​After you file your tax return there is always a possibility that you and your business are going to be audited. And there is also no guaranteed way to do well. The best way to navigate this process is working proactively to have all the documents in order and being able to present all the documents are requested from you.

​I wanted to share some tips with you to avoid the pain of paying penalties and to have the best set of books to be stress free in case of and audit. These tips will help you get the best result from an audit:

1. Know your rights: It's important to know why the auditors are requesting a particular document and to understand your rights and the possible criminal implications. Read CRA website and be on top of the tax rules. be aware that you can challenge the results of the audit.
2. Don't withhold requested information: always provide the documents on the date they are required. But be aware to provide just the documents they asked for, not too many documents. Just they ones they asked for.
3. Communication is key: don't avoid contacting the auditor in advance to set up dates, place of meetings, if you need representation. Having a representative will save you stress as they will deal with the auditors. But don't have meaningless conversation with the reviewer, just ask the questions they ask.
4. Be proactive: always keep proper records, record only the expenses you are allow to, keep mileage and home office records!!! If you have employees, keep always contracts in place, and be aware of all the labour rules, both provincial and federally.
5. Be responsible: Even if you hire someone to file your taxes, be responsible and review the data, the consistency and that you are in line with other business in your same industry.

These tips work if you file personal or business taxes. The auditor job is to find areas where additional taxes can be collected and yours is to keep your money safe. Always work in advance. Be ready. 

We can help you with the record keeping, helping you having an audit-proof set of books. Contact us today if you have questions. 

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​Your business is growing and you need to start hiring! Congrats! But before finding the candidates you need to decide: are you looking for a subcontractor or for an employee? Are you outsourcing a service or hiring an ideal candidate with the skills to grow in your team? What are the rules to follow?

As a business owner you need to comply with government regulations when hiring. Canada Revenue Agency (CRA) is really strict with these rules as they are going to decide if you need to deduct liabilities from the person paycheque, if the person is eligible for regular employment insurance, how they are going to be treated under the Canada Pension Plan program, and decide the conditions of employment.

The easy way is not always the best way here. Most of the time due to not knowing the full consequences of hiring in the wrong way you can get in trouble with CRA en end paying penalties and ate fee on the liabilities you needed to remit to CRA. 

There are 2 to main areas that CRA asks when auditing a business hiring system (Quebec has its own set of rules) that rule for all the business: 

1. Intention?
2. Control?

If the intention for both the worker and the payee is having a contract for service (business relationship) or they intend to enter into a contract for services (employment relationship)? Sometimes the intention is clear and both parties are in agreement, even they write and sign an agreement, and this is the proof of common intent. If there is no contract, CRA assumes there is not common intent and to decide the intention an examination of both parties' action is required. Be aware that this is just one step, just intention doesn't determine the employment status.

Once you can determine the intention, then you go to decide who is in control. This point will clarify the working relationship. These question relate to the following elements:

• level of control the payer has over the worker's activities
• Who is the person providing the tools and equipment
• whether the worker can subcontract the work or hire assistants
• the degree of financial risk of the worker
• the degree of responsibility for investments and management of the worker
• the worker's opportunity for profit
• any other relevant factors, such as written contracts

Based on all the answers CRA decide if the actual working conditions are consistent with a contract of service or a contract for services.

The actual degree of control may be difficult to determine when you are hiring a professional such as doctors, engineers, etc as their expertise and specialized training will require less directions and guidance in their activities. They tend to be more independent that let's say a cashier who you give an schedule, daily activities to complete, and systems to follow.

When you provide the tools, decide the working hours, take all the financial risks and are the only one with the capacity to hire someone as assistant for the work and/or subcontract the work, then you are hiring an employee and you have obligations under the Federal Labour standard  and your provincial Employment Standards https://www.canada.ca/en/services/jobs/workplace/federal-labour-standards.html). You are obligated to calculate payroll and deduct Employment Insurance, Canada Pension Plan and Income Taxes, both federal and Provincial. At the end of each month you will need to remit the deductions plus the employer burden to CRA under your Payroll account.

If hiring subcontractors, then they are in control of their schedules, they have the capacity of hiring another person to do the job, as you are contracting a service, the result! They are also incurring in financial risks. The subcontractors need to keep their own set of books, save money to pay their own taxes and register for HST/GST when needed.

Either if you are looking for a subcontractor or an employee you need to be informed and make the right decision. Don't go with the note of "saving money" and "make things easier" hiring a subcontractor when in reality the relationship is for employment. Be complaint of the regulations and your business will flourish with succeeds and growth.

Are you still in doubt? Contact us today with your questions! 

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The government of Canada has created various programs to support Canadians and business facing the effects of the COVID-19. The programs are divided in 3 sectors: Individuals, Business and Industries

There are programs to support individuals and families, who are facing cuts or totally loss of income, as well as special sectors of the public:

• Increasing the Canada Child Benefit
• Special GST credit payment
• deferral on tax payments
• Support on mortgage payments
• Canada Emergency Response Benefit (CERB)
• Indigenous Community Support Fund
• Supporting Preparedness in First Nations and Inuit Communities
• Improving access to essential food support
• Enhancing the Reaching Home Initiative
• Youth support: mental health.
• Reduced minimum withdrawals for Registered Retirement Income Funds
• Supporting the delivery if items and personal outreach
• Immediate and essential services through the New horizons for Seniors Program
• Suspended repayment and interest on Canada Student Loans and Canada Apprentice Loans
• Temporary Changes to Canada Summer Jobs programs.

To support business the government is focusing on:

• Avoiding layoffs and rehiring employees
• Deferred payments
• Access to Credit
• Supporting Financial Stability
• Supporting self-employed individuals

For special details on each program I'm sharing with you the CFIB reports and FAQ that covers all these aspects in a really detailed and easy to read way: https://www.cfib-fcei.ca/en/small-business-resources-dealing-covid-19

Related to industries, the programs are focusing on:

• Increasing credit available for agriculture, fisheries and aquaculture
• support for airports
• support for broadcasters.

These is merely a summary of all the programs available to you, your family and your business. Check the official website for details on each program: https://www.canada.ca/en/department-finance/economic-response-plan.html

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Reading the news, and I still can't find the proper solution for business owners. There are great news but still I see to much bureaucracy and not all the points solved.  The government is taking strong and immediate actions but still there are people falling through the cracks.

What is still the same?
Income Support for employees: 

• Regular benefits: unemployment
• Special benefits:  Sickness, maternity & parental, compassionate care and Family Caregiver - also for self-employees (with previous arrangements with service Canada)

What has change under the special measures for these benefits?
t involves Canadians without paid sick leave who are sick or quarantined: now the waiting period have been waived, and there is no need for medical certificate to prove you are sick. Regularly, you need 600 hours of insurable work to be eligible , for the emergency measure the minimum hours are not defined yet

What is new?
The original Care & Emergency Benefits packages are now ONE package (simplified): under the “Canada Emergency Response Benefit”, eligible Canadians will be paid $2000/m during 4 months. This is a taxable benefit. 

Who is eligible? 

• Canadians who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19,
• working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures.
• The CERB would apply to wage earners, as well as contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance (EI).
• Additionally, workers who are still employed, but are not receiving income because of disruptions to their work situation

When can you apply?
After April 6 and will receive the benefits after 10 days

What we don't know yet about the“Canada Emergency Response Benefit” (CERB)?

Where to apply?
It's still unclear. To be proactive be sure to open your online account bot with CRA and Service Canada:

• CRA my Account: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html
• My Service Canada Account: https://www.canada.ca/en/employment-social-development/services/my-account.html

CRA is stating that: "The EI system was not designed to process the unprecedented high volume of applications received in the past week. Given this situation, all Canadians who have ceased working due to COVID-19, whether they are EI-eligible or not, would be able to receive the CERB to ensure they have timely access to the income support they need."

But right now there is uncertainty on how the self-employees who don't have kids, or are not sick, or taking care of others and people operating business that are incorporated can access those funds? Not sure yet! Is there a way we can all been covered? We need to be informed and keeping track of the news.

Still going for business:

1. Corporations have until September 1st to pay any tax payments
2. Subsidy to cover 10% of payroll costs for a period of 3 months
3. $10 billion in credit through Business Development Bank of Canada (BDC) or Export Development Canada (EDC)

Stay tuned for further updates as the news are released in the coming days. Stay strong and be safe.

Claiming business expenses can be intimidating when you are not clear if you are allow to claim the charge or not. 
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First we need to understand that there are 2 scopes here: business and taxes. As a business owner all your Meals and Entertainment expenses are 100% included on your Profit and Loss expenses. Yes, the full amount is business related (conditions apply) and must be shown as part of your results because the expense is incurred for the purpose of earning income. 

Now, as CRA rules only 50% of the expense, or a reasonable amount (always lower than 50%) is eligible to be claimed as a deduction from your income. Same for the HST you pay on meals, you can claim the Input Tax Credits (ITC) only for 50% of the HST paid.

Conditions apply? YES! as per CRA tax rules to be eligible the meals expense must be:

• meals eaten with customers
• the cost of tickets for a theatre, concert, or athletic event, or other performance
• the cost of private boxes at sports facilities
• the cost of room rentals to provide entertainment, such as a hospitality suite
• the cost of cruises
• the cost of admissions to fashion shows
• the cost of entertaining guests at clubs (night, athletic, social, and sporting), as well as on vacation and similar trips
• taxes, gratuities, and cover charges are included in entertainment expenses

What can't be included?

• costs incurred for use of recreation facilities and club dues
• purchase of season tickets for sporting events (unless satisfactory proof is provided that the tickets are a promotional expense)
• meals claimed while outside a sales territory or on a vacation

Best practices for calculating, claiming and keeping records of Meals and Entertainments Expenses are: 

• Keep clear records of the transactions - both receipts, the one showing the payment, and the one showing the details and HST.
• Write down details on the receipt - client name, contact, purpose.
• Add to your calendar the meeting date and client
• Take a picture of you receipt or scan it ASAP - ink fades and maybe at year end you are not able to see the details.
• Keep daily records on your accounting books.

Always remember, the burden of proof is on you. Work efficiently each day and keep your records organized. 

Still having questions? No worries! Send me a message and we can chat! Let's keep your business organized and on track.

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Our business closes today for the holiday season.  We''ll see you again on Jan 6, 2020

2019 has been amazing: a year of growth and learning (from studies and mistakes), meeting new clients and strengthening relationships with the loyal customers who have been with me for these 5 years in business.

Closing my year with my goals met and many more dreams to achieve. ✅

Next year will be better. We'd planned for new services packages to help our clients reach their goals too using the power of numbers, because business not only need bank reconciliation and HST reports. Business also need planning and management reports to be aware of changes and be able to correct the strategies to reach their goals. We are giving you some tools to make your life easier:
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• Compliance Reports to comply with rules and standards
• Advisory reports to draw your attention to important data
• Financial reports to support your business plans
• Organizational systems to be able to always find what you are looking for.

I'm so excited for what the 2020 is bringing in: new opportunities and chances to learn and grow, to build meaningful relationships, and build a community of entrepreneurs wanting to grow and reach their financial goals. 🙋‍♀️🙋‍♂️

Happy holidays to all of you, your family and team members!

Tell me what's been your best part of 2019? What are your business plans for 2020?

#holidays #business #goals #numbers #celebrating #Ottawa

Big and sad news for you: getting a big refund when filing your taxes is not always a good thing for you. Sometimes is due to lack of planning. Imagine if with each paycheque you could pay less taxes and get more money! It's a possibility.

Canadian Tax Law based its rule on fairness, you pay what is fair for your personal and family situation. There credits and benefits you can apply to depending on your amount of income. Then, let's do that, pay only what's fair, no more, no less. 

When getting your paycheque you have some deductions applied, that is way your earned amount is not the same as your collected amount (net pay). The basic ones are: Canada Pension Plan (CPP), Employment Insurance (EI) and Income Tax (IT). There are additional benefits depending on your job: Pension Plan, Group insurance plan, RRSP savings Plan, etc. 

EI and CPP contributions are calculated on earned income and usually you can't change them due to tax rules. But you can calculate the exact amount of Income Tax you would pay at year end and this is the way to increase your paycheque. How?

• Via your employer: make sure every year you sign the appropriate forms regarding your personal and family situation
  • There are federal and provincial forms. TD1 Personal Tax Credit Forms: This form will allow you to report your current situation and calculate the right amount of taxes to pay.
  • It’s important to file this form if you change your marital status, have a new child, you have more than one job, or you are a student
  • This form will recalculate the tax to pay and help you get ore money now instead of waiting to get a big refund
• Via CRA: there are situation when you can directly request CRA to reduce your tax bill:
  • If you are excepting significant deductions as: Huge RRSP investments, rental losses, child care expenses, employment and medical expenses. Use this form only for situations not contained on the TD1
  • You can file then the form T1213 Request to Reduce Tax Deductions at source and if approved CRA can give authorization to reduce your paycheque tax bill.

You always need to update your current situation with your employer and CRA to get a fair deal. If you get marry, or divorced, or got sick or have a child. Don’t wait until the tax season time to declare your changes and receive a refund. On the other side of the spectrum, you can also fill out the TD1 and provincial forms if you always have a bill to pay at the end, you can increase the amounts by each paycheque and the you won’t have a debt to CRA.

As you see, having a great refund is not always good news, you can plan and have more money on your side during the whole year, then you can use it to save on RRSP, TFSA, pay old debts or going on holidays with your family. 

Here are the 4 tips to avoid paying more taxes during the year and save/gain money:

1. Always update your personal/family situation with CRA
2. Ask your employer to calculate your tax expenses using the TD1 Personal Tax Credit Forms 
3. If your situation is changing dramatically ask CRA for an adjust with the T1213 Request to Reduce Tax Deductions
4. The extra money you get on each paycheque save it for the future using RRSP, TFSA or buying the insurance you need to protect you and your family

​
Hope this can help you plan better for the next tax season. Contact us today for an appointment and we can help you plan for your tax bill. 
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Yes, we are here again: getting ready for the 2018 Tax Season. It's that time of the year when we start to panic if we are not organized or we don't like dealing with paperwork. We'll be helping your during this month to plan and be ready!

The best way to deal with tax season is to be one step ahead, then you can take your time, plan and compile all the documents you may need to file properly. Why is so important to get ready and file your taxes the earliest possible?

• You can get faster refunds if you overpaid taxes during the year with your paycheque (I'll be taking about this next week: how to reduce the tax taken from your paycheque)
• If you owe taxes, then you'll have time to plan for the payments. Due date is April 30, any payment you can make before that date is not subjected to interest or penalties. You can pay your debt by instalments and avoid the extra charges.
• You can avoid delays receiving tax credits and benefits: Canada Child Benefit, GST/HST tax credit, Working Income Tax benefit and Guaranteed income supplement. You can find more information on how to apply here:  https://www.canada.ca/en/services/taxes/income-tax/personal-income-tax/doing-your-taxes.html
• You have more time for reviewing the rules and changes, then you can find all the documents you need and do it right.

The due dates for this 2018 tax season is April 30, 2019. This date apply to most of the taxpayers, except for self-employed individuals and their spouse or common-law partner. If you are in this situation you both have until June 15 to file, but any owing balance must be paid on or before April 30. Then we go back to the beginning: the best way is to file the earliest and always plan for your taxes.

This month I'll be sharing due dates, benefits of planning for this season, examples, check lists and tips on how to navigate this tax season pain-free. Follow our blog and let us know if you have any question. 

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Audits are scary and may have a devastating effect on your business if your books are not up-to standards: you can be penalize with high fines, you can loose your operating licenses, and you can loose your business. Plus, the stress of having someone breathing on your neck and you not even been sure your accounting records can hold the scrutiny. Now with that image in your mind, I want you to meet Max.

Max is a lawyer and runs his own legal practice; we met on 2009 when I was updating my foreign accounting credentials on Canadian payroll and income taxes. He was in a panic state looking for someone to clean-up his accounting books as the Law Society of Upper Canada was reviewing his practice. In the middle of the audit Max had the bad luck of loosing all his database as his computer decided to crash. No back-ups! He hired me to re-construct his books and provide all the information to the auditors with the goal of not loosing his licence.

I came back home that day with a giant bag containing 5 years of receipts, bank statements, client’s ledgers and a laptop with PC Law installed to recover all the data and the responsibility of doing everything right. My living-room became my office and step by step I was able to sort out and properly file all the receipts, record all the entries on his legal software and provide accurate reports for the auditors. Max reached his goal of keeping his licence as the accounting standards of the Law society were met.
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By offering support and providing him with the reports he so desperately needed, I discovered I really enjoyed the whole process. I love cleaning-up messy books, recovering data and providing management reports that help business owners make better decisions and be covered and totally prepared when the auditors knock at their doors. Seeing the change on people from the panic state to feel comfortable and safe with their accounting reports is a prize on its own.

Yes, Max is still my client and we’d navigated together numerous audits: CRA and Law society, and he is happy with the results. The first thing he does when he receive the regular letter from the legal board, is to call me, and we then prepare all the reports: Stress-Free process.

When you are in business chances are, you’ll get audit by Canada Revenue Agency or your professional board. But you also need to make sure everything is recorded properly, and you have an efficient archive system where you can find what you are looking for at any given time. We can help you, we can offer you solutions to keep your accounting records up-to date and you can count on management reports that free your time to focus more on your business.

What tips can I give you after sharing Max’s story? Here they are:

• Always have back-ups systems in place
• Keep tidy records and efficient archives
• Hire a professional to run you bookkeeping and managements reports
• Be proactive and prepared for any review
• Follow-up with your bookkeeper regularly: it’s your business!!

Is there anything more relaxing that knowing that your records are audit-proofed? Imagine the free time and the comforting peace of taking that pain out of your mind. Now you can enjoy running your business and have better results. As I did with Max's practice, we can offer this peace to you too: a set of up-to date and accurate records that will make you feel protected from an audit. We are your shield.

​Book a free meeting today to check the bookkeeping health of your business. Don't panic if the auditors call you.

Why is so important reconciling your bank accounts?
You can always hear your bookkeeper whispering in you ear to send the bank statements on time. Why are they so obsessed? They are taking care of you and your business!
Why all the fuss about the reconciliation? Why is so important reconcile your accounts on time?

1. Don’t forget to report all your income: reporting ALL your income is the best way to avoid audit and build a business that fulfill its responsibilities. It’s is your duty as a taxpayer to report all sources of income, and when you keep track of your income periodically you can make sure you are avoiding non-reporting penalties. On the other hand, measuring your income against your goals give you the answer if you are on the right track to reach your financial goals.
2. Identify your personal contributions: when reconciling you need to distinguish your personal contributions from the business income. Remember to keep track of them and document the transactions to support your claims.
3. Don’t forget to claim all your expenses: as important as reporting all your income is also identifying and reporting ALL your business expenses. When you claim all your eligible expenses you are reducing your taxable income and then saving on taxes. Review on detail you bank accounts, credit card statements and any cash receipts you have and send the to your bookkeeper on time. The expenses, of course, need to be all business related and supported by the proper source documents. https://www.dcastro.ca/blog/record-keeping-requirements-from-cra-perspective
4. Keep track of receivables: comparing your sales and deposits at the bank helps you plan your cash flow, but also give you a rough idea of how much money are you owed. The best way is creating detailed reports and collect your funds periodically, but a quick look at your bank account and your invoices lets you know who well (or not) you are doing strategically.
5. Avoid errors: not frequently, but the bank can make mistakes too. Duplicated transactions not cashed cheques, incorrect charges to your account. When you get into the habit of reviewing periodically your credit card and bank accounts charges you can detect these mistakes or fraudulent charges on time and deal with the bank accordingly.
6. Be sure you have enough money: chequing your bank balances and debts give you the chance of savvy planning for the future. it's really important to know how much money do you have today and how much of that is owed to third parties. You can separate funds to pay HST, income taxes and save money for yourself and your business.

 
Reconciling your bank accounts gives you an amazing planning tool that can be using to improve the financial situation of your business. Making sure you report all your income and claim all your expenses can save you money, time and stress when the tax season arrives. You will be ready! 

Do you reconcile your bank accounts periodically? Are you using it as a planning tool? 

We can help!

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