sorting through receipts, leave the following receipts out of your folder.

1. Clothes

You may also be required to wear a certain type of outfit to work on a regular basis such as a suit. However, unless you are buying specific safety gear or are required to wear a branded uniform any clothes you purchase are considered a PERSONAL NOT BUSINESS expense. This includes associated costs such as dry cleaning and laundry services.

I know this is a terrible reality for most of us in particular for all of the office workers out there. As much as we wish things were different (we too would like to get some money back for looking this good on a daily basis) the CRA just won’t budge on this one.

Until the day when we start a revolution by wearing burlap sacks in protest please refrain from sneaking your clothing purchase receipts into your bookkeeping folder.

2. Personal maintenance

When you are the face of your company or the company you work for it’s important to look the part. This can be expense we all know Botox, makeup and personal training isn’t cheap!!

That said the CRA wants you to be beautiful on your own dime. Clearly this faceless monster doesn’t understand the pressures of being a local celebrity.

Again until we find a way to make them understand how important looking and feeling good is when you are a business owner please keep these receipts out of your bookkeeping.

3. Groceries

Eating is expensive!!! It would be really nice to get some of that money back on your food consumption especially considering that majority of your eating takes place while working.

Twice a year you can throw a party and claim it as a business expense. Keep that in mind when gathering your receipts.

Anything more than that is just groceries for your family, you know it…we know it…and the CRA will know!!

 

4. Solo Meals

So you ordered Subway for one during your lunch time “business meeting”…hmmmm interesting. Unless you went Dutch, which we know you didn’t, you can’t claim single meals as a business expense without running the risk of having it rejected during an audit. In addition your three daily trips to Starbucks don’t count as business meetings.

The best way to protect yourself and prove that your “meeting” is legitimate, in the event of an audit, is to write the name of the person you were meeting on the meal receipt.

Rejection = Penalties and interest

5. Personal items, trips & gifts

Did you really purchase that tent for your business trip to Pemberton? We may accept this as true if you are a journalist who works for a local paper that rewards you with love not money, or more logically a tour guide. But when the average business owner adds this receipt to their folder the bookkeeper will automatically assume it is personal unless you make a note claiming why it is a business expense.

Tickets to Disneyland, ski passes, expensive artwork, adult toys and climbing the grouse grind to have lunch will also be filed by your bookkeeper under “I don’t think so” unless you write a convincing argument on your receipt in advance.

 

The main thing to know about bookkeepers is that we want to make sure your expenses are recorded correctly so that if you are audited you have nothing to worry about because all of your expenses are legitimate business expenses that would be approved by the CRA.

To find out more about how we can help you with your business or to determine if you have some expenses that are an exception to the rule contact us today.

How to start your own business in BC

tax_slider

Most people assume when taking the plunge into self-employment by starting their own small business that there are going to be a million forms to sign and government entities that need to be registered with before you are cleared by the CRA to begin working.

But that is not the case at all.

The following breakdown will hopefully clarify just how simple it is (from a tax perspective, because let’s be honest becoming successfully self-employed is no easy feat!!!) to get your new business tax ready in BC.

Trading under your personal name

The quickest way to get your business up and running is to trade under your own name (eg. Teya Mali trading as Teya Mali).

From the CRA’s perspective when you trade under your own name you can begin trading immediately and no business registration is necessary.

All the CRA cares about in this instance is that you are honest come tax time and declare all of your income and expenses correctly.

Trading Under A Business Name

Trading under a name other than your own isn’t quite as simple and does require some paperwork. However, it is still not as overwhelming as you may think.

You can have your business up and running in four easy steps.

  1. Firstly you need to register your business name. This can be done for a cost of $30 through the BC Registry One Stop BC service.
  2. Determine your business structure. Do you want to be a sole proprietor, partnership, or incorporation? (If you are a solo entrepreneur working from home, I would highly recommend that you start off as a sole proprietor to keep things simple. You can always incorporate later. There are MANY rules (that are governed by penalties) that you need to comply with once you become incorporated. So again, I recommend that you hold off until your business has expanded).You can register your sole proprietorship for $40 through the BC Registry One Stop BC service
  3. Determine if you need to charge sales tax. If you are selling retail products, you will need to register for PST. Homeroom can do this on your behalf or you can register yourself on the BC Government site.  (Please note: until you have incurred SALES of $30000 in a calendar year, you ARE NOT REQUIRED TO REGISTER FOR GST so save your money and wait)
  4. Apply for a business licence. The application fee is $50 with an annual fee that varies depending on your location.

Although getting your business set up correctly with the CRA is a relatively simple process you must remember that your paperwork doesn’t necessarily end there and that you still need to consider your insurance needs, budgets, inventory tracking, invoicing and of course bookkeeping.

We recommend checking out Small Business BC Website which is a great online resource with a lot of helpful information on how to start a small business.

Additionally we recommend that you begin keeping all of your business related receipts from the moment you decide to venture out on your own. Even if you haven’t started making sales, you can still write-off business expenses as you develop your idea . That said, you should note that you can only write of an expense in the year that it occurred, so make sure you talk to your bookkeeper in advance and plan the best time to make larger purchases.

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.