Blog | SkidmoreCGA http://www.skidmorecga.com Sat, 26 May 2012 16:51:45 +0000 Joomla! 1.5 - Open Source Content Management en-gb Tax Tip of the Week - 10 Ways to Reduce Accounting fees http://www.skidmorecga.com/blog/tax-tip-of-the-week-accounting-fees http://www.skidmorecga.com/blog/tax-tip-of-the-week-accounting-fees Tax Tip of the Week - 10 Ways to Reduce Accounting fees

Looking for ways to reduce the accounting fees associated with tax preparation?  Accounting firms generally charge fees based on time.  The more time spent on your file the greater the accounting fees will be.  The following are a few tips to help reduce the time spent on your file:

1. Organize your paperwork.  Although each tax situation is unique, there are several similarities to each person's tax return.  Organize your slips by: income, deductions, tax credits, etc. 

For example, if you are entitled to claim Employment expenses on your tax return, specifically your car, then put all your gas receipts together.  Organizing by date will help you determine that you have included ALL the relevant receipts.  If you only have one receipt for January and you fill up your tank weekly, you'll know to look for three more receipts for the month. 

Total the receipts using either an adding machine (with tape) or a spreadsheet.  We like you to provide the spreadsheet so we can check the formulas.  Many times users add a few more lines but forget to adjust the SUM calculation. The spreadsheet can be emailed or sent using Sharefile.

2.  Provide complete information.  Each time we revisit the file to up date or check your status, it takes time.  (Remember you are charged based on time spent.) 

3.  Compare to the previous year and let us know what has changed. This saves us having to contact you to find out why you don't have your Canada Saving Bond interest receipt if you cashed in your bond.

4.  Only bring in valid tax slips/documents.  For example, Charitable Donation receipts must be for the current or preceding 4 years.  Don't bring in receipts for 2012 - instead start a file for 2012. Check to be sure the slips are 'official' for tax purposes.  Lottery tickets are not a tax deduction!

5.  Respond promptly to requests for info; ideally, while we are still working on the file. 

6.  Only bring the current year paperwork.  If it doesn't have '2011' on it, we likely don't need it.  There is no need to bring in your previous tax package (if you are a returning client), we carry forward the figures and have quick access on our computer. 

7.  Don't separate slips.  By keeping Part 2 and 3 together we don't have to take time to match up the slips to avoid duplication.

8.  Open your mail and remove the slips from the envelopes. Ideally the slips will be opened so that the complete slip is showing.

9.  Request your Capital Gains/Loss Report from your financial institution.  Not only does this same us time calculating, it saves the contact time to request the information AND avoids delays in preparation.

10.  Only bring tax related records.  Generally, we do not need the RRSP activity, RESP, TFSA, LIF statements. 

This year we are returning most tax packages with information on documents that were not required and the reason they were not required to help our clients Understand Tax. 

]]> Blog Fri, 30 Mar 2012 20:46:10 +0000 Tax Tip of the Week - Education Credit http://www.skidmorecga.com/blog/tax-tip-of-the-week-education-credit http://www.skidmorecga.com/blog/tax-tip-of-the-week-education-credit Tax Tip of the Week - Education Credit

Obtaining a post secondary education is costly. Use that cost to your advantage and claim the Education and Tuition tax credit.

Not all the fees paid are deductible for tax purposes so be sure to access your T2202A. In most cases, these forms are no longer mailed out - they are generally sent to the student's in-box.

If you are paying for your child's eduction, you may be able to claim up to $5,000 of the costs by way of an education transfer. Your child must complete the back of the form assigning their unused credit to you.

Continuing education is often a life long venture. If your employer is paying for all or a portion of your continued education, your claim for the Education amount may be restricted.

]]> Blog Fri, 23 Mar 2012 20:23:30 +0000 Tax Tip of the Week - RRSPs http://www.skidmorecga.com/blog/tax-tip-of-the-week-rrsps http://www.skidmorecga.com/blog/tax-tip-of-the-week-rrsps

When gathering your tax receipts to bring in, be sure to include your RRSP contributions for the first 60 days of 2012.  These slips MUST be recorded on your 2011 tax return - whether you claim them as a deduction or not. If they get missed, your return will have to be amended. 

You want to make sure you get the deduction for contributions as you will have to pay tax on these funds when withdrawn. 

RRSP contributions are usually claimed as a deduction when your income is in a higher bracket than it would be at retirement.  RRSPs are a great savings tool and can be drawn on, if need be during a low income year. 

RRSPs are also great for saving for your first home (Home Buyer's Plan) and for returning to post secondary education (Life Long Learning Plan). 

So... get saving!

]]> Blog Fri, 16 Mar 2012 22:47:28 +0000 Make a Date with your Business http://www.skidmorecga.com/blog/make-a-date-with-your-business http://www.skidmorecga.com/blog/make-a-date-with-your-business

With the abundance of paperwork a business owner is faced with, it can be difficult to keep track of the various due dates.  The penalties for being late, especially with Revenue Canada can be quite punitive.  Creating a 'Due Date' checklist can be helpful to keep payments and reporting on track.

The Due Date Checklist can be created using any number of programs.  Any program will need the same information. Start by asking yourself what you want to track.  Canada Revenue Agency is one of the more important 'payees' so list your obiligations with them:  HST, Payroll, Corporate Tax.  WCB will naturally follow if you have payroll.  If your business sells to other provinces they will also need to go on the list. 

Once you have this information, ask yourself what information you'll need to file the report(s).  If this involves other people such as your bookkeeper or accountant, you'll need to factor in their turn around time frames as well. 

If you are going to be late with the filing, consider making a payment of the estimated payment due. 

Knowing what is due, when, will help with your cash flow.  It is never a nice surprise to find out that the funds that have accumulated in your bank account are actually due to the government!

]]> Blog Tue, 06 Mar 2012 23:09:28 +0000 Hiring Credit for Small Business http://www.skidmorecga.com/blog/hiring-credit-for-small-business http://www.skidmorecga.com/blog/hiring-credit-for-small-business

The 2011 Federal Budget included a perk for small businesses that saw an increase in EI premiums in 2011. The hiring credit of up to $1,000 is automatically calculated by Canada Revenue Agency once your 2011 T4s are filed.

Now that you have received this credit how do you account for it in the books?

The options are to reduce your EI premium expense or include the credit as income in the year received. My preference is the latter. To account for this in your books the general journal entry is a Debit to Payroll Liabilities and a Credit to Other Income.

]]> Blog Fri, 02 Mar 2012 18:56:30 +0000 Tax Tips 101 http://www.skidmorecga.com/blog/tax-tips-101 http://www.skidmorecga.com/blog/tax-tips-101 Tax Tips 101

Take the mystery out of organizing your tax papers.  If you are a member of the Tri-City Chamber of Commerce, register for this upcoming seminar March 16.  Space is limited.

]]> Blog Sat, 18 Feb 2012 00:33:57 +0000 T4 Filing Fast Approaching http://www.skidmorecga.com/blog/t4-filing-fast-approaching http://www.skidmorecga.com/blog/t4-filing-fast-approaching T4 Filing Fast Approaching

There are a number of tasks to complete when wrapping up the calendar year for your business, among them are filing the T4s and WCB return.

Don't panic, you have until February 29th to file but payroll remittances for 2011 must be remitted by January 16, 2012 (date extends to Monday when the 15th falls on a weekend).  Short remittances are subject to penalties so it is a good idea to reconcile your payroll before sending the December payment. 

T4s may seem like a simple thing to do so why not tackel this on your own and save the accounting fees?  Every year we spend needless time correcting mistakes made by clients who attempted this seemingly easy task on their own.  The penalties and interest from Canada Revenue Agency were far greater than the accounting fees would have been if we had filed the returns for them in the first place.  On average, when we have prepared the year end, the fees to file the T4 are about $200 or less (depending on the number of employees).  Do what you do best - and hire out the rest!

 

]]> Blog Thu, 12 Jan 2012 00:08:38 +0000 CPP Changes in 2012 – Will they affect you? http://www.skidmorecga.com/blog/cpp-changes-in-2012-–-will-they-affect-you http://www.skidmorecga.com/blog/cpp-changes-in-2012-–-will-they-affect-you CPP Changes in 2012 – Will they affect you?

There are four main changes to CPP effective January 1 2012:

  1. The requirement to stop working or reduce earnings in order to apply for early benefits is removed.
  2. CPP recipients who continue to work will continue to make premium contributions (as well as their employers) to age 70.
  3. The rate of adjustment for early and late pension application increases.
  4. The low earnings years ‘drop-out’ provision is increased.

These changes do not affect those already receiving CPP retirement benefits UNLESS they will not be 65 before 2012 AND are still earning pensionable earnings. These individuals will have to start contributing again in 2012.

For those who are between the ages of 65 – 70, they can elect to stop making further contributions to CPP by filing form CPT30. For those who are self-employed, this election is made on their tax return.

These changes are significant, time sensitive and should be reviewed with your financial planner.

]]> Blog Thu, 15 Dec 2011 17:33:00 +0000 Meals – Make them deductible http://www.skidmorecga.com/blog/meals-–-make-them-deductible http://www.skidmorecga.com/blog/meals-–-make-them-deductible Meals – Make them deductible

Meals and entertainment expenses are often a significant portion of the advertising budget for businesses. Time spent with clients, potential clients and strategic alliances are a productive way to build relationships which ultimately build business. Often what makes perfect sense to the business owner may not make sense to the tax governing bodies. Understanding the rules will help you make the most of this deduction.

Meals and Entertainment

For the meal to be deductable for tax purposes it must be incurred for the purposes of producing business income. For example, taking a customer out for lunch or to a hockey game strengthens the relationship which is generally considered a valid business expense. Even though the expense is allowed for tax purposes, only 50% of the meal or box seat is deductible. The background to the 50% deduction is that there is a personal element to expense, so CRA restricts the deduction (the HST recovery is also restricted). There are however a few exceptions to the 50% limitation such as certain celebratory events such as Christmas parties*and specific industries such as those in the food industry*(see IT-518R for additional exemptions).

Receipts

When claiming meals, it is important to keep adequate documentation which includes the itemized meal receipt and, if paid by credit card, the payment receipt as well which indicates the tip. Submitting a credit card statement only will not get you very far with an auditor.

Memories fade so be sure to make a note on the receipt indicating who joined you for the meal and how it relates to business. Attaching a business card to the receipt is a quick way to accomplish this.

Recent Audit Rulings

Without sufficient proof that the expense is necessary for business purposes, the expense may be denied by the tax department. Recent audits of meals and entertainment expenses denied single meal receipts considering these to be personal in nature (an exception to the single meal receipt is when the meal relates to travel). Another reason to pick up the tab!

As a business owner, you'll want to make the most of your meals and entertainment budget. Understanding the tax rules will help you get the most out of these expense dollars.

]]> Blog Wed, 07 Dec 2011 19:05:57 +0000 Minimum Wage Changes http://www.skidmorecga.com/blog/minimum-wage-changes http://www.skidmorecga.com/blog/minimum-wage-changes Minimum Wage Changes

The minimum wage increased in BC May 1, 2011.  The general minimum wage has been increased to $8.75 per hour.  Liquor servers had their minimum wage increased to $8.50 per hour.  The first job/training wage of $6.00 per hour is no longer in effect.  Check your payroll records before your next payroll run to be sure you are meeting the minimum standards.  For additional information check the BC Government Minimum Wage Factsheet.

]]> Blog Tue, 03 May 2011 22:06:55 +0000