I’m running the Achilles 5K March 18th

Posted on January 26, 2012 by Tom

On March 18th I will be running 5k with the Running Room at the Achilles 5K which is also St. Patrick’s Day. Achilles Canada is the organization behind the event, and they are a non-profit that encourages people with disabilities to participate in running and and being active. If you’d like to donate, secure online donations can be made at the Running Room Events web site with your credit card. An electronic tax receipt will be sent to you by email. Please click here to make a secure online donation.

If you’d like more information about the 13th Annual Achilles St. Patrick’s Day 5K Run/Walk 5K Individual Run/Walk, or to join me on Sunday March 18, 2012, please visit here.

Looking to buy QuickBooks? Its 50% off, one-day sale

Posted on January 25, 2012 by Tom

Just got a note from QuickBooks that there will be a one-day sale for QuickBooks for 50% off on January 26th. If you were thinking of purchasing the software, now would be a good time. It’s for sale from FutureShop, BestBuy, Staples, Amazon.ca and London Drugs. It normally costs $200 plus tax, but with the sale should cost you only $100 plus tax.

Using it correctly on the other hand is a whole other matter. For that I would recommend a training course. It’s good to keep in mind that QuickBooks is a good framework, but you still need to have the basic accounting knowledge. In some cases, QuickBooks is overkill too. Or it may be just ill-suited to what you want to accomplish. As with most things, its good to talk to a professional.

When should I incorporate? Some things to think about

Posted on January 24, 2012 by Tom

Are you operating a business of your own or thinking about it? One question that inevitably comes up with a lot of people is whether they should incorporate. It’s not necessarily easy to answer as there are a lot of different factors.

Costs
There are some costs to consider for incorporation.

Not only are you paying for the actual incorporation, but you also need to consider the ongoing costs of maintaining a company. Remember, technically speaking an incorporation is another legal entity. It needs to have a return filed with the government every single year. That costs either your time or your money to get it done by somebody else.

Liability protection

Incorporation offers some additional protection than operating as a sole proprietorship. As a separate entity, it can hold assets and debts that are separate from your own. If a customer or vendor has a problem with you, they can only go after the corporation, not yourself and your personal assets.
Keep in mind however as the owner and director of a company, the protection is not valid for government debts. If corporate tax, HST, source deduction payments or other government amounts are behind, they can go after your personal assets
Borrowing for a corporation when it’s small often requires personal guarantees. Liability protection isn’t valid here.

Taxes

Incorporations have some additional options for people when it comes to their taxes. For example, money can be left in the business if you don’t need it now. The advantage of this is that corporations face a much lower tax rate than you do as an individual. Leave it there and you can take it later.
One of the reasons for the lower tax rate is the Small Business Deduction. It’s a reduction in taxes available for qualified businesses. There are some rules to consider though.
You can also take money out as wages or dividends.
That being said, we often recommend people consider incorporation when they reach $50,000 in net income, which is to say income after all expenses. Before that point, it doesn’t offer that much of a benefit.
In addition, it’s also advantageous to operate as a sole proprietorship because any losses that inevitably occur at the beginning of most new businesses can be applied to your income from before. Remember, losses the incorporation has are not your losses, they are the businesses.
Some businesses may not get as many tax benefits, namely “Personal Services Businesses” which are being used more and more. Specifically the corporations with only one employee and no other customers may not be able to get the Small Business Deduction

Additional requirements

Technically speaking every year a shareholder’s meeting needs to occur.
You also need to name directors. Keep in mind directors are liable for government debts so name them carefully.

Some other things to look out for…

Most of the incorporation services out there are often very bare bones. However, you should also get a corporate seal, a minute book, and shares. If that hasn’t been done, then you may have more limited options. Shares are required for example to be able to offer dividends.

Who can and can’t do it

Doctors, real estate agents, chiropractors, lawyers cannot incorporate. These rules are changing however and in some cases are being allowed when certain conditions are met.

Additional resources

This is by no means a comprehensive list and there are often a variety of other things to consider. You should consider contacting an accountant or lawyer when you’re thinking about incorporation to see if it makes sense for you.

Happy Chinese New Year… 2012 Year of the Dragon

Posted on January 22, 2012 by Tom

Image: Chinese new year 7a, a Creative Commons Attribution (2.0) image from hisgett's photostream

This is not an accounting or tax related post, so much as a side interest one. I have to admit, I’m not a big follower of Chinese New Year. I know how to say it in Cantonese (“Gung Hay Fat Choi!”) and I’ve gotten red pockets but not much beyond that. That being said, I kept seeing a lot of messages about it, pictures, celebrations, etc on Facebook. So, I did a little research for myself and here are some interesting tidbits:

The Dragon is the only creature of the 12 that isn’t real
While they call it Chinese New Year, it’s also celebrated in many other Asian countries, such as Malaysia, Singapore, Indonesia, and the Philippines. It makes it something of a misnomer.
Chinese New Year celebrations are a Big Deal™, with celebrations supposed to last for 15 days. It easily rivals Christmas, at least in Asia in terms of size and scope.
In addition to being born in the year of the Dragon, people whose birthdays fall in the dates may also end up being a particular type of Dragon of one of the 5 different elements, the Metal, Fire, Water, Wood, or Earth Dragon.

Have a great year, everybody!

Additional resources

Free tax planning guide – get ready for 2012

Posted on January 20, 2012 by Tom

As many of your know (or perhaps trying not to think about , personal income tax returns will be due April 30th, and for the most part you can’t do too much to change what you’ve done in 2011. That being said, it’s never too late to think ahead. The CGA every year prepares a really useful handbook filled with valuable information. This document outlines a lot of different ways you can affect your taxes, be it through RRSPs, tax credits that you may be able to take advantage of as well as other considerations that may raise your taxes.

Feel free to download a copy from the link below. If you have any questions about it, contact me or your accountant for more information.

CGA Ontario – Personal Tax Planning Guide 2011-2012

How to get paid from your business – dividends, wages, or owner advances

Posted on January 19, 2012 by Tom

A distinction that seems to be lost on a number of people with their own businesses, either new entrepreneurs or old, is how they get paid and the different tax benefits or costs to it. This article should be fairly old hat for anybody who has taken some tax courses but it seems to come up fairly often for everybody else. Please note this post is talking about corporations, not sole proprietors or partnerships. This is not going to cover other means like trust companies or other corporations.

Continue reading →

CGAs, CAs and CMA’s all holding hands? Not likely….

Posted on January 18, 2012 by Tom

Apparently the talk of unification of the accounting bodies is gathering steam. This website is the most advanced item I’ve seen in how the proposed unification might occur. I’m not really expecting that unification will go too far just because it’s been proposed and then rejected before. The naming convention of CPA, [old accounting designation] seems clunky and likely to create divisions that are no better than before. I’d be most curious as to how some of my CA friends perceive this development since they seem to dislike the discussions the most.

That being said, perhaps I’m wrong. Maybe the transition over time is exactly what would be needed for people to just warm up to the idea. It should at least be interesting to see how it turns out. The CGA members are a vastly different group in terms of individuals and practice types than the CA or the CMA bodies as far as I can tell. It might be that differentiation combined together is a good thing. It also has some ramifications on my company.

Changes to the CPP affecting those 65 and older

Posted on January 17, 2012 by Tom

The Canada Revenue Agency has changed the way CPP payments occur. They are now allowing people at 65 to 70 to continue to make additional CPP payments. If you are or know somebody who is approaching 65, this might be useful to them.

It is quite expensive to continue making contributions and it doesn’t seem to be worth it. However, the default position is that payments will continue whether you want to or not and require an opt-out if you want to stop.

To stop the payments, you must fill out this form from the CRA called CPT30.

Great resources for taxes and accounting information

Posted on January 12, 2012 by Tom

Here are some great resources for taxes and accounting information, I’ve found.

Grossman CGA – This blog is really up to date, with new information constantly being added.

TaxTips.ca – This is a general resource blog with tons of information on tax rates, budget news, laws, and all sorts of other handy information. The site is kind of hard to navigate and not really pretty, but an invaluable resource.

As I come across other resources, I’ll keep updating my links section. Let me know if you find any yourself.

QuickBooks 2012 Courses

Posted on January 11, 2012 by Tom

I recently attended a QuickBooks training course done by Accounting Cycle. They are a separate company from Intuit, but they are endorsed by them. Many of the trainers have been Intuit employees in the past, so they know the ins and outs of the software very well. I’m certain they also have maintained many of the relationships from working there as well.

Overall, it’s a really good course. It covered a great deal of material in a two day span. A lot of it wasn’t necessarily new to me, but there were a lot of little tidbits of information that I didn’t know which are really handy, stuff like keyboard shortcuts, and recommended ways of handling information.

The problem I have with QuickBooks is that as simple as they might make it sound to use, it still requires some fundamental accounting knowledge. This is not set up in the program. It has a lot of great guides and what not, but there are some basic things that it won’t tell you want to do. In that sense, having a course to instruct you on how certain things should be done or checking with an accountant is a big help.

I’ll write about some of the things they covered in some other posts. Needless to say, if you’re thinking of using QuickBooks, this would be a good course to take.

Tom Chow CGA

Accounting, taxation, small business