Simple Steps to Start Organizing Your Business Finances

In Canada, the tax filing deadline for self-employed individuals and their spouse is June 15 (but taxes payable are due April 30th).   The biggest reason I get for clients deferring to the last minute to file (or filing late) is the lack of organization of their receipts.  Here are some tips to get you organized and tracking your finances regularly:
1 – Choose how you’re going to track your financial transactions (ledger book, spreadsheet, MINT, Money Tracker, WAVE accounting, Quickbooks, SAGE or other bookkeeping software) – I personally use a combination of WAVE (for personal), Quickbooks (for my business) and Excel (for cash flow planning)
2 – Depending on the method of tracking, download an app to your phone to scan receipts (I have WAVE Receipts for my personal expenses and HUBDOC for business receipts that links to QB)
3 – Make a date with yourself every single week, for an hour, to scan your receipts and update your finances, balance your checkbook if you will.

4 – Keep receipts and invoices organized either in electronic folders by transaction type, stapled/matched to your credit card/bank statement or in paper format in a tabbed binder.

If you follow these 4 steps alone, even if you don’t understand the numbers, at least everything will be complete an organized for your accountant come tax time, and you won’t have to wait for the last week of the filing deadline, nor incur costly late-filing penalties due to disorganization. Hey, you may even file early and knock one more thing off your list to stress about!

If you need help getting organized with your finances, I can help or connect you with someone else who can.  Send me an email Linda@visionspire.ca
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[author] [author_image timthumb=’on’]http://54.82.103.175/wp-content/uploads/2017/12/IMG_0012-resize-square.jpg[/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist, Business Planning Consultant and Money Mindfulness Coach. Her mission is to eliminate the stress and anxiety you experience around money and taxes, by empowering you with the know-how and mindsets to improve your business success and financial wellness, so you can have more harmony, joy and abundance in your life. [/author_info] [/author]

Get Unstressed – Organization tips to get you ready to file your taxes

I hear it all the time – people STRESS about their taxes and getting their taxes done.  Here are some tips to get you ready for your 2017 tax returns and reduce your tax preparer fees, as well as reduce your stress levels, knowing you’re prepared:

1 – Gather all your tax slips in one folder (T4’s, T5’s, T3’s, other T-slips, RRSP contributions, donation receipts, medical receipts.  Your T-slips should all be available to you by February 28th, except for T3’s and T5013’s which can take a few weeks longer (but by March 31st).

2 – Group like slips together

3 – If you have a lot of investments, keep a list of your accounts and account numbers, and check your T5 and T3 slips against your accounts to see what’s missing

4 – Group medical receipts by patient

5 – Group donations to the same organization together

6 – Gather details of any investment dispositions, including real estate, into a spreadsheet.  Include details of the historical cost and other transactions affecting your cost base.

7 – If you are a sole-proprietor or have rental income, use accounting software to capture income and expenses details for each of your business and rental properties (separate books and records for each business or property).  Hire a qualified bookkeeper to do your bookkeeping for you (freeing your time to spend on higher-level business matters). At the very least, use a spreadsheet to track your financial transactions.

8 – Don’t delay – start the process early.  The sooner you get your information to your tax preparer, the less stressful it will be for both of you.  Tax preparers would much rather get your returns done in March than scramble to meet the deadlines in the last final week.   If you’re getting a refund, wouldn’t you much rather receive that sooner than later?  And if you owe, wouldn’t you like to have peace of mind knowing how much you owe and that you still have time to make that tax payment (due April 30th), rather than waiting until the last minute.

9 – A caveat to #8 – it’s more efficient (and less costly) to get your complete tax information package to your tax preparer at the same time.  Sending bits and pieces in dribs and drabs will only add processing and review time to the process, which could result in additional billings by your tax preparer.  Having said that, don’t hold up if you’re just waiting for a couple of slips or receipts.  Just note what you are missing with as much detail as you can (for example, if you’re missing an RRSP contribution slip, note the amount you contributed and date of contribution).

You must have adequate and reliable records to support your tax filings.  Here are some helpful links on keeping records.

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/keeping-records.html

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic78-10r5/books-records-retention-destruction.html

Need help?  Send me an email (Linda@visionspire.ca), and I’d be happy to answer your questions.

 

[author] [author_image timthumb=’on’]http://54.82.103.175/wp-content/uploads/2017/12/IMG_0012-resize-square.jpg[/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money Mindfulness Coach. With over 20years of assisting business owners with the business and tax strategies, her mission is to eliminate stress and anxiety people experience around money and taxes, by empowering them with the tools, knowledge, strategies and mindsets that will put them in the driver’s seat of their business success and financial wellness, so they can have more harmony, joy and abundance in their life. [/author_info] [/author]

Gearing up for Tax Season

It’s that time of year again – Tax Season, and while some people are eager to get their taxes done early, many stress and wait until the last minute (or later) to get their tax return filed. So, how can you better prepare yourself for this coming tax season?

  1. Be aware of the changes in tax law that may affect you. In Canada, the changes that were made in the last year relating to the 2016 personal tax year include:
  • Children’s arts credit – The maximum eligible fees per child (excluding the supplement for children with disabilities) has been reduced to $250 for 2016. This credit will be eliminated for 2017 and later years.
  • Children’s fitness tax credit – The maximum eligible fees per child (excluding the supplement for children with disabilities) has been reduced to $500 for 2016. This credit will be eliminated for 2017 and later tax years.
  • Home accessibility expenses – You can claim a maximum of $10,000 for eligible expenses you incurred for work done or goods acquired for an eligible dwelling.
  • Family tax cut – The family tax cut (allowing income split allocation of up to $50,000 for families with children) has been eliminated for 2016 and later years.
  • Eligible educator school supply tax credit – If you were an eligible educator, you can now claim up to $1,000 for eligible teaching supplies expenses.
  • Canada Child Benefits (CCB) – 2015 was the last year of the Universal Child Care Benefit (UCCB). As of July 2016, the non-taxable CCB has replaced the Canada child tax benefit (CCTB), the national child benefit supplement (NCBS), and the universal child care benefit (UCCB). You may have received taxable UCCB payments up to June 2016 that you would have to include in your 2016 income tax return.
  • Sale of principal residence – Starting in 2016, the sale of a principal residence must now be reported on your tax return in the year of sale, along with any principal residence designation. Under proposed changes, the CRA will be able to accept a late designation in certain circumstances, but a penalty may apply.
  • Reassessment period – Under proposed legislation, for tax years that end after October 2, 2016, the CRA may at any time reassess your income tax return if you fail to report a sale or other disposition of real estate. So make sure you report those real estate sales, including the sale of your own house.

 

  1. Open your mail as it comes in and keep separate file folders if you have a lot of different types of slips. Every year I get clients who bring in their tax slips in unopened envelopes.  First, I wonder why they wouldn’t open their mail (What if the information on the slip is incorrect, or if it’s the wrong slip altogether? Or what if it’s a request that needs a response by a certain date?)  Keep like slips together. I recommend keeping separate file folders for different types of slips/receipts (such as charitable donation receipts, T4 slips, T3 slips, T5 slips, RRSP slips, medical receipts).  Please note that most slips will have been sent out to you by February 28th, but some (like T3 slips for mutual fund and trust investments) are not due until the end of March.  You can always log in to your online account with CRA to check for missing T-slips.

 

  1. Have all your tax documents and support in order. If you are self-employed (i.e., you run your business as a sole proprietor), or have interest in a partnership or rental property, gather, organize and summarize all your transactions into categories and put them in a spreadsheet (or on a piece of paper, or in a bookkeeping program such as QuickBooks or Freshbooks).  Accountants and tax preparers really do not enjoy getting a shoe box or grocery bag full of disorganized slips…and it can add a significant amount to your accounting bill since it does take time to go through them and verify with you the business purpose and category of expenditure they relate to.  The same goes for your revenue invoices and receipts.  The more you can organize and summarize yourself, the more efficient (and less costly) the process of getting your tax return completed and filed.

 

  1. Keep your business transactions and documentations separate from your personal documents. Always keep a separate business bank account, and if you make business purchases by credit card, I recommend keeping a separate card just for business purchases and don’t use it for personal items. It’s easy to get things mixed up, but the mistake of claiming personal expenses as business expenses can be a costly one when faced with a tax adjustment or audit.

 

  1. If you use your vehicle for business or work, keep a log of your business and total km’s travelled. If you don’t already keep a log, you’ll need some way of documenting and supporting your business usage claimed in your tax return.

 

  1. 6. Get your taxes done early. The deadline to file and pay your Canadian personal tax return is April 30th, without incurring penalties and interest on any amounts due.  If you are self-employed, June 15th is the filing deadline (but the tax payment due date remains April 30th).

 

The information reported in your tax return is ultimately your responsibility, not your accountant’s.  Therefore you should at least be aware of the rules that apply to you, so that you are comfortable signing off on your return before it’s filed.

 

Here are some helpful links to find further information:

For individuals – http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/menu-eng.html

For small business owners and self-employed individuals – http://www.cra-arc.gc.ca/tx/bsnss/sm/menu-eng.html

I also love taxtips.ca for their tools and calculators.

If you have a specific tax or business question you want answered, or would like assistance with your income tax return, feel free to send me a direct email at Linda@visionspire.ca.

You may also want to attend my upcoming workshop in Georgetown, ON on March 22, 2017 – Tax Essentials for Small Business, where I will be showing you essential tips and best practices regarding income tax and GST/HST compliance for small business in Canada.

 

[author] [author_image timthumb=’on’]ca/wp-content/uploads/2017/03/Visionspire-Linda-Spencer-Ontario-quote.jpg[/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money, Marketing & Soul business coach. Her mission is to eliminate stress and anxiety around money and taxes, by empowering heart-centered small business owners with the tools, knowledge, strategies and mindsets to put them in the driver seat of their financial success and wellness.[/author_info] [/author]

Do You Know Where You Are?

“She turned to the sunlight And shook her yellow head,And whispered to her neighbor- -Winter is dead.”So many entrepreneurs just don’t know where they’re starting from, and end up taking inefficient and ineffective action to get to where they want to go.  For many, the first glimpse of their past year results is when they have their taxes done, which I have found in my 20 years of preparing tax returns for small businesses to be 4+ months after their year-end and into their current fiscal year.  But how can you get a good handle on your strategic action plan for a successful year if you don’t even know where you’re starting from?

That’s why I feel Step 2 – Knowing where you are now, financially, systematically and operationally, is an essential step in the process of creating your strategic action plan for success. This means you’re going to have to get organized with your financials and conduct a little internal assessment of where your are now in your business.

Once you have a good picture of your current financial situation, skills and resources, internal controls and risk management practices, you can figure out what you’re missing and need to put in place (Step 3 – Analyze the gaps between where you want to go and where you are now) in order to effectively build your action plan for how you will achieve the goals you set for your business in Step 1 of the 8 steps to create your road map to success.  (By the way, If you missed my 8 Steps to Building your Road Map to Success post, or last week’s post on Step 1 – Start with the end in mind, you can get them HERE.)

Statistics show that 85% of business failures are a result of improper organization and planning.  So why is it that so many entrepreneurs don’t have their records organized and up to date?  Some of the reasons I hear are: not enough time (and no one to help), not knowing how, and outright fear of money and finances (YIKES!).

On of my clients, Susan, recently shared with me that 2015 was her best year in a long time, that she had a lot of growth in the fall, and that a big part of that success had to do with me helping her to change her mindset about finances and understand her financial numbers in a strategy session we had back in the summer.  She had long been tracking, monitoring and using her marketing and social media metrics to gain more traffic and clients, but had fallen short of using her financial metrics effectively to grow her profits and cash flow.   As she put it, finances scared her, so she ignored them.  I helped her see that they weren’t scary at all (and in fact, they could be her best friend) and showed her how she could use her financial metrics to make more effective business decisions based on what her numbers were telling her.  So kudos to Susan for using her new knowledge and mindset to create a great year!

If you find yourself resisting the task of getting your finances up to date and organized, or if you just struggle with tracking and understanding your financial numbers, I can help.  Contact me to set up your complimentary Business Clarity Breakthrough session to discuss a strategy for success with this essential step in creating business success, and ask for my Business Management Assessment Questionnaire.

Complete the following form to request a private Clarity Session with Linda

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