Organizing for 2014 Tax Preparation

Income Tax T4 SlipWith 2014 disappearing behind us, it’s time to finish the year by completing your income tax return. Employers will have until the end of February to send out T4 slips. Most people have other receipts to go along with their T4’s including:

  • RRSP contributions
  • Employment Insurance
  • Social Assistance
  • Universal Child Care Benefit
  • Receipts related to medical & dental expenses
  • Receipts related to your children such as sports or camps
  • Charitable donations
  • Transportation Fees
  • Tuition Fees

Now is the time to become organized so when your T4 comes in the mail you will know where to put it! We recommend keeping an envelope marked “2014 Tax Information” beside where you open your mail. An envelope rather than a folder ensures nothing falls out or gets misplaced. You can also mark on the outside what you expect to get in the mail to ensure everything is received, then check it off as the mail arrives. It’s also a great place to keep notes as things occur to you. For example writing a note on the envelope to remind yourself that your child took swimming lessons last March and you need to find the receipt.

Other things to include in your envelope:

  • Your SIN (Social Identification Number) for yourself and spouse
  • Last years Notice of Assessment
  • If you made payments on taxes owing, receipts for those payments

Once you have everything together you can seal up the envelope and bring it with you to your accountants office.

Don’t forget you can still contribute to a RRSP prior to February 28th, 2015 and it will be recorded on your 2014 tax return. Depending on your situation, you can make a contribution in order to reduce your taxes owing.

If you own a business, start collecting the receipts you will need in order to file your return. Getting them into manageable shape will reduce the amount of time your accountant will need to sort everything out.

If you are new to Jim Walker’s office, please call (905) 272-4000 or email Jim@JamesWalker.ca to make an appointment to drop off your information. We look forward to hearing from you!

Personal Income Tax Service in Mississauga

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Posted in Personal Accounting, Tax Tips, Year End Planning

Why Hire An Accountant?

Hire a professional accountant in MississaugaThere are many reasons to hire an accountant for both personal or business purposes. From a business perspective it makes sense to hire a professional accountant as it is necessary for your business survival. As a business owner, if you simply take revenue into your bank account then when bills or expenses need to be paid just take the funds out you will never know if your business is doing well. If for no other reason, keeping accurate records will make it easier when tax time comes around.

Many owners of small businesses or freelancers choose to try and do their own accounting or bookkeeping. Unless you have a background in accounting it may not be the best plan. Things to consider when deciding on whether you should hire an accountant:

Time

How much time are you willing to spend on maintaining your accounting records? Well maintained records require regular updates. Deciding whether your time is better spent on your business or on your accounting needs will help you decide if you require an accountant.

Understanding

Do you understand basic accounting principles? Cash and accrual accounting are different methods of recognizing when revenue and expenses are accounted for. Do you know which one is best for your business? Will you receive the best tax advantages at the end of the year? Can you keep your accounts balanced? If you are struggling with any of these things, it may be best to bring in a professional who will make sure that your business is running smoothly.

Information Use

If you have dutifully kept track of your revenue and expenses and can provide detailed financial statements do you know how to use them to effectively to help your business prosper? Financial statements serve many purposes. Making use of the information that accurate and up to date accounting provides is important for setting a budget, predicting trends and setting goals. A professional accountant will be able to use your financial statements to help you determine where your business is headed.

Hiring a professional accountant has its advantages. One of the biggest benefits includes being prepared when tax time rolls around. An accountant will help you recognize problems before they have an impact on your business and will help you resolve them. They will be educated on current tax laws and will ensure you claim all deductions available.

Jim Walker has over 30 years of professional accounting experience. By hiring him you bring all of his experience to your business. Call (905) 272-4000 today to set up your free initial consultation.

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Posted in Business Growth, Entrepreneurs, Self Employed, Small Business Accounting, Start Ups, Year End Planning

A List of Deductable Business Expenses

Mississauga Accountant Business Income & ExpensesDuring the course of being in business, you will incur some business related expenses. For example you may decide to advertise on Google or Facebook, you pay rent if you have a physical location, there will be purchase orders for your product which will include a freight charge. Some expenses only allow a portion to be claimed. For example, only 50% of your meals expense may be claimed (under certain guidelines), but a long haul trucker is allowed 80%. All of these expenses are applied against your revenue to reduce the taxes you will have to pay. The only way you are allowed to claim any of the expenses is if you keep the receipts to verify your claim. You do not need to submit the receipts to Canada Revenue Agency (CRA) but you will need to keep them in a safe place in case you need to submit them.

Advertising

Deductible advertising expenses include but are not limited to newspaper, television, radio, billboards, digital including Google Ad Words and Facebook, plus a variety of other non-tradition advertising methods such as bus stops. Also included in advertising expenses are any amount you paid as a finders fee.

Bad Debt

This amount is money owed to you that you cannot collect. You can deduct bad debt if the account receivable is a bad debt during the taxation year and you had already included the receivable in income.

Business Tax, Fees, Licenses, Dues, Memberships and Subscriptions

During the course of being in business, you may have to pay an annual license fee or dues (for example to maintain your Real Estate license you must pay a fee to the licensing board). You cannot deduct club membership dues including initiation fees if the main purpose of the club is dining, recreation, or sporting  activities.

Delivery & Freight

You can deduct the cost of delivery, freight, and express incurred in the year that relates to your business. For example, if you have your product shipped from the supplier and there is a shipping charge, you may claim this charge as a deduction.

Insurance

If you have a restaurant or retail showroom you should carry commercial insurance. You can claim the insurance for any buildings, machinery and equipment that you use in your business. Life Insurance cannot be claimed as an expense unless the policy is collateral for a loan related to your business in which case you may be able to claim a portion.

Office Expenses

This expense is one that is sometimes misused as a catch-all for all office expenses. It should be used for things such as pens, paper, stamps, envelopes – that sort of thing. For things such as office chairs and desks or even computers, they should be claimed as Capital Items. For supplies that are used indirectly in your business (such as motor oil for a mechanic), they should be claimed as Supplies.

Supplies

These expenses are used indirectly to maintain your business. For example a cleaning person would have cleaning supplies, a dog groomer might have shampoo, or a mechanic might have engine oil.

Telephone & Utilities

You can deduct expenses for telephone and utilities, such as gas, oil, electricity, and water, if you incurred the expenses to earn income.

Travel

When you incur travel expenses to earn business and professional income, you may claim them as deductions. This includes but is not limited to public transportation fares, hotel accommodations and a portion of some meals.

Meals & Entertainment

Perhaps one of the most overused of business expenses, the portion that you may claim as a deduction is 50% (there are some exceptions to this rule). This also applies to meals and entertainment costs that are incurred when you travel to a convention for example. When you submit a meal expense receipt that has a kids meal on it, it will likely be disallowed. It is also important to note that some industries are more likely to incur meals & entertainment expenses than others. A retail showroom owner will have very few as compared to a real estate agent who may take potential clients out for dinner to get them to sign with him.

Entertainment expenses include but are not limited to tickets and entrance fees to an entertainment or sporting event, gratuities, cover charges, and room rentals such as for hospitality suites.

Download our FREE Business Expense Schedule to help you stay organized when tracking your expenses

It is very important to note that these expenses are guidelines only and what you are eligible to claim may be different. It is always best to speak with a professional about your financial matters. James Walker is always available to answer your questions. Please call (905) 272-4000 to schedule an appointment.

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Posted in Entrepreneurs, Self Employed, Small Business Accounting, Tax Tips

HST in Ontario: An Overview

Mississauga Accountant HST Remittance in OntarioHST (Harmonized Sales Tax) came into effect in Ontario on July 1, 2010 and is applied on most supplies of goods and services. The amount charged in Ontario is 13% which consists of 8% provincial portion and 5% federal portion.

There is a small supplier rule that states if your revenue from taxable supplies before expenses from all your business is less than $30,000 or less in the last year then you are not required to charge HST. This also means that you will not be able to claim any input credits. You can however choose to voluntarily submit HST, regardless of your revenue.

Input Tax Credits (ITC) are claimed by businesses that have registered for a business number and are collecting HST. You may recover the HST you paid on purchases and expenses for consumption, use or supply related to your business activities.

If you collect HST then you must remit the amount collected to Canada Revenue Agency (CRA). You may also claim Input Tax Credits (ITC) which are applied against the HST collected. Provided below is an example of how input credits are claimed against HST collected.

In this example ABC company has and annual revenue of $100,000. In total they collected $13,000 in HST. Their expenses for business were $67,000 and they paid out $8710 in HST. Barring any adjustments, the HST owing for the year would be $4290. This is of course a generalized calculation and your business situation may be different.

James Walker can help you navigate HST when it comes to your business. Call (905) 272-4000 to schedule an appointment.

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Posted in Entrepreneurs, Retail Store Owner Accounting, Self Employed, Small Business Accounting

A List of Deductible Vehicle Expenses

Chartered Professional Accountant Mississauga Vehicle ExpensesOne way to increase your small business profitability is to claim all of the deductions available to you. If you are using your motor vehicle for business purposes it is in your best interest to keep track of your expenses to claim as an expense on your tax return. You will need to keep all of your receipts for these expenses in case Canada Revenue Agency requests supporting documentation.

Keep in mind that your claimed expenses are pro-rated based on the percentage of kilometers driven for business purposes. This means that you will need some planning if you plan to claim any vehicle expenses – most importantly a log book to track your kilometers driven for business purposes.

Vehicle Information

You will need to know the make, model and year of your vehicle in order to claim any deductions. You will also be required to provide the total kilometers driven for the year as well as the total kilometers driven for business purposes. You should keep a log book to record the starting and ending kilometers for the year as well as all kilometers driven for business purposes. This should include the date, destination and reason for each trip. Travel between work and home is normally considered for personal use.

Fuel & Oil

You must keep all of your gas and oil receipts related to business purposes in order to claim this deduction. As well, if you decided to buy cigarettes or candy and it is listed on the same receipt, only the expenses relating to the vehicle should be included when adding up the receipts.

Insurance

This expense includes your vehicle insurance. When you drive your personal vehicle for business use you should also be insured for business driving.

Licence & Registration Fees

This might include your drivers license – for example a taxi driver would require it to be in business. It might also include any other fees involved in using your motor vehicle for business. For example a truck driver may have to pay a fee to an association in order to drive.

Repairs & Maintenance

Items that could be deducted under the repairs & maintenance category include but are not limited to normal wear and tear on the vehicle. For example a taxi driver may require brakes or oil changes more often.

Lease Payments vs Interest or Finance Charges

You may be able to claim a portion of your lease payments on your vehicle. If you own your vehicle and pay interest on a loan from the bank, this may also be deductible. It is important to note that if you change the vehicle you are driving you will require a copy of your purchase / sale agreement or a copy of the lease agreement.

Other Expenses

Depending on your line of work expenses such as parking, vehicle washes, vehicle rentals or 407 ETR expenses may be deductible.

Download our FREE Vehicle Expense Schedule to help you stay organized when tracking your expenses

It is very important to note that these expenses are guidelines only and what you are eligible to claim may be different. It is always best to speak with a professional about your financial matters. James Walker is always available to answer your questions. Please call (905) 272-4000 to schedule an appointment.

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Self-Employed Tax Tips

James Walker Chartered Professional Accountant in MississaugaIf you’re self-employed, you will be required to file a tax return which includes your income as well as your expenses. Depending on the type of business you own, you will be able to claim a variety of expenses to reduce your taxes owing.

James Walker will help you clarify the types of expenses you may deduct. A real estate agent for example will have different deductible expenses than restaurant owner will.

Develop a System: When you have a reliable system in place to record your business transactions you will be able to quickly put your hands on the information you need. When it comes to tax time everything will be organized and you won’t be looking for receipts from 6 months ago.

Keep records: It is imperative that self-employed people keep accurate records of their transactions. Keeping track of things like a one time payment, education costs, dues & fees, plus any other expenses that come up. Regularly maintaining your records will allow you to have an organized system for tax time.

Car Expenses: Self-employed people regularly use car expenses as a deduction on their taxes. You will need to accurately track your mileage plus keep receipts for gas, repairs and maintenance. Other types of vehicle deductions include insurance, 407 ETR bills, license renewal and even car washes. Click here to download our free Vehicle Expense Schedule to help you organize your expenses.

Chartered Accountant in Mississauga James Walker will help you organize your income & expenses and show you where you could use allowable deductions in order to reduce your taxes owing.

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Accountant vs Bookkeeper: Which one do you really need?

Accountant vs bookkeeperAs a business owner you understand your time is valuable.You need to be on top of everything from sales to marketing plus a wide variety of other activities such as web development, social media, prospecting. There are a number of reasons some business owners decide they will keep their books themselves – either they see it as an unnecessary expense, or as a job they should be able to perform (or train a staff member to perform). Both will lead to the same place. Often a business owner never finds the time to input the information, or the input is entered incorrectly which can lead to costly mistakes.

To be clear, bookkeepers and accountants have different functions. A bookkeeper will record daily inputs such as sales, purchases and expenses plus ensures bills are paid on time. Bookkeepers also ensure your business is ready at year end tax time. Accountants on the other hand will advise on budgeting, provide financial analysis, and prepare your year end tax returns.

So in answer to the question “Do I need a bookkeeper or an accountant?” the answer is probably both. Deciding to hire a bookkeeper either as an out sourced employee or in house will be decided based on the type and size of your business. Most business owners will find a qualified bookkeeper who will find and fix errors both big and small which will save money in the long run. Bookkeepers will look for duplicate expenses, make sure the bills are paid on time to avoid late fees, track purchases and expenses as well as sales, and will be able to give a financial big picture to help you make informed decisions when you take the information to an accountant.

Deciding to hire an accountant will ultimately relieve you of many stresses. You will find an accountant will show you where there is the potential for problems down the road, help you budget and plan to make big purchases or re-locate, advise on financial strategies, prepare financial statements, income tax returns, and help you grow your business.

By outsourcing these two jobs to qualified people, you as the business owner will have more time to concentrate on what you know and love – your business. Comment below to let us know if you have both a bookkeeper and an accountant, only one or neither as well as your thoughts on hiring them.

Jim Walker can help you with all of your accounting needs. Wondering how much help you really need? Call (905) 272-4000 to schedule your free initial consultation!

Posted in Business Growth, Business Management, Small Business Accounting, Start Ups, Tax Tips, Year End Planning

10 Reasons Why Jim Walker is Different

You wouldn’t buy the first house you see. You shop around for your electronics. It only makes sense that you want to hire an accountant who meets your business needs. As a business owner you want someone who understands what it means to be a business owner. Sitting at the dinner table on Saturday night, mind wandering to the upcoming week and how to get more customers to walk through your door. Will the road sign you put up work? When is my HST due? These thoughts have also gone through Jim’s head. That’s part of what makes him a better accountant than most.

  1. Chartered Professional Accountant James Walker has his practice located in Mississauga, Ontario. If your business is located in the western suburbs of Toronto (Mississauga, Oakville, Burlington, Brampton, Georgetown, Milton, etc), Jim’s offices are easier to get to than if you have to travel to Toronto. This means it will save you time – and time is money!
  2. You will actually get to meet with Jim Walker. When you come for your free initial consultation you will sit down with Jim to discuss your situation. This means you will get the full benefit of meeting with the actual accountant who will be doing the work for you. You will also receive the benefit of speaking with a qualified accountant who has experience in advising business owners.
  3. Jim is a phone call or email away. If he isn’t busy he can take your call to answer a quick question and will get back to you by email in a timely manner. It’s important to have good lines of communication with your accountant.
  4. Jim Walker has vast, hands on experience. He has worked with restaurant owners, retail shops of all kinds, a wide variety of real estate agents and contract workers. He has helped them through all kinds of situations and will bring that knowledge and experience to the table when speaking with you regarding your business.
  5. He has owned and operated more than one business. Jim owned a company that manufactured carpets before opening his accounting practice. This means that he understands how a business works – from the inside. He’s been there, right where you are right now.
  6. He has worked for a huge, multinational firm. When Jim graduated and received his CA designation, he worked for more than one accounting firm. He has dealt with hue companies and was able to implement the proper structures. Therefore no job is too big or too small!
  7. He has run a business out of his house. His wife works with him. Both of those things can be difficult at times. You will be able to speak with him about the pros and cons of these types of situations and you can count on him to have real life experience to draw on.
  8. It matters to him. He wants to see you succeed. As an entrepreneur himself, he gets a personal satisfaction when he sees a business that is flourishing. He will do everything in his power to help you on the path to success.
  9. Jim is trustworthy. You can count on him to do the right thing. He will never steer you in the wrong direction. That’s important because when you are seeking financial advice, you want to make sure that person won’t leave something important out (or omit anything). When it comes to things like proper accounting procedures, James Walker will do it right. The first time!
  10. He understands that things happen. Things like the economy, seasonality, problem workers, stress, divorce, new baby, life. Sometimes things slip out of your control. It’s happened to Jim too. He will understand – just talk to him.

Wondering if Jim Walker is the right accountant for you? Call (905) 272-4000 for your FREE initial consultation and find out.

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Posted in Retail Store Owner Accounting, Self Employed, Small Business Accounting, Start Ups

Should I Pay an Employee In Cash?

Licensed Public Accountant James Walker Retail Owner AccountingAs a small business owner it is sometimes tempting to want to pay a part time or sometime employee in cash. When you hire a shop girl to work 5 to 10 hours a week, it can seem like a big inconvenience to pay them by cheque with the proper source deductions calculated. So lets look at the pros and cons of this arrangement.

In this situation, a retail store owner has hired someone to work a few hours. They have been hired to do some cleaning in the showroom and some general office duties during the work week. The worker is making $11 per hour for a maximum of 10 hours per week. It may seem like an easy solution to just pull out $110 from your pocket to pay them at the end of the week. If you were to pay by cheque, you would need to deduct CPP, EI and income tax from the small amount of money they were going to take home. That might only leave them with $80 or so. Plus the time it takes to write the cheque, the possible cost associated with bank fees for writing the cheque, the accounting to record the payment, etc. There are many reasons why it’s just easier to pay cash.

The downside to this situation comes in 2 parts. The first is, as a business owner if you pull this cash out of your pocket (in a literal sense), you are essentially paying this person out of your after tax dollars. This means it is the same as paying them out of the money that was from your income. If you have a retail shop where there are cash transactions and you pull the cash out of the till, you are essentially doing the same thing. When you use petty cash to pay someone in this way, there isn’t any receipt or invoice to justify the cash that went out. So, you guessed it, the cash will be attributed to your income. Depending on your situation, you may be in a higher tax bracket than this part time employee. So you will pay more tax on this money than the employee would have if you had paid them by cheque.

It is possible to pay them in cash and record the transaction with a signed receipt from the business in order to issue the employee a T4A at the end of the year. In this case, they are still responsible for paying the taxes on their earned income. The transaction is not attributed to your income which means you won’t be pushed into a higher tax bracket. As a caution, there are strict rules on whether someone is self employed or an employee. This is something you should discuss with your accountant before making any payments.

Do you have part time or some time employees that you pay in cash? Do you pay everyone by cheque with all the proper deductions? Wondering which situation would best suit your needs? Call (905) 272-4000 to schedule a FREE consultation.

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Posted in Business Management, Entrepreneurs, Payroll, Retail Store Owner Accounting, Self Employed, Small Business Accounting

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