When to Hire An Accountant For Your Small Business

No matter what stage your business is at, hiring a small business accountant can help it grow. In addition to handling payroll, bookkeeping and taxes they also can provide valuable financial advice. A big question small business owners have is when is the right time to hire an accountant? The answer is whenever you need one. Here is how a professional accountant can benefit your business at each stage.

In The Beginning

Hiring an accountant in the beginning stages of your small business can be beneficial. They will be an incredibly valuable resource for you. They can help you with the business plan, including budgeting, and also with any loan applications. An accountant will also be able to advise you on how to pay your employees, how to set up business accounts, how to pay yourself, and how to legally structure your business.

After It Is Set Up

If you’ve already started your business and are established hiring an accountant can still benefit you. Running a small business takes a lot of work, and as the owner, you probably wear a lot of different hats. Don’t waste hours pouring over the books; hire someone that is professionally trained to do that. This will save you time and money so that you can focus on other aspects of your business.

A small business accountant can also keep track of your financial data, catch any bookkeeping errors, manage your payroll, and set up a budget. All of this is invaluable to making a business successful. Don’t worry about the cost either. Most accountants more than make up for their fee through the money and time they save you.

During Tax Season

If you are an experienced small business owner, something you might only need an accountant during tax season. That is perfectly fine. Hiring a small business accountant to handle your taxes can end up saving you money. They can catch any bookkeeping errors that could end up causing you trouble. An accountant will also be able to find tax breaks and deductions that you might not have known about otherwise.

If your small business ever gets audited, the first thing you should do is hire an accountant. They will get you on track, recalculate figures, budget for payments, and prevent you from getting audited again. Professional accountants say the best way to not get audited is to hire an accountant in the first place.

Business Changes

When your business goes through a major change it is smart to hire an accountant to help you with these. An expanding business is a sign that things are going well but that also means there is more to handle. An accountant can help guide you through the process. Everything from financing a new location, expanding your service/product, and hiring more staff can be handled.

If you are downsizing or selling your business a professional accountant can also be helpful. They will help prepare any financial records and reports that are needed by the government or buyers. A small business accountant will also make sure you get the best value for your business when selling.

Conclusion

You can never go wrong with hiring a small business accountant. There is never a wrong time to do so. The services they provide are valuable to helping a business thrive and grow. Contact a Toronto Chartered Small Business Accountant today to talk about how we can help you with your small business.

Small Business Accounting and Accountants Myths

As a small business owner, wearing multiple hats comes with the territory. It can be incredibly stressful but with the many myths out there about small business accounting it’s easy to understand why people are reluctant to hand over that role. To make your life easier as a small business owner we’re here to debunk 6 of the most common myths about small business accounting and accountants.

1. Small Business Accounting Services Are A Waste Of Money

People think that they can save money by doing all the bookkeeping themselves. There’s tons of online accounting software out there now too that makes it much easier. However, nothing can replace the skill and experience that a professional accountant has. Hiring a small business accountant will end up saving you money, not wasting it. They will set up financial plans, create budgets, manage the books, and find hidden tax breaks.

2. They Are Only For Large Companies

Professional accounting services are important to any business, large or small. Outsourcing your accounting needs are safe, inexpensive, and easy these days. No matter the size of your business, organized books, effective budgeting, and an understanding of taxes are vital to its growth and stability. Hiring a professional small business accountant will provide all of that and more for your business.

3. An Outsourced Accountant Will Not Understand My Business

A lot of small business owners think that an outsourced accountant won’t understand their individual business. A professional small business accountant works hard to understand the specifics of any business that hires them. They are usually very well rounded and have a strong understanding of multiple industries. If it’s a serious concern for you though consider hiring an accountant that specialized in your specific industry.

4. They Are Too Expensive

A decision usually comes down to money. The number one reason small business owners don’t hire an accountant is because they think they’re too expensive. While an accountant is an upfront cost, they more than make up for it in the long run. They can increase cash flow, have better budgeting, improve bookkeeping, and create higher profit margins. They will make up for their fee and more.

5. Small Business Accounting Services Are Only Needed For Taxes

Finances are most crucial during tax season, but it’s important not to neglect them during other times of the year. A small business accountant will give you an accurate picture of your finances throughout the year. They’ll make sure your books are accurate and that you’ll have everything handy for filing taxes. If you’re hesitant maybe try out an accountant for tax season as a trail run.

6. I Can Handle The Accounting Myself

As a small business owner, you already take on so many roles. You do whatever needs to be done. Unfortunately, this means that you’re busy a lot of the time. Mistakes will get made and things slip through the cracks. Hiring a small business accountant means someone is solely focused on your finances, which is a good thing. It means you’ll have one less thing to worry about.

Bottom Line

Don’t buy into one of the many myths about small business accounting and accountants. Hiring a professional means you’ll spend less time on finances and more time actually running your business. 

Everything You’d Want to Know About Filing Taxes Late

Tax season is full of stress, especially as the April 30^th deadline gets closer and closer. You may be wondering what happens if you miss the date for submission. The answer is nothing good. That’s why accountants always recommend filing and getting started as early as possible. And here’s why.

Deadlines

Have it marked on your calendar. April 30^th is the deadline that income tax returns have to be submitted by as well as any balance owed to the government. Make sure any payments sent by mail have been postmarked on or before that date or you’ll get a penalty. If you’re self-employed there’s a big more wiggle room. Taxes don’t have to be filed until June 15^th but the catch is that any balance owed is still due on April 30^th, which confused a lot of people. Talk to your Toronto accountant to make sure you’re following the right dates.

Penalties

There are some pretty hefty penalties for filing late. You’ll be charged 5% of your owned balance plus an additional 1% for each additional month that your return is late. These penalties can increase too, doubling even, if you are continuously late. If you can’t afford to pay your balance by the due date at least make sure you file your taxes.

Benefit Interruption

Government benefits may also be interrupted in addition to financial penalties. Filing annual tax returns is a requirement in order to receive some government benefits. If you file late, or not at all, the payment for these programs will likely be late.

Programs that are affected by this are:

• Canada Child Tax Benefit
•  Universal Child Care Benefit
• Working Income Tax Benefit
• Guaranteed Income Supplement
• GST/HST Benefit
• Ontario Trillium Benefit

I Filed Late: Now What?

If you’ve already missed the deadline the best thing to do is file as soon as possible. Penalties get worse with each day that passes. There’s something called voluntary disclosure which is when you submit your taxes and forms before the CRA audits and asks for them. If you do this you will only be required to pay the amount owed plus interested instead of steeper penalties.

How to Avoid Being Late

Accountants always preach that you should avoid filing late at all costs, even if it means a late night or two. The penalties for filing late are heavy. Start getting all the information you need as early as you can. Don’t wait for the deadline either- file as soon as you have everything ready. Consider hiring an accountant to help you with everything as well. Contact a Toronto chartered accountant today if you have any questions, concerns, or are interested in our tax services.

Advantages of Filing Online Taxes

Most of our life happens digitally today, and not just communication and entertainment. We receive almost all of our important documents from bank statements to bills via the Internet. So why haven’t we shifted our taxes into the digital age with us? It’s been slow going but thankfully with the CRA NETFILE system taxes can now be done online. Chartered Accountants back this digital filing system and here are all the advantages of using it.

What is NETFILE?

NETFILE is the online tax filing system that is used by the CRA. It’s a free system of Canadian taxpayers. As long as you have an Internet connection, a completed tax return, and a four-digital NETFILE access code (that can be found on your T1 personal income form) you are good to go.

Security

People always worry about doing anything important over the Internet because of security. In this instance, don’t worry about privacy or security. The CRA and NETFILE use the most advanced encryption available in North America. Your financial data will be safe and secure, only to be seen by yourself and the CRA.

Errors

Accountants say another advantage to filing online is that there are fewer mistakes and errors made. NETFILE will actually tell you if there is an error in your taxes when you try to upload it. This gives you a chance to double check and fix the error before submitting. This isn’t a luxury that one gets with pen and paper taxes. It saves you from having to made amendments later on. Flagging these errors before submitting also lowers to chances of an audit.

Speed

Filing your taxes online is way faster than doing it with paper even if you have an accountant helping you. In addition to filing being quicker, you also get your returns earlier. Refunds can be set up with a direct deposit and received in as little as eight business days. By comparison, it usually takes anywhere from four to six weeks to get refunds when filing with paper.

Tracking and Organizing

Filing your taxes online means you have a permanent electronic record of them. This will keep them nice and organized. If you ever need to access them later on or have proof of them they can be conveniently located. It saves you time and stress that comes with digging through piles of old papers looking for the right ones.

More Refunds

Accountants’ say that people who file online tend to bet more refunds back. When you file online you get a chance to see what tax credits and deductions are available to you. If someone files on paper without an accountant they often miss out of these opportunities.

Conclusion

There are so many benefits to filing your taxes online. There’s ease, speed, along with greater refunds and less stress. Contact a Toronto chartered accountant today to get help with your taxes or if you have any more questions about filing taxes online.

5 Myths About Audits

Taxes are already stressful, but the threat of an audit makes it that much worse. It doesn’t help that there are so many myths and falsehoods floating around there about audits. Here are the 5 most common ones that we’ve debunked.

Myth 1: Filing Online Increases Your Chance Of Being Audited

There is no evidence that backs up this up. This myth stems from the fact that when you file online you can’t file paper recipes or tax slips. That means that when the CRA needs these documents they will send a request for them. Many people interpret this as an audit when in fact it’s nothing more than a simple routine verification. Filing online is actually great because there are fewer errors and you get your returns quicker.

Myth 2: Amending Your Taxes Means Getting Audited

Most people file an amendment when they realize they have made an error, put in a wrong figure, or forgot to add something. Some people won’t file amendments though because they are worried this will increase their risk of an audit. An amendment will be screened, but so are your initial taxes. This is a chance to explain what mistake you made. This can actually help you avoid an audit.

Myth 3: The CRA Will Show Up At Your Door

Here’s the thing, the CRA can show up at your door but they only do that after sending you a notice and scheduling an appointment. In some audit cases, they need to inspect one’s home and or workspace. Most audits take place entirely through the mail, though. If anyone contacts you online or shows up claiming to be the CRA and you haven’t received a written letter then it’s probably a scam.

Myth 4: Getting Audited Means You Did Something Illegal

People have this perception that people only get audited when they do something illegal. Sometimes that’s true, but in most cases, people get audited because of simple mistakes. Hiring an accountant is a good way to avoid this.

Besides errors, there are a ton of other reason people get audited. It could be a secondary audit, your business might have made more than the average, or the CRA could dispute the one portion of a claim you made. An audit is a chance to argue your case, not that you immediately did something wrong. Sometimes the CRA even audits at random. Audits are stressful enough without the stigma.

Myth 5: Audits Are Horrible Experiences

This myth stems from a history of truth. In the past, tax agencies were cruel, ruthless, and unnecessarily harsh. They earned a reputation that has stuck long after serious changes were undertaken. Today, the CRA is more focused on working with people rather than against them. An audit isn’t pleasant but it doesn’t have to be horrible. To make an audit go as smooth as possible by being cooperative, compliant, and honest. Hire a Toronto chartered accountant to help you out if you’re too scared to do it on your own.

Conclusion

Audits are stressful and can be scary but they’re not the end of the world. Honesty goes a long way when it comes to an audit.

Getting Audited? Here’s What You Should Know

Getting audited by the CRA (Canadian Tax Revenue) is scary. It’s the stuff of nightmares. There are multiple reasons why your personal or business finances have been audited. The best thing to do with an audit is to cooperate and be honest. Here is everything you should know about getting audited.

Audit Reasons

There are tons of reasons you could be getting audited. Cash businesses such as restaurants get audited more frequently than others. Businesses that claim to make more than the industry average for the year are also at a higher risk of being audited. The CRA also has audit projects, where they will target certain industries that have a higher non-compliance rate.

You could also be audited because of a something called a secondary review. That is when the CRA audits you because you are a spouse, investor, and supplier of a company or individual that is undergoing a main audit. This is done so that your records match the ones of the main audit. The CRA will also do random audits. Always make sure you are compliant because being resistant will only make things worse.

Audit First Steps

The first thing that will happen during an audit is that you will be contacted by the CRA. Make sure you receive a written notice to make sure it’s a legitimate audit and not a scam. Ask them for a list of documents they want and work on compiling them. Make sure to contact your Toronto chartered accountant to get their aid with this.

Documentation

Certain documents will be required during a CRA audit. Sometimes all of them are requested and other times it's only specific ones. Receipts, bank statements, income forms and other documents will be requested. Work with your accountant and bank to make sure you get everything they ask for.

Addressing Problems

The CRA should be clear about what issue they want to resolve with an audit. Maybe they disagree with you about income or expenses you claimed. Maybe the car expenses you claimed aren’t accurately documented. The key to a smooth audit is to show valid reasons and support for your claims.

Results

All issues will be resolved at the end of an audit. You might have to pay a balance or you might not owe anything else. The CRA will send you a document letting you know. You and your accountant will have some time to decide if you accept their results or if you want to challenge them.

Conclusion

An audit is scary but it isn’t the end of the world. Stay calm and honest. The best thing to do is consult your small business accountant at every step of the way. It’s important to remember that just because you’re being audited doesn’t mean you did anything wrong. Stay compliant and things will work out.

Accounting Software Comparison: Xero vs. QuickBooks Online

Inuit’s QuickBooks Online has dominated the cloud accounting software for years. Recently, another competitor has arisen to challenge them- Xero. QuickBooks Online still has the majority of the market share, but Xero is growing at the same rate of them now showing it to be a worthy competitor.

Many small business owners see these two programs and wonder what the difference between the two are. They both offer similar features but there are a few differences between them. To help you determine which accounting software is right for your small business we’ve compared them to you.

Cloud Accounting

Both software is cloud-based accounting ones. Cloud accounting is when financial data is remotely stored in cloud servers. There are many benefits to cloud accounting. Cloud accounting has increased security, tends to be cheaper, and allows for remote access and real-time updates. So whether you choose Xero of QuickBooks Online you will get the benefits that cloud accounting offers.

Users

When it comes to QuickBooks Online and Xero cloud accounting, the number of allowed users is one of the biggest differences. Xero offers an unlimited amount of users, no matter what subscription package you have. Unfortunately, QuickBooks Online only allowed one, three, or five users depending on the plan you have. If you have a small business that requires multiple people to use the accounting software then Xero might be the option for you. Adding additional user to QuickBooks Online can quickly become pricey.

Use

Neither Xero nor QuickBooks Online would be so popular if they weren’t so easy to use. Both of them offer easy navigation, a nice layout, and tons of useful features. Many accountants say that Xero is slightly better when it comes to ease of use, though. A common complaint about QuickBooks Online is that they have some unnecessary navigation steps and minor bugs.

Pricing

Pricing is a big factor for small business owners when it comes to choosing bookkeeping software. It is a little difficult to compare Xero and QuickBooks Online, as their packages don’t always offer the same things. QuickBooks Online offers a great deal for a company that needs the bare minimum for bookkeeping. For more comprehensive plans, though, Xero offers far more for a lesser price.

Customer Service

Customer service and support say a lot about how a company cares about their clients. Luckily, both Xero and QuickBooks Online have good customer service. In the past, people had some issues with QuickBooks Online but Inuit appears to have listened and fixed those problems. Both have proven to be great at fixing small issues. Accountants and clients say Xero does slightly better when it comes to solving bigger issues as they have a faster response time and representatives that know what they’re doing.

Security

A common concern small businesses have about cloud accounting is software. Accountants swear by cloud accounting software such as QuickBooks Online and Xero though. Both companies excel at making sure your small businesses financial data stays safe. Between secure data centers, encrypted passwords, and authorized accounts your information will be safe and protected.

Verdict

Both Xero and QuickBooks Online are great options for your small business accounting needs. Xero pulls ahead in some categories but QuickBooks Online has years of experience. If you’re still having a hard time deciding between the two ask one of our Toronto chartered accountants which one would be better for your small business.