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Save money on your bookkeeping, Wonder Woman-style!

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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.

Employee or Contractor: CRA checklist


Vancouver Bookkeeper(s), Tax Return Service Vancouver, Small Business Bookkeepers in Vancouver, CRA, Canada Revenue Agency, employment, employee, contractor, long weekend

Something to chew on over the long weekend……

Looking to hire additional help for your expanding business? Last week, we outlined key questions to ask yourself before expanding your sales force.

We noted that deciding between hiring a contractor or an employee is not as simple as figuring out your personal preference.  The Canadian Revenue Agency (CRA) has a very comprehensive checklist that they use to determine if you should be paying your new hire as an employee or if it is OK to consider them a contractor.

This week, we are going over the checklist presented by the CRA  in more detail so that you can make sure you are paying people under the correct category to avoid nasty fines.

Tip: If you own a store or run an office and you don’t want to hire a contractor through a temporary  employment agency then you need to hire an employee and pay the applicable payroll taxes.

Determine who has control

Do you want to have control over the worker? Will you determine when, how and where the work will be completed? Do you expect them to complete the work personally?

According the CRA ‘It is the right of the payer to exercise control that is relevant, NOT whether the payer actually exercises this right’ so basically, if you have the option in any way, shape or form to control the employee’s time and how they complete the work then they are not considered a contractor.

Tools & Equipment

Who provides the tools and the equipment to complete the job?

If you provide your new hire with the tools and equipment they need to complete the job and are responsible for all repairs to that equipment then you need to hire an employee.

Subcontracting Work or Hiring an Assistant

Can the person who is working for you independently hire an assistant or subcontract out the work you have asked them to do?

 If the answer is no, then as you may be assuming by now, you have yourself an employee.

Financial Risk

 Will the worker be financially liable if they do not fulfill the contract? Does the worker actively market themselves? Does the worker perform a substantial amount of the work from their own workspace? Are they responsible for paying their own employees?

If you answered YES to these questions then you may be able to categorize your worker as a sub-contractor, if you answered NO then you guess it, you need to pay them as an employee.

Responsibility for Investment and Management

Does the worker have any capital invested in their business and an established business presence?

If they do then you are pretty safe hiring them as a contractor so long as the also meet majority of the above criteria.

Opportunity for Profit

Can the worker realize a profit or incur a loss? Is the worker paid a flat fee and incurs any expenses as a loss?

If the answer is NO then you need to hire the worker as an employee.

In the end if you are uncertain about your relationship with your new hire or you can’t distinctively answer majority of these questions with a YES or NO response (because the status of your relationship is unclear) then it is best to contact the CRA and get a ruling before you proceed.

This will save you a lot of grey stress hairs, and costs in the long term.

#ThursdayThoughts: Employee or Contractor?

CRA, Vancouver Bookkeeper(s), Tax Return Service Vancouver, Small Business Bookkeepers in Vancouver, subcontractor, contractor, employee

Tear. It’s been a year. Your small business is growing before your eyes. You stare at your Profit and Loss statement for the hundredth time like a kid who’s been fervently measuring their height against the wall fixedly checks in on their progress, and your eyes fill with water. You really made it.

Your email  inbox is flooded with fan mail. It’s wonderful and scary. You want to respond to all of them, even the creepy ones, you want to be Superman/Wonder Woman/the Hulk combined, deliver on your promise of top-notch service but you need help.

You can finally afford it, but who do you hire: an employee or a contractor?

We recommend that before you hire anyone as an employee you start them out as a contractor for a trial period. This way you can test them out and make sure they work well with you, are reliable and will not steal business from you before committing to a long-term agreement.

Once the initial trial period is over, ask yourself the following questions to give some clarity when trying to determine the best way to proceed with your expansion:

What is the nature of the project?

Will you need to control the time of those who help you and the sequence in which they complete tasks?

  • Yes- Then you need an employee
  • No- Then you can consider a contractor

Are you supplying all of the equipment?

  • Yes- Then you need an employee
  • No- Then you can consider a contractor

Do you need a very specific task completed?

  • Specialized tasks are often completed by contractors however if it is an ongoing specialized task then you may want to consider hiring an employee.

How long will I be this busy?

Do you have a higher workload because you have taken on a short term, labour intensive contract?

  • Yes- Then you can hire a contractor
  • No- Then you should consider hiring an employee

Financial responsibility

Will the payment of the person you hire depend on you receiving payment for the overall contract?

  • Yes- Then you can hire a contractor
  • No- Then you should hire an employee

Training

Do you plan on providing training?

  • Yes- Then you should hire an employee
  • No- Then you can hire a contractor as they should already be trained.

What are the Financial differences

If you hire an employee

  • You must match your employee’s CPP which is 5% of their gross earnings.
  • You must pay 1.4 times the EI amount that the employee pays.
  • You must remit taxes on behalf of the employee.
  • You must supply your employee with the equipment necessary to complete the job.

If you hire a contractor

  • They are responsible for paying their own CPP and taxes.
  • They supply their own equipment.
  • You cannot fire them without paying out the contract, they also cannot quit without finishing the contract.

As attractive as it may appear to hire a contractor over an employee you must make sure that your contractor is considered a contractor under the rules set out by the Canada Revenue Agency (CRA) or you risk experiencing heavy fines.

Stayed tuned for next week’s post where we will discuss the CRA employee or contractor checklist in more detail.

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.

Top 5 Social Media Tips

1. Add Share buttons

One of the biggest mistakes many people make is not having social media share buttons on their website.

When you are writing a blog, or posting valuable information the easier you make it for your audience to share your posts on their social media the more chances you have of people seeing and sharing your information.

Depending on which blogging platform you use or who developed your website adding social media share buttons can be as simple as clicking a button or installing a plugin.

2. Find a balance

 

Currently Wikipedia lists 200 networks in their list of major active social networking websites. So it is understandable that many business owners become overwhelmed by the whole concept of social media marketing.

Determining which networks you should use is dependent on several factors including:

  1. Where your target audience can be found.

  2. How much time you have to dedicate to social media marketing.

  3. What type of product or service you are providing.

My advice to you as a small business owner is to start by picking no more than three relevant social networks and get to know them well before trying to expand. .

3. Know your voice

The tone and language you use when talking to your mother is more than likely going to be different to the tone and language you use when you are talking to your best friend.

You may miss out some swear words, you may avoid revealing your true opinion and you more than likely will do your best to maintain a certain image (the kind of image that would make your mother proud)

Majority of the time you naturally change the way you present yourself to a person depending on the situation and your relationship with them.

However, your online personality is different because your reach is so broad you quite often you have no idea who is viewing your posts.

You need to determine how you want the world to view your business and you.

Are you all business or are you funny? Are you an expert in your field or do you connect people with experts? What are the interests of your business? etc.

Once you have your online personality figured out it will be easier for you to set out social media guidelines for your staff, determine who to follow and plan your posts.

4. create quality content

 

The internet is essentially an ocean of content.

You can have the equivalent of the Red Sea in content but if it is boring, poorly written or useless information nobody is going to care, nobody will share it and nobody will stay on your site.

You need to make sure that when you write blog posts you consider your audience’s needs, answer their questions and write well.

This may seem like some harsh advice but you need to keep it in mind. Just because you wrote essay’s in high school that Mrs McDonald marked as an A+ doesn’t mean that you are going to create quality blog content or more importantly searchable blog content.

The best way to ensure you aren’t slowly driving your readers away or killing them with boredom, due to poor content, is to hire a professional writer. If this isn’t an option then make sure you have a variety of people look over your post and provide feedback before you put it on the internet.

5. Don’t become self-involved

 

The biggest mistake a lot of small business owners make when embarking on social media promotion is that they become self-involved.

If all of your posts are about your business and the products you sell then you are going to drive people away.

You need to add value to your viewers lives by providing them with quality content, by asking them questions and by hearing their questions and concerns.

The best rule to follow when posting is the 80/20 Rule, where only 20% of the content you post is self- promoting.

While we are on the subject of self-promotion, I should mention that for help with your social media and communications you can contact us at Homeroom Small Business Solutions. We will make sure that you always have your best foot forward when communicating with your stake holders 🙂

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.