When running your business is important knowing the expenses you can claim not just to reduce any amount of tax to pay but also to be able to manage your business properly, making decisions on which expenses to reduce to save money. The main goal of having your own business is paying yourself and be able to pay the business expenses with the business revenues.

All the expenses that you incurred to run your business you are eligible to claim them: office expenses, supplies, salaries, bank charges, insurance, utilities, vehicle expenses, etc. Always providing copies of the receipts and proving that the expense is actually related to your business. If you are in the food business buying supplies like sugar and oil are totally fine, not the same with a software business that the amount of sugar is just related to supplies to giving coffee or tea to your clients when visiting your office. All expenses need to be justified and supported by the nature of the business and the proper supporting documents.

At CRA website you can find a long list of expenses you are able to claim: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses.html, just be careful with which ones are actually necessary. Remember that the goal is not pay for all the expenses in the list but expend the necessary amount of money to run your business and still be able to pay yourself. I once met with a client that bought anything she can find for her business, her justification “it is eligible, it’s a business expense”. When I asker if she can actually afford all that expenses she was surprised that she could only pay “in cash” for just part of the expenses and the other part she didn’t actually need it. Her business now is running better, she is able to pay herself, have a profit to invest and find the cutest toy for her daycare business.

If you have a web design business you need top of the notch software, but if your business is a daycare you can do it, for starters, with a free version of FreshBooks. Sometimes is not the expense per ser, the main point is if we need it or if we can afford it. We totally understand we need to invest to sale, but are you aware of smarter ways of running your business?

• You can use free software - even accounting software - that help you be organized and run your business. Once you grow enough and are able to pay you can upgrade.
• Even if they are not free you can use technology on your favor: online payment services, teleconference services. Buy the software you really need.
• Don’t buy what you don’t need, even if is on sale.
• Plan, use budgets to track your expenses. If is not in your budget don’t buy it.
• Go paperless, print only what is necessary
• Reduce your credit card debt, reduce your interest payments.
• Instead of renting an office, be creative. Use co-working spaces (if appropriate for your business model) or work from home.

When buying supplies or incurring in expenses for your business you must also consider the source of money. How are you paying for that? Are you incurring in more debt? Are you able to recover that amount with your sales? This is a topic for next blog.

In summary, we can always plan for ways to afford the business expenses and run a profitable business which can support our life style. 

Photo by Ryan Born on Unsplash

After our blog about the importance of keeping records we’ve been contacted this week by 2 business owners with doubts regarding record keeping. What documents are important? What business records we must keep and for how long to comply with Canada Revenue Agency’s requirements?

First, we need to define what a Record is for a business. We can identify a Record as a document containing accounting or financial information that must be kept in an organized way. Usually they are called “books and records”. Records can include: ledgers, journals, vouchers, financial statements and accounts, and income tax and excise tax records. They help you determine your tax duties. Records are generally validated by Supporting Documents, which provide evidence of the transactions.

As per CRA website, Supporting Documents include (not limited to):

• sales invoices;
• purchase receipts, contracts;
• guarantees;
• bank deposit slips, cancelled cheques;
• cash register slips, credit card receipts;
• purchase orders;
• work orders;
• delivery slips; emails; and
• general correspondence in support of the transaction.

There are various methods of record keeping: paper files, electronically accessible and readable format converted from the original paper (scanned), or electronic documents produced by software. The main objective here is that the document must be readable, reliable and complete. The Supporting Document must provide you with the correct information to backup any tax claim.

You as an entrepreneur are solely responsible for the record keeping and maintenance of all documents, even when you hire a third party to do your filing, admin, bookkeeping and/or accounting work. Keep in mind that you are also responsible to provide those records to CRA at any moment. That is why is important to keep an efficient system where you can find any document at any given moment.

How long do you have to keep your records? Usually, for income tax purposes you need to keep all records and supporting documents for a period of six years from the end of the last tax year to which they relate. It’s important to indicate that the documents that support long-term acquisitions and disposal of capital, share registers, and other documents that will have impact upon sale or liquidation of property must be kept indefinitely. Similar rules apply to GST/HST documents, CPP, EI, ROE.

There are also special situations, some of them are: of you file your taxes late, you need to keep your documents six year from the date you file the return. You must also keep all documents concerning notice of objection and appeals.

All the business records and supporting documents must be maintain in Canada, or made available in Canada at CRA request, always in any of the 2 official languages. The documents can be kept outside of Canada only with a previous authorization from CRA.

Keeping proper records is both an obligation and a useful tool for all business owners. When you maintain archives that support every claim you made you make your business transparent and avoid unnecessary penalties due to loss of supporting documents. Records also helps you identify all sources of income and make better business decisions.
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If you still need help or have any question just let us know, we are here to help you and support your business.

Photo by chuttersnap on Unsplash

One of the obstacles that we find most frequently when we are creating or expanding our business is lack of concentration and motivation to keep pace and not get bored, quit in despair and throw everything away. For everything that have actual value you have to invest time and patience.
 
The lack of concentration can be adjusted with short-term goals, create tasks or lists of goals to be met. Some people prefer this on paper, others rely on software and others do Dreams Boards. You must find what is that keeps yourself focused, so that you can achieve your goals. By concentrating better on what we do, we increase the productivity and quality of the tasks we perform. There are many business studies and business books that deal with this topic, but the best thing is that everyone can use the system that works for them and generates better performance.
 
In the other hand, motivation is an emotional state that activates us, and helps us maintain a behavior that helps us meet our goals. It is an impulse that moves us to perform tasks and persist in them until we finish them. There are several "types" of motivations, but all studies agree that it is vital to achieve our purposes and dreams.
 
As you can see, the word we use the most here is: GOALS. The goals help us to draw the path, but first we must know where we are going. If we do not know where to go, no matter what path we take, we will never get there.
 
Discipline and perseverance in meeting our goals are the keys for our businesses to grow successfully.
 
In your business: do you work with goals? A question that we think so many times silly (but it is not): where do you see yourself and your business in 5 years? 📔📚🏷️💰💲

Today we will talk about another advice to improve your business: The need of keeping detailed records.
 
The registers - Accounting books - in which we record quantitatively all the commercial and operational operations of our businesses, in chronological and orderly manner, have the purpose of showing us the financial situation of the company at any time of the year and its results allow us to make the right decisions.
 
Example: when reviewing how much it costs you to produce a certain article, you can see if the sales prices are adequate and the sales have a favorable economic result. Thus, we can analyze different areas such as: cost of services, prices, reduction of expenses, to which products / services we should dedicate more attention and the ones we must even eliminate since they are not profitable at all.
 
"During a fiscal year there are a lot of economic movements. Beyond the income and expenses of the company, all properties and assets owned by a company must be taken into account, so it is not enough to keep a record of the movements in the company's account in an Excel file "(Judith de Quipu)
 
When keeping records is important that you keep track of all your bank accounts and credit cards movements, as well as your Account Receivables and Accounts Payables cycle. It’s possible that you have money in your savings account, but you owe must of the funds to third parties: CRA, vendors, Credit Cards balances, that is then an indicator that you need to plan better with cash flows, collect the money your clients owe you and even increase your sales!
 
It is also important to maintain detailed records that can demonstrate that our income and expenses are adequate when filing tax returns. In this way we avoid paying penalties and more taxes than we really need.
 
I hope your records are up to date!
 
Your comments are welcome!


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​Running your own business is an exciting journey that can also be sometimes hard to take on. We found obstacles that we must overcome to build successful enterprises. Today we’ll share some tips we use to keep us going on this ride to reach our goals. sometimes they are just common-sense practices that will help us create more successful and successful businesses. There is no exact formula to create a profitable business, but there are basic rules that can help us.

The first impediment usually is a disorganized office. The first advice then: Organize yourself!

And when we talk about organization we include not only the missing papers, or the sticky-notes that are flying everywhere. Organization includes: our daily activities, documents, goals, objectives, plans, our financial statements, debts. The first step in fixing a problem is to recognize it, and if we do not find what we are looking for, or do not know how much money they owe us, or what we owe to the creditors, we cannot take corrective measures to help us overcome this problem.

A good idea is to create:
- List of activities / tasks that must be completed on the day.
- Calendars that allow us to work with deadlines.
- File systems where we can easily find the documents we are looking for.
- Updated financial statements that we can make sense of
- Cash flows that help us understand our inputs and outputs to plan collections and payments.
- Work plans and goals, which allow us to work with a priority plan.

As I said, there is no single model and every business is a world, but these basic rules will allow us to work with more productivity, and we can have control of the decisions we must take to make our businesses successful. 

On following weeks we’ll keep giving you tips to create better business and help you pave your road to success.

What advice do you have that can help us to organize ourselves better? What techniques do you use to improve your productivity?

As a business owner you need the right tools to success. Let me help you build strong foundations for your business.

This seminar will help you decide the right structure for your business, the basics of the bookkeeping process, the need for keeping good records and how to use your Financial Statements in the decision making process.

Attendants will gain skills in Chart of Accounts, Financial statements reports and Planning.

There will be a second seminar on Sept 20, 2017 to complete the cycle on using Cash Flow and Budgets to keep your business on track. Join us!

Ticktes:
-Early Birds: $45.00 - Register before Aug 31, 2017
-General Admission: $50.00
-Duo - Attending 2 seminars (Sept 13 & 20) $80.00

​TICKETS @ EVENTBRITE
https://www.eventbrite.ca/e/your-business-in-canada-structures-accounting-and-taxes-tickets-36721876120

​Once you have developed your business idea and expect to run your business and get a profit from it, it’s time to decide the structure of your future way of life.

There are 3 way of structure your business: as a sole proprietorship, a partnership or a corporation. Today we will go over the first type of business.

A sole proprietorship is an un-incorporated business with just one owner: You! 
You are then responsible for paying personal income tax on the profit of your business. A small business run by one owner is the easiest and less expensive way to set up your enterprise. The government regulations are usually minimal.

There is no legal distinction between you and the business, then you are personal responsible for the business decisions, financing and debts. In case your business is not able to cover its debts you are hold to pay by the creditors. Maybe you have to declare bankruptcy.
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As a sole proprietorship you are considered a self-employed (not salaried) and you need to pay taxes based on the personal rates. Good news? Any loss can be used to reduce your taxable personal income.