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Save money on your bookkeeping, Wonder Woman-style!

Wonder Woman Super Hero Vancouver

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.

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.

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 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.

The 12 Craziest Write-Offs of 2012

Crazy write-offs

Photo courtesy of moffoys

Homeroom proudly presents: The 12 Craziest Write-Offs of 2012: weird & wonderful things we’ve had receipts turned in for last year.

  1.  The first Crazy Write-Off: receipts came in for a beta, a Hamster & a Kitty. They’re cute yes, but not tax deductible.
  2. The 2nd Crazy Write-Off: receipts came in for 2 packs of diapers. DIAPERS?! Nope, sorry, can’t write off baby’s ‘leavings’.
  3. The 3rd Day of Crazy Write-Off: receipts came in for Marriage Counselling sessions. Hate your spouse? Revenue Canada cares not.
  4. The 4th Crazy Write-Off: receipts came in for  boxes of LEGO! Sorry, lego is fun, but definitely not a business expense.
  5. The 5th Crazy Write-Off: receipt came in for a stay at a ‘CLOTHING OPTIONAL’ RESORT!!! Not *that* kind of ‘business’.
  6. The 6th Crazy Write-Off: receipt came in for LEATHER CLEANING! White leather sofa? Fetishwear? Biker Gear?
  7. The 7th Crazy Write-Offs: receipt came in for U-Brew Beer Kegs!! Is your business driving you to drink?!
  8. The 8th Crazy Write-Off: receipts came in for purses, clothes & shoes!!!! Sorry ladies, unless it’s a UNIFORM, no dice.
  9. The 9th Day of Crazy Write-Offs: receipts came in for boxes of tampons! This would be AWESOME, wouldn’t it girls?!!  Dream on…
  10. The 10th Crazy Write-Off: receipts came in for packs of BIRTH CONTROL PILLS!!! Kudos for being baby-making responsible!
  11. The 11th Crazy Write-Off: receipts came in for MOVIE TICKET/CONCERT STUBS! Schmoozing customers/staff? Great! Yourself? No.
  12. The 12th Crazy Write-Off: receipts came in for ‘ADULT’ MOVIES!!! There’s ‘business’ and then there’s ‘BUSINESS’.