Frequently Asked Questions

The following is a list of some of the most common Questions (FAQ) that I encounter.

• Q: What is a bookkeeping procedure development? (aka process auditing)
  A: A monitor of what you are doing in your business with regard to receipts, payroll, and general bookkeeping and perhaps recommendations into how it can be improved.
   
• Q: What are monthly financial statements?
  A: Reports to show how much is coming into the business and how much is going out.
   
• Q: What is year-end preparation?
  A: The infamous year-end that everybody seems to identify with his or her bookkeeper each year at tax season.
   
• Q: What are special assignments?
  A: This may include a new business set up, or payroll services as well as management functions such as strategic planning, operational procedures, business plans, and even the overall management plans of business.
   
• Q: What to look for in a Bookkeeper?
  A: A proven track record with good credentials. A good bookkeeper must possess many skills in order to do their job effectively for your business. The more experience they have the better off your business will be as a result.
   
• Q: Does my company need to register for WSIB/Health & Safety?
  A: Every company that has employees or uses a third party contractor to perform services on their behalf most likely needs to be registered with WSIB except for a few exempt industry groups. Failure to register can result in serious fines and penalties for past premiums owing as well as charges against the owners and directors of the company, especially if a serious accident were to occur.

Health and Safety compliance issues also represent one of the most overlooked liability areas for the business owner. For example, when is the last time you conducted safety training, updated your safety manual, instructed employees on using chemicals/solvents in your business?

• Q: What should I know about reimbursing Employees/Owners for business use of personal Vehicles?
  A: For 2007, CRA will allow you to deduct for corporate income purposes up to 45 cents for the first 5,000 kms and 39 cents for additional km for each individual using their personal vehicle for business applications. Please consult our office for tax planning opportunities for vehicle use by business owners. 
   
• Q: Should I incorporate my business versus Self-Employed? 
  A: Many business owners chose to incorporate to limit their personal liability. In this way, they are able to protect their personal assets from creditors in most cases such as their homes or investments. In addition, you can generally obtain more beneficial tax planning opportunities such as income splitting, wealth management and retirement planning if you are incorporated. For example, if you do not take every dollar earned in your company out as salary, you can retain that profit and more funds in the company for investing as the small business tax rate is just over 19% in Ontario versus a top personal rate of 46%. Therefore, you have 81 cents to invest versus 54 cents.
   
• Q: Should I lease or buy automobiles?
  A: Given today’s low interest rates and competitive environments, there is no easy answer to advise clients. For example, will the vehicle be used primarily for business or pleasure as this has a profound impact on taxable benefits? What is the cost of the vehicle? Canada Revenue Agency only allows you to write off the cost of a vehicle up to $30,000 plus GST and PST. but the taxable benefit is based upon the original cost. There are also caps on leasing vehicles. 
   
• Q: What percentage of my Meals and Entertainment expenses are tax deductible? 
  A: One of the most common area’s of non-compliance uncovered during CRA audits is in the area of meals and entertainment. Although the basic principle is fairly simple in that the taxpayer is only allowed to deduct 50% of expenses related to meals and entertainment, there are some exceptions.
   
• Q: Should I invest in a Registered Retirement Savings Plan? 
  Although registered retirement savings plans have been around for years, other plans such as IPP’s (Individual Pensions Plans) are becoming more and more popular as an additional resource to fund the retirement of Canadian business owners. These taken and combined with our business strategies unique to your own specific needs allows us to maximize your retirement wealth.
   
• Q: Why should I out source accounting services?
  A: Small businesses and medium size businesses usually benefit most from outsourced accounting services. Through outsourcing, companies can enjoy improved efficiency, cost savings and access to financial / management expertise not available in-house.

• Q: Do you come in to do the work?
  A: No, not normally. We may make some occasional visits to your office for meetings, if you prefer that way. In some situations, we may also come in to ensure a smooth transition of the accounting work from your existing bookkeeper / accountant to us. If required, we may also come in to help you set up communication system with us.

However, we do NOT normally do our work in your office. Typically, documents are sent to us via fax, e-mail or courier. Nevertheless, it is important to maintain close contacts such as to ensure the accounting records, and related financial statements accurately reflect what is happening in your business.

• Q: What kind of savings can I expect?
  A: This depends on the efficiency of your existing set up. Typically, you can look to save up to 25% the cost of having to maintain an in-house staff. More importantly, you benefit from the accurate, timely information as well as the financial expertise from us.

Questions about Starting Your Own Business:

• Q: I started a small home-based business this past tax year.
  A: How do I report my income and expenses?
  If your business is a proprietorship, which means you are the sole owner and it is not incorporated, you would need to summarize your business income and expenses on form T2124 and include the net income on your current-year income tax return.

• Q: I started a business this year. Do I have to register for GST?
  A: If your taxable sales are more than $30,000 and they are not exempt from GST/HST, you must register. If your sales are less than $30,000, you have the option of registering. Registering is generally a good idea since you can then claim input tax credits in respect of your expenses.