5 Bookkeeping Mistakes Every Small Business Owner Should Avoid

When you are a small business owner, you are a boss, a manager, and an employee. The lines between these positions are more blurred the younger the business is. But as the business grows, your bookkeeping responsibilities will grow as well.

You might also need to attract potential partners and hire full-time employees of your own, which means that it’s time to kick your marketing efforts up another notch. In the process, your bookkeeping may get neglected, and you may commit terrible mistakes that can put your business in peril. However, by being aware of the most common bookkeeping mistakes, you can avoid them even as you face a hectic schedule.

Here are five bookkeeping mistakes that you will have to avoid:

1. Don’t mix business funds with your personal money

While your business is technically your property, that doesn’t mean you can take $1,000 from your business funds to pay for your Croatian cruise. You need to talk to an accountant who can help you set up a bank account or credit card for your business that is separate from the personal bank account and the credit card you have. The reason for this is to make it easy for you to monitor which of your expenses are related to business and which ones are personal. At the same time, having separate bank accounts for business and personal money will help you determine the appropriate tax deductibles and possible savings.

2. Don’t forget to integrate your bookkeeping with the bank

Small business owners need to integrate their bookkeeping efforts with their bank data to make it easier for them to track cash flow. To do that, they need to use cloud accounting software that connects to their bank details online. With cloud accounting software, you considerably reduce the need for manual data entry that is prone to human error. This means you don’t have to record the time and amount of money you have withdrawn or received as the accounting software will automatically store and record the transaction the moment your bank data changes. The added advantage of cloud accounting software is that you can access your business data anywhere, anytime, for as long as you have a working internet connection.

3. Don’t use accounting data the wrong way

As you have read previously, accounting software can go a long way in easing the burden of monitoring your business finances off your shoulders. But whether it’s Quickbooks, Excel, or other accounting software, it’s the individual who will use them which ultimately defines how well it will perform. Thus, you need to study your accounting software’s instruction manual in-depth to prevent costly mistakes.

4. Don’t hire a bookkeeper who doesn’t understand you

Outsourcing bookkeeping work can help lighten your workload so that you focus on more critical business tasks. But before you outsource your bookkeeping work, you need to do some research to find a bookkeeper who not only has a grasp of basic accounting and bookkeeping concepts but has the expertise, knowledge, and experience that is related to your line of business. Ideally, the bookkeeper you would choose should specialize in your particular industry. In addition, they should be someone whom you can trust.

5. Don’t rush your bookkeeping tasks

While you may have been able to get by while procrastinating and cramming for tests, this is a definite no-no and a recipe for business disaster. For every day that you put off a simple bookkeeping task, it accumulates. Chances are that you will realize too late the gravity of your procrastination days before the looming tax deadline. There is an increased risk of making mistakes when you cram your tax returns, which makes you prone to penalties. If you think you really have no time to do your bookkeeping regularly, then you might want to talk to Taxvisors in downtown Toronto to see what you can do.

If you’re looking for a professional tax advisor, Taxvisors is your best option. Get in touch with us today and see how we can help.

4 Signs It’s Time to Hire a Bookkeeper

When you’re building your small business, it can be hard to know what tasks you can and should take on by yourself and which tasks you should outsource. Accounting and bookkeeping are common tasks that many small business owners, freelancers and entrepreneurs tackle on their own. Primarily, this is done as a cost-saving measure, however, it’s important to note, that poor accounting practices can end up costing a business even more in the long run than the cost of hiring a bookkeeper or accountant. So, how do you make the decision that is right for you and your business? Here are a few telltale signs that it is definitely time to hire a bookkeeper.

1. You’re Working 24/7

Perhaps the most common sign that it’s time to bring on help is that you’re working around the clock. Burnout is not good for you or your business and, as an entrepreneur, it’s important to know when to delegate tasks. Bookkeeping is an easy task to offload when you’re drowning in operational tasks.

2. You’re Not Making Use of the Latest Accounting Technology

The accounting and bookkeeping world has come a long way since the days of storing your receipts in a shoebox. The cloud has replaced the shoebox and new accounting technology can save you an incredible amount of time. This is especially true if a bookkeeper who has experience with software is in your corner!

3. You’re Not Spending Your Time on the Most Important Things

If you’re finding yourself spending all of your time on accounting and bookkeeping at the expense of other important areas of your business, it is definitely time to make some changes. It’s crucial to spend your time doing the things that only you can do and the things you do well.

4. You Don’t Have a Good Grasp of Your Numbers

Proper accounting practices are crucial to helping you understand exactly where your money is coming from and, perhaps more importantly, where it’s going. If you’re not sure exactly where you stand financially it is important to bring in extra help. This can help you make strategic decisions for your business.

If these four signs apply to you, it is probably a good time to start considering a bookkeeper. CONTACT TAXVISORS TODAY – we can get you set up with the right person for you and your business!

 

8 Signs That You Should Hire a Tax Advisor

The process of tax preparation is something that no one wants to go through, and yet it is such an essential part of the process. Proper tax preparation can make the filing process infinitely more smooth.  Depending on the nature of your business and your personal finances, you may or may not need extra help from an expert. To help you decide whether you need to hire a tax professional, let’s take a look at some common signs that it’s time for you to hire a tax advisor:

1. You Are a Business Owner

Most small business owners have limited knowledge when it comes to tax matters. This is why they are more likely to face tax issues that can put them out of business. With a qualified tax advisor or a certified public accountant, you can save a considerable amount of money and time. A tax expert will be able to identify deductions that can potentially reduce your tax bill as well as helping you develop a plan for next year.

2. You Recently Bought or Sold a Property

Real estate taxes can be a complicated matter to deal with. If you have recently purchased or sold a property, then you may want to consider seeking help from a tax professional. They will be able to help you get the most out of your property tax deductions. A tax specialist can also offer you guidance when claiming these expenses on your tax return as well.

3. You Have Several Investments

Investment accounts have their own unique tax implications. There are many types of accounts, from retirement to college savings accounts, each of which comes with their own unique tax rules. If you have multiple investment accounts, then it is highly recommended that you have a tax expert to guide you through the process.

4. You Went Through Significant Life Changes

When you are experiencing major life changes, there could be significant tax implications as well. For example, if you recently got married, had a child, bought a house, changed careers or went through a divorce, then you should consider consulting with a tax professional. They can help you ensure you get the best tax return possible and prevent any tax issues that may arise.

5. You Have Multiple Jobs

Multiple jobs can complicate things for you when it comes to taxes. If you have more than one job, you should make sure that you have all records of your income ready. It is also highly recommended that you seek help from a tax professional to ensure that you save enough from each paycheck to cover your income taxes in case they are not automatically deducted.

6. You Have Made a Charitable Donation

Donations to charitable organizations may be eligible for tax deductions. If you have made a donation to any nonprofit organization or a local church, make sure that you keep all the receipts and statements in case you are audited. A tax expert can help you specify what qualifies as a deductible.

7. You Have Trouble Itemizing Your Expenses

There are various expenses that you can itemize on your tax return, including charitable giving, and home mortgage interest payments. While itemizing can be a time-consuming process, it is also a great way to make sure that you do not end up overspending on taxes. A tax professional can navigate you through the process with ease.

8. You Are Not Sure What to Do Next

If you’ve hit a crossroads and are feeling stuck you in the middle of doing your own taxes this could be another sign that it’s time to hire some help. If you have no idea what you should to next, then you are better off contacting a professional who knows the tax code well. A tax advisor can make sure that you are doing everything right and help you get back on the right track.

The Bottom Line

Do not hesitate to seek help when you need one. It is better to invest in hiring a tax professional than end up losing money over tax mistakes. The best part is that the fees that you pay your tax advisor may even be deductible on next year’s tax return.

If you’re looking for a professional tax advisor, Taxvisors is your best option. Get in touch with us today and see how we can help.

 

Plan Ahead With Our Bookkeeping Services

Unless you’re a straggler – tax season is pretty much over! With only 12 days left before the Canada Revenue Agency (CRA) deadline to file, we’re hoping that by now you’ve crossed your ‘t’s, dotted your ‘i’s and paid any balance owed. If you were really early, you might even be treating yourself to something special with that tax return.

Time to sit back, relax and forget about your finances! Right? Wrong. If this tax season was a nightmare for you, now is the time to set yourself up for success next year. The clock has already run down on almost a third of the year and if you haven’t set up proper bookkeeping procedures for your business, you’re sure to run into more hurdles come next tax season. But, that’s not the only reason we think having a bookkeeper is so important. Let’s take a look at all the benefits your company will reap when you get a good handle on those books!

Proper Accounting Practices Help You Analyze Your Business & Make Strategic Decisions

Making major decisions for your small business can be stressful and overwhelming for even the most seasoned entrepreneurs. And, while planning for the future is not a perfect science, having access to correct figures can certainly help you make smart decisions. This is difficult to do when your books are a mess. Your business could be failing and you might not even know it. On the other hand, you could be far more profitable than you think you are. For very obvious reasons, it’s crucial to know where you stand financially.

A bookkeeper can produce financial statements regularly. These reports can help you ensure that you are budgeting correctly and that you have a strong grasp of your revenue streams and key expenses. When you’re fueled with this information, you can make the right decisions for you and your company!

Bookkeeping Ensures Organization & Peace Of Mind

As an entrepreneur or small business owner, you know that on any given day you are juggling a million different tasks. All the while, you have questions, concerns, ideas and worries rolling around in the back of your mind. Owning a business means you are always carrying around a heavy mental load. Don’t let your bookkeeping and accounting weigh you down too.

Accounting and bookkeeping are the perfect task to offload to someone else. As discussed above, this will not only fuel you with the information you need to make key decisions, but it will also free you up to do what you do best. Run your business!

Accurate Financial Records Make Tax Season A Breeze

Hiring a bookkeeper now, means saving yourself many headaches come tax season next year. Not only are you required by law to keep accurate records of all of your business revenue and expenses, but it also makes tax preparation significantly easier.  This will help you as you file your taxes and, importantly, will help you be prepared in the event that your business is audited by the CRA. Furthermore, with the help of a certified accountant, you can strategize on ways to reduce your tax burden throughout the year.  

As the saying goes, the early bird gets the worm. The sooner you start organizing your finances with the help of a bookkeeper or a certified accountant, the sooner you’ll reap all the rewards we discussed above.

While you might be celebrating the end of tax season, we recommend pausing the party for just a moment to CONTACT US about our bookkeeping services. Once you’ve got Taxvisors on board, you’ll have even more reasons to celebrate! What are you waiting for?!

 

CRA Deadlines: What You Need to Know

Tick tock everyone! The CRA deadline is fast approaching. Unless you are self-employed, your tax returns are due by April 30th.* Thinking about taxes can often be overwhelming and stress inducing so, understandably, it’s a topic many of us try to avoid. If you’re a little behind the game this year, here’s what you need to know!

What happens if I’m late filing my taxes?

The CRA charges compound daily interest starting May 1st on any taxes owing for 2018. Interest is charged on penalties starting the stay after the filing is due date. The interest rate changes every 3 months. A full break down of interest rates can be seen here.

What if I can’t pay my balance owing?

If you can’t pay your balance owing by April 30th, it is still wise to file your personal or business tax return on time. By doing so, you can avoid the late-filing penalty which is 5% of your 2018 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

What should I do if I’m feeling behind and overwhelmed?

We’re glad you asked. Every year, many of our clients leave their taxes to the last minute, so, you’re not alone. First, we recommend compiling your key documents such as T4s, tuition slips business receipts, public transit receipts etc …

Next, contact an accountant who can ensure that your taxes are filed quickly and correctly the first time. Now that we’re down to the wire it is best to leave this task to a certified professional accountant (CPA) or an enrolled agent.

If you’re scrambling, no need to stress! Contact Taxvisors today, with over 20 years of experience, we can help get your return filed on time. You’ll avoid any interest fees or penalties and can rest easy!


*The CRA tax deadline for self-employed persons is June 15th, however, any taxes owing must still be paid by April 30th.

 

Looking for a Great Tax Advisor in Canada?

When it comes time to sort out your taxes, you need to make sure that you’re ready to take care of the situation quickly and correctly. Keeping track of every related expense and receipt can feel like a full time job all on it’s own.  But, that’s only half the battle! You’ll also need to ensure that you file for all the available deductibles. That’s a lot to juggle – which is why it’s often the best idea to find a professional tax advisor. They can help you with your tax filing while providing you with all the key information you need to avoid any unnecessary fees and complications.

It’s important that you learn how to find the most suitable tax advisor for you. This will help you to ensure that you make the most of your money. With that said, here are our tips on how to find the best tax advisor:

Look for Enrolled Tax Agents Certification

You need to make sure that the tax advisor you’re working with is an expert at what they do, so look into each candidate’s professional credentials and portfolio to see their work experience. Enrolled tax agents are licensed by the federal government and approved by the CRA to represent the best interest of their clients. They offer their services to both general consumers and business tax services alike.

Certified Public Accounts (CPA)

While a certified public accountant (CPA) may not be as specialized when it comes to taxes as an enrolled agent, they are proficient enough when it comes to taxes to give you guidance and advice on tax issues. Becoming a CPA is no easy feat! A CPA has to complete a 150-hour course on top of being graduated from an accounting school or any related field to ensure their expertise on the domain of accounting. Having a CPA license suggests to an employer that the accountant has passed rigorous training and years of studying to become a professional in the field of finances.

The majority of tax advisors are either enrolled agents or CPAs, so these are the best credentials you can hope for when you’re assessing the capability of a tax advisor.

Finding a Tax Advisor

So, now that you know what credentials you’re looking for – let’s chat about where you can find an accountant that checks off all your boxes. You can find information on every government-licensed agent, like CPAs and enrolled agents, on official websites. So, that’s a great place to start! tYou can find an enrolled agent on the National Association of Enrolled Agent database and CPAs can be found on the Boards of Accountancy CPA database. In the accountant’s profile, you can see their work experience and the additional services they offer. If you’re looking for a tax advisor, consider starting your research with the help of these sites.

Why You Need a Tax Advisor

The CRA is one of the strictest federal organizations in Canada and you do not want to get on their bad side. They will make sure that they get their dues one way or the other. Your tax advisor can direct you around the tax issues and review the terms, conditions, and owed taxes to ensure that they are accurate. They can also summarize confusing tax code and help you gather evidence and documents for your tax returns. This is crucial for when you have one more source of income and own a business or property, as you can lose track of this information, which may result in late fees and other legal complications.

How to Get the Most Out of Your Tax Advisor

So, you’ve found the one! Now what? When you’re looking to get started with a tax advisor it’s important to have a clear idea of your goals as well as any tax issues that you need to address. This will be a huge time saver which is key for you as these professionals typically charge by the hour.

You will need to bring all of your financial statements and evidence of your tax payments so that the advisor will know precisely what they need to focus on. Make sure you learn as much as you can about the basics of deductibles and tax returns so that the tax advisor doesn’t have to waste their time explaining the definition of terms and giving other unnecessary information to you.

If you’re looking for a professional tax advisor, Taxvisors is your best option. Get in touch with us today and see how we can help.

Important Canadian Tax Deadlines for the 2019 Tax Season

Getting through tax season can be quite the journey. There are a variety of things to consider and a number of important deadlines to be aware of. We’ve created a list of the key dates you need to know!

T4 Deadline & Earlybird Opportunities

February is an important month for employers. They must provide their employees with their T4 slips by the last day of the month (February 28th).

It’s also a great time to start thinking about getting your taxes done early. The Canada Revenue Agency or the CRA, opens their electronic filing system, NETFILE, on February 18th. If you owe taxes it’s great to get a jump on your return so that it can be properly assessed before the payment deadline. If you don’t owe taxes, it’s still a good idea to file your taxes early. The sooner you file, the sooner that tax refund hits your bank account! That’s reason enough for us!

RRSP Contribution Deadline

The deadline for Registered Retirement Savings Plan or RRSP contributions for the 2018 tax season is March 1st, 2019. Whether you were contributing regularly to your RRSP throughout the year or not, now is a good time to check in and see where things stand. You can contribute 18% of your earned income to your RRSP so be sure to check in before March 1st to see if you have more room to contribute. From there, you can decide if additional contributions before the deadline are an option and if it’s the right decision for you! A registered accountant can help advise you on this if you’re uncertain.

Canadian Tax Filing Deadline

The deadline to file your taxes with the CRA is April 30th unless you are self-employed or you are the spouse of someone who is self-employed. In this case, your deadline is June 15th. However, regardless of whether or not you or your spouse is self-employed, if you owe the government taxes they must be paid by April 30th.

Late tax payments are subject to interest fees. Specifically, the CRA charges an extra 5% on top of the taxes you owe and an additional 1% for each late month. This is why it is smart to file early and pay on time!

If you’re overwhelmed with deadlines and information you’re not alone. Let Taxvisors help you get through tax season the right way – we’ll ensure your taxes are filed on time and that we find all the tax breaks you’re entitled to. Contact us today for a consultation!

Five Ways Canadian Small Business Owners Can Reduce Their Tax Liability

Owning a small business comes with no shortage of responsibilities and to do lists. Often, one of the most dreaded tasks is accounting. However, it is also one of the most important. Furthermore, proper accounting practices can not only help you head into tax season prepared but, can also provide you with valuable information to help reduce your tax liability and save money! Sounds like a win-win to us. Here are some strategies you can implement today to help lower your income tax.

1. Keep your receipts

Often, small business owners are advised to track all of their business expenses in preparation for tax season. Tracking is important, but, it’s not enough. You will also need to ensure that you have original documentation of your purchases. This means, you’ll need receipts – either paper or digital – to support your claim. Be sure to hold on to all original receipts related to expenses that help you do business. Whether it’s a coffee with a client or a new software subscription, hold on to it!

2. Contribute to your RRSP and TFSA

Contributing to your RRSP and TFSA are both great ways to reduce your income tax. RRSP contributions can even be saved and carried forward to the following year. Saving these contributions for a year where you are expecting a higher income can help you save even more.

If you have made the maximum allowable contribution to your RRSP, you can begin contributing to a TFSA or ‘Tax Free Savings Account’. TFSAs help shelter your income from taxes. Even better, both income and capital appreciation are tax free within the TFSA.

3. Donate to Charity

Donating to charity is a great way to give back but, it’s also an excellent way to help you earn tax credits. If you are looking to earn tax credits through your charitable donation, make sure that you are giving your donation to a registered Canadian charity. Donating to charities who are not registered, International charities as well as political parties will not earn you tax credits.

4. Claim your Capital Cost Allowance (CCA) at the Right Time

Small businesses must deduct the cost of depreciable property they’ve acquired over a period of years. This is done through the Capital Cost Allowance or CCA. It’s important to be aware that you are not required to claim the deduction in the year that the property was acquired.  You can use as much of the CCA claim as you would like to and carry forward the rest to the following year. It is wise to carry it over it you are expecting a larger income tax bill in the following year than the current year.

5. Hire a CPA

Of course, we would be remiss if we didn’t touch on this important topic. Business accounting and taxes can be complicated. It is an especially daunting task to handle while you are trying to operate all other aspects of your business. In addition, you may not be aware of all of the easy ways you could be saving on your tax bill. For these reasons, we recommend hiring a certified professional accountant and/or bookkeeper to assist you in preparing for tax season and filing your taxes.

If you’re feeling overwhelmed this tax season, contact us! With over 20 years of experience, we have the knowledge and expertise to help you get a handle on your business accounting and taxes!

 

5 Tips to Help Freelancers Prepare for Tax Season

Tax season can be a nightmare for freelancers and small business owners. But, with proper preparation and a little help, it doesn’t have to be so painful. Here are our tips to help you prepare for smooth sailing all the way through to this year’s tax deadline!

1. Track Your Expenses

The single most important thing you can do as a freelancer to help prepare yourself for tax season, is track, track, track and track some more. From income to expenses, to HST/GST that you charged and HST/GST that you paid, it’s all important information to have organized and at your fingertips prior to tax season.

There are many ways you can do this. Your first option is to track yourself. You can do this with an excel spreadsheet or accounting software. But, as your business grows it is worth considering hiring an accountant or bookkeeper.  This is a great way to ensure that tracking is done properly by a certified professional with experience. Ultimately, it helps make tax season a breeze.

2. Think Ahead

 Many freelancers get blindsided by income tax in their first year of business because they weren’t thinking ahead. Avoid this mistake by setting aside about 30% of your revenue into a savings account each month. This will help you slowly chip away at the income taxes you will likely owe come April instead of scrambling to pay them at the last minute.

3. File Your Taxes On Time

Speaking of tax season, don’t forget important deadlines. The standard Canadian tax deadline is April 30th. If you are self-employed the deadline to file your taxes without penalty is June 15th. Keep in mind, however, that you must ensure that you pay any taxes owing by April 30th. Make sure that you abide by these deadlines so you don’t end up paying interest or penalties on what you owe!

4. Invest!

Investing is a great choice for many reasons. Not only will it help you build up a nest egg but, it’s also an efficient way to lower your income tax bill! Income that you invest into an RRSP is sheltered from taxes. It’s a smart decision all around!

5. Hire A CPA.

As your business grows it is a good idea to look into hiring a certified professional accountant or CPA. They can help you discover tax breaks, credits and deductions you didn’t know you were eligible for. They can also help you identify what you can claim as an expense and what you cannot. Finally, they can help you keep everything organized and balanced.

 

There are lots of ways to ensure that tax season isn’t a nightmare for the self-employed. Of course, our favourite way is Taxvisors!

If you are looking for help with your personal and business taxes please contact us today!

 

Mississauga Personal Tax Preparation Checklist

Taxes are the lifeblood of the government and for this reason, they have become every citizen’s obligation. Taxes can be paid quarterly or annually, depending on which city you are from. However, whether or not interested in paying your taxes, you cannot avoid taxes themselves.

The worst case scenario you can fall in, in case you don’t pay your taxes, are ending in jail, paying huge penalties, or facing huge tax cases. Surely, you don’t want these things to happen. So if you are planning to pay your taxes this year, here is basic checklist of what you might need.

  1. Personal information – This includes your social security number, your original full name, and the full name of your spouse, beneficiaries, residence, birthdate and birth year, and status.
  2. Tax returns - Your personal tax will be computed according to your current income and also, your previous tax payments will also be assessed. Since your tax returns will prove that you have paid your tax liabilities, it is important that you also bring them with you.
  3. Information about other people who are in your tax return – This may include your childcare records, tax ID numbers, income information, and social security numbers. If your state requires that you need to fill a specific form, these information should also come in handy so the Mississauga personal tax preparation will be fast and easy.
  4. Education payment - If you have been enrolled in any educational plan, you may need to show your statement of account as proof of payment. Depending on your state, this could help you enjoy certain discounts. Pertinent forms from educational institutions such as form 1098-T is also important, along with tuition receipts, records of any scholarships, and other financial statements if you have taken up a student loan.

Personal Tax Deductions

There are many ways that you can get tax deduction or tax credits. For example, if you have a business and you are giving out 20% discount to seniors as part of government incentives, then you can reclaim it as tax credit later on. Other aspects where you can get a discount also include the following:

  1. You are involved in child tax credit payment or you have two to three dependents with you.
  2. You have made charitable donations or investment interest expense.
  3. You have spent money for medical and dental expenses.
  4. You may also get miscellaneous deductions for your unreimbursed employee expenses and union dues – this is applicable if you are an employee.

After Preparing a Tax Checklist

Before you create a checklist, you first need to know what type of taxes you are going to be paying. As we all know, taxes can differently apply to people. So here are some things that you should do.

  1. Organize your checklist pad in a file folder where you can immediately see it.
  2. As you the tax document, place them together with the checklist.
  3. Scratch off anything on the list as soon as you get them done.
  4. Add into the checklist anything that you have discovered as you go through the process.

Paying your Mississauga personal tax does not have to be so difficult. Now that you have this handy checklist with you, your task is going to be even more comfortable. .