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Homeroom E-Return: “I am digitally illiterate. How does the e-signature work?”

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Forget that pen. Unplug that printer. Signing documents just got hella easier and funner. Let’s jump right in!

Now that you know how to securely submit your online tax documentation, how do you sign all the paper we email your way without turning on your printer?

Each year, we get more advanced and efficient with everything we do. This year, we will be using the user-friendly HelloSign app to send tax returns securely.

E-Signature Is The Way

The electronic signature allows you to sign your tax return draft from anywhere! The Canada Revenue Agency (CRA) accepts personalized electronic signatures. Save the paper err day, all day!

How does the e-signature work?

  1. Go to your inbox and open the email from Homeroom Team.
  2. Click on the button “Review & Sign.”
  3. Read the document carefully to ensure everything OK eg your address, full name, etc.
  4. Tap “Start” (top right) to begin signing.
  5. Click on the area on your screen that is highlighted with a tiny red arrow pointing down to begin to sign.
    1. Mobile Phone: Use tip of your finger to sign your name.
    2. Computer: Use your mouse to sign * Make sure you are using personalized signature NOT the typed-out version.
  6. Click FINISH (top right corner) when you are done.
  7. You will receive a copy via email. You can securely save your document online FREE with DocuSign.

If you experience any issues or get stuck along the way, give us a call at 604-739-9536.

Next week’s blog post will highlight the turnaround of filing your tax return!

 

Homeroom E-Return: “My tax return is too complex. How will I properly explain my situation?”

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Is your tricky tax situation keeping you in the dark?  | Photo by Alexas_Fotos via Pixabay

 

By now, you’re probably feeling a bit more keen to dip your toes into the world of online tax filing, and save yourself time and money!

But what about that extra self-employment income you earned mid-year after your messy divorce? Or that time during the fall when you took a 3-week contract at an office after quitting your full-time job at your kid’s school, right before you started working part-time as an actor?

Sure. Not every tax situation is clear-cut and on a snap-and-send basis, like the Homeroom E-Return requires. You might feel the need to explain your situation to us in-person.

Thing is, MOST of the time, clients presume their tax situation is more complicated than WE know it is. We’ve seen it all, and it is seldom THAT extra.

Do it up, and leave the rest to us, the pros! We know where to find you (and we mean that in the nicest, non-stalkerish, most helpful way possible!)

  1. Complete the intake form.
    1. This form is designed to ask ALL the important questions that will allow us to file your tax return.
      1. Eg: How many tax forms do you have, which year are you filing for, what is your marital status, are you self-employed, etc.
  2. We will review your form and send you instructions on how to submit your tax documentation.
  3. We will schedule a phone call or email you any questions we may have.
  4. We will send you a tax return draft to review.
  5. We will e-file your tax return when we receive your signed tax draft.
To encourage easy and safe tax filing, you will receive the best Homeroom rate when you request the Homeroom E-Return!
Next blog post will delve deep into the electronic signature that will make even the computer-illiterate want to e-sign!

Homeroom E-Return: “Is it secure to submit my tax docs online?”

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Look up at the bright sky dotted with tiny humans dangling off stringed balloons, and you might wonder why anyone would want to take such a beautifully vicious plunge to their death. Statistically, however, paragliding is as safe as driving.

And just like driving or if you are inclined, paragliding, submitting your personal tax documentation online has never been more secure or fast! Send us photos or scanned copies of your paperwork in a snap and know that a professional has got your back!

We will email you instructions on how to securely submit all your paperwork to our unique LedgerDocs email address (see waaay below).

Here’s a blurb from the LedgerDocs website on the security of the growing app:

LedgerDocs’ first priority is to ensure that your information remains safe. We have invested in innovative architectural engineering to provide maximum data durability and availability, while using cutting edge security features to take special care of your data.

  • LedgerDocs uses a 256-bit SSL encryption to protect any information that travels between your browser and LedgerDocs. This is the same encryption that banks use for online transactions.
  • All of your data is backed up regularly to multiple locations, ensuring that there is no data loss in the event of a natural disaster.
  • Users are able to easily grant and revoke access privileges to documents and files with one click

On the real real

  • Avoid losing paperwork
  • Send files from anywhere with Wi-Fi *no appointment or parking required
  • Feel like a professional is holding your hand the entire time *in a non-creepy way, of course!

How do I send my files?

  1. Scan your tax paperwork OR snap pictures of it
  2. Go to your personal email inbox and attach up to five files MAX
  3. If you’re feeling up to it, type us a message as you would ANY other email
  4. Send to our LedgerDocs email: homeroom@app.ledgerdocs.com
    1. Subject: [YOUR NAME] Tax return
    2. Email: Please find attached [NUMBER OF TAX SLIPS]
  5. Delete from your Sent Mail email folder (if you want to be extra safe)
  6. Your job is done! Now you have the rest of the day to do what makes YOU happy! Paragliding, perhaps?

So stop wasting time with in-person appointments and get your E-Return started today!

 

Easy, breezy, beautiful CRA online payment option

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“Bummer, I owe the CRA money! How do I pay them?”

Whether you have taxes owing for this year or you are a business owner who needs to settle a debt, handle it like a boss and pay the CRA to avoid late fees and any legal trouble.

Here are some ways you can pay the CRA, whether you are an individual or a business:

Online (Recommended)

The Canada Revenue Agency (CRA) is getting hip by being down with the online payment world!

The CRA prefers to receive electronic payments. It’s fast and easy! You can do it two ways:

  • Make a payment using your financial institution’s online banking services:

    • Sign in to your financial institution’s online banking service (RBC Royal BankTD Canada TrustVancity, etc). Bank with another financial institution? See the complete list of banks that can be used on the My Payment service here.
    • Under “Add a payee,” look for an option such as: CRA (revenue)-current year-tax return. CRA (revenue)-tax amount owing. CRA (revenue)-tax installment.
    • See other available options under “Add a payee” that are not listed above here.
    • Business: Specify payroll, GST, Corporate Tax
    • The account number for personal: SIN number
    • The account number for business: Business number

Offline payment methods:

Remeber these ones take more time so be sure to give yourself a head start if you want to avoid late payment penalties.

  • In-person (at the bank): You cannot walk into the bank to pay without the remittance voucher. The CRA does not mail them our anymore to encourage people to take advantage of their speedy, secure online payment option.
    • We can provide all our existing clients with a remittance voucher for their personal taxes which they need to take to their financial institution to pay.
  • Photocopy an old remittance voucher that you have, or call the CRA and request the mail one to you. Just know the process takes more than 10 business days, and that might cause you incur late penalties.
  • Mail a personal cheque: In the memo, indicate account number (SIN for personal or business number for self-employed).  Attach a letter to let CRA know what you are paying.

For information about your account balance and payments, including installments, see My Business Account.

When completing your return, you may calculate a balance owing on line 485Your balance is due no later than April 30, 2018. When a due date falls on a Saturday, a Sunday, or a holiday recognized by the CRA, your payment will be considered on time if the CRA receives it or it is postmarked on the next business day.

Generally, if this amount is $2 or less, you do not have to make a payment.

If you owe tax for this current tax year, and you file your return after the filing due date, the CRA will charge a late-filing penalty.

They start charging compound daily interest on any outstanding balance starting May 1, 2018, until you pay it in full.

If you can’t pay the full amount you owe, take action right away and call the CRA arrange a payment plan.

For a full list of payment options, go here.

Get in touch with us if you have any concerns here.

What happens if you miss the deadline to file your income tax return?

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Homeroom’s Alan Chau bursts into panic mode at the thought of a missed tax deadline…Lucky for him,  the Canada Revenue Agency (CRA) opened the option to file online on February 20, 2017. So, now he’s got some time in his hands…

 

Planning on forgetting to file your tax return on time?

The result of failing to file your personal income tax return by the April 30th deadline when there is a chance you owe the CRA money can best be revealed with the scary emoji: 

It is mostly scary financially as the penalty can cost a hefty coin. Basically, your wallet will get the worst of it.

Here’s what will happen:

  1. The CRA will charge you daily interest starting one day after your return is due on any unpaid amounts owing for the year. This includes any balance owing if the CRA reassess your return.
  2. The late-filing penalty is 5% of your balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months. If you were charged a late-filing penalty on a previous return eg: 2013, 2014, or 2015, your late-filing penalty for the current year may be 10% of your balance owing, plus 2% of your balance owing for each full month your return is late, to a maximum of 20 months. That’s double the trouble!
  3. Your goods and services tax/harmonized sales tax (GST/ HST), including any related provincial credits, Canada child benefit payments (including related provincial or territorial payments), and old age security benefit payments may be delayed or stopped.

Tax Tip

Even if you cannot pay your full balance owing on or before the deadline, you can avoid the late-filing penalty by filing your return on time.

Keep open and honest communication, and the CRA will be your BFF: agreeable, reasonable and understanding. But ignore or cheat them in any way and expect a pricey strike-back.

Self-employed Individuals

If you carried on a business during the tax year, your return has to be filed on or before June 15. However, if you have a balance owing for the year, you have to pay it on or before the April 30 deadline. We recommend that all sole proprietors have their tax returns ready to go for April 30 just to be safe.

Find out how to pay the CRA here.

Happy tax season!

Think before you cheat the Tax Lady!

Granny's mad

The Scary Tax Lady is watching……and she means business! 

 

Want to get freaked this Halloween season?

Google “tax audit”:

tax audit

Frightening indeed.

And it’s happening.

Extra tax auditors, tighter oversight, criminal investigations….

This year, The Canada Revenue Agency (CRA) is upping their game when it comes to catching the wicked tax dodgers, after recent reports revealed possible tax cheats and loopholes in the system, which certain offshore investors were also, apparently, tapping into.

Goosebumps-inducing, isn’t it?  Not if you report honestly come tax time.

The government is banking on catching the perps, which seem to have been slipping through the cracks. With a budget hike to bankroll tax hack crackdown , the CRA is already criminally investigating 20 cases of tax evasion and conducting 750 tax audits, according to Financial Post.

“The budget aims to recover $2.6 billion over five years through a pledge of $444.4 million to support the hiring of auditors and undertake investigations and verification of filings,” reported Business Vancouver.

The CRA crackdown:

The Canada Revenue Agency’s crackdown on tax fraud in the overheated real estate markets of Ontario and British Columbia is bearing fruit, with auditors recovering $240-million in unpaid taxes and $12.5-million in additional penalties over the past 18 months, new figures show.

The money is being recovered as auditors focus on several issues identified in a series of stories in The Globe and Mail, including property flipping, efforts to hide capital gains and avoid paying sales taxes, and false ownership statements. — The Globe and Mail

 

Need a trusty tax service to take care of your taxes? Get in touch with us here.

Stay on CRA’s good side, when it comes to proper tax filing because no one wants to be the receiver of THAT call……

 

 

 

 

 

Employee or Contractor: CRA checklist


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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?

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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.

Oh, snap! Submit your receipts electronically

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

It’s that time of the year again! Remember the olden days when you had the cumbersome task of lugging bags of receipts the Homeroom office for your bookkeeping? Well, the FUTURE IS HERE!!!

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. Download the LedgerDocs App and use it to snap pictures of receipts and income invoices with your phone OR scan your docs and email them to your unique email address.
  2. Save yourself a trip to our office and relax knowing the rest is being taken care of by your bookkeeper!

LedgerDocs integrates with QuickBooks Online (QBO) allowing us to publish all of your expenses and income to your QBO file instantly.

You can even throw away your receipts once they are in LedgerDocs. Canada Revenue Agency (CRA) officially accepts PDFs as supporting documentation.

We will also provide you with a back up of ALL your receipts if you decide to move on down the road.

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 to submit your photos or scans.
  2. Download the FREE app and use your cell phone (iPhone, Android, Blackberry, etc) to take pictures of and upload your receipts.
  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!

 

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.