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Save money on your bookkeeping, Wonder Woman-style!

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When you are juggling a small business or start up and your life…. 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 you file, organize your receipts by company eg. Translink.

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.

How to start your own business in BC

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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 honestly 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 at 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.  If you earn over $30,000 within a 12 month period (So not just the calendar year) you must register for GST. Until you have incurred SALES of $30000  you ARE NOT REQUIRED TO REGISTER FOR GST but can register by choice.
  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.

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/