Thornhill

T’is the season to be giving! Ten questions to ask yourself prior to donating

When you donate to charities you help make a positive impact on the lives of many Canadians, people around the world and on your life as well. Charities depend on our donation dollars to help Canadians and people around the world.  Yet, before you go out and support an organization, it is important carefully research the charity.  Here are the top ten questions you could ask yourself prior to donating to a charity.

1.Who can I donate to?

Although there are plenty of important causes in Canada, only registered charities can provide you with a donation receipt and thus help you reduce your taxes. The key word here is registered. Registered charities differ from not-for-profit organizations such as clubs and sporting leagues. Registered charities function under specific rules that are set out by the Canada Revenue Agency (CRA). Some of the stipulations that charities must follow include: ensuring that the money that they raise goes to charitable activities, keeping proper books and records, and sharing their financial and activity information annually with all Canadians through the CRA. There are other rules that charities must adhere to which you can read more about on the CRA website. In exchange for adhering to these stipulations, charities earn the right to a charitable registration number. This number is important to you, the donor because it makes you qualify for a tax credit.

Related: The difference between a registered charity and a non-profit organization

2. How can I find out if a charity is registered?

You could ask the charity for its registration number and verify its status on the List of Charities. You could also call the Charities Directorate at 1-800-267-2384.

Related:  The information that must be on an official donation receipt 

3. What can I donate?

You could donate cash, land or listed securities such as stocks to a registered charity or other qualified donees. Note that although gifts of service are valuable to charities, they don’t qualify for a tax receipt. These include donated time, skills and effort.

A good example of a gift of service is the following scenario. Let’s pretend that you are a software company and you offer to build a website for XYZ charity. After the website is completed, your company suggests that instead of invoicing the charity $16,000, the charitable organization issue you with a tax receipt of $16,000. Is the charity able to issue you a tax receipt? No, the charity is not able to issue you a tax credit because the website that you built for the charity is considered a gift of service and its an example of how you donated your time, skill and effort.

Lets now look at another scenario. You are still the same software company, yet in this case, you created a pre-designed software product, specifically a website template designed for charities (not only for XYZ charity but many charities). Your software company sells this product for $4000 and as long as you have documents to verify that this the fair market value of the product, then XYZ charity could issue you a donation receipt for $4000.

So the difference between scenario 1 and scenario 2 is that the former scenario is an illustration of a gift of service whereas the latter scenario is an example of a gift of property. In scenario 1, your software firm created a website specifically for XYZ charity, which could not be sold in the free and open market and therefore doesn’t qualify for a tax credit.  On the contrary, in scenario 2, your software company designed an off the shelf software that could be sold in the free and open market, and thus qualifies for a tax credit.

4. How much do I need to donate to receive a tax credit?

You could donate any amount to benefit from a tax credit. Just ensure that you have an official donation receipt.  Note that a charity is not required to give a receipt when it receives a donation. The CRA advises charities to tell potential donors when they will or will not be issued a receipt.

5. How do I claim a donation?

When you file your income tax and benefit return, there is an area on your return that is specifically for claiming your donations. Remember to fill out the donations section on your provincial and territorial tax and credit form. Additionally, ensure that you store all supporting documents such as official donation receipts, canceled cheques and pledge forms and stubs in the event that the CRA decides to review your return.

Related: The documents you will need to claim your charitable donation

6. Do I need to claim my donation receipts on an annual basis?

You can claim your receipts up to 5 years after you’ve made the donation, You can also combine your receipts with those of your spouse or common-law partner. In fact, donations of over $200 are equivalent to a deduction at the top tax bracket regardless of whether or not the donor is in the top tax bracket.

7. Is it fine if a registered charity gives me something in return for my donation, such as sporting or ballet tickets?

Yes, this totally fine and it is called an advantage. When a charitable organization gives you something as a token of their appreciation in exchange for your donation, the charity is required to subtract the value of the advantage from the amount of your donation to calculate the eligible amount to put on your donation receipt.

For example, you donated $1,500 to a registered charity called ABC Ballet Company. In order to show their appreciation, the company gives you three tickets to a performance that are valued at $150. You are therefore considered to have been given an advantage of $150. The eligible amount of the gift is $1350 ($1,500  $150).

8. What if the organization that I donated to is no longer registered. Can I still use my donation receipts to claim a tax credit?

Yes, if the charitable organization was registered when you first made the donation, then you can still use the receipt to claim a tax credit.

9. What are some tips that could help me ensure that I donate wisely?

a. Prior to donating check out the List of charities to verify that the organization is qualified to give you an official donation receipt.

b. Do not donate to an organization that pressures you to give immediately or if you aware of any signs of fraud.

c. Ensure that your online donations are secure.

d. Write cheques to the charity and not the individual.

e. Beware of donation schemes that promise a tax receipt for more than you donated.

10. What are some warning signs that a charitable organization might be engaged in fraud?

a. The charity calls to thank you for a donation that you have not made.

b. Organizations that use names similar to popular charitable organizations.

c. Canvassers who do not disclose details about the organization they serve.

d. Requests from the organization to send cash or money orders instead of cheques or credit card. Cash could not be traced and cannot be canceled.

e. Overly friendly canvassers that ask you personal questions.

f. Organizations that use free email addresses like Gmail or Hotmail to enable people that are part of the organization to conceal their identity.

g. Strange call display numbers such as 123-456-789 or 888-888-889 which might mean that the caller is trying to hide their phone number.

If you suspect an organization is engaged in fraud, report the suspected fraud to the Canadian Anti-Fraud Centre at 1-888-495-8501.

An infographic about top five tips to donating wisely

An infographic about the top five tips to donating wisely.


If you require additional consultation or want to learn more about our professional accounting services, please do not hesitate to contact S & P Accounting Services.

Polina Presman, CPA, CA

T- 416-371-6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Disclaimer: We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

Why small business owners should have a business bank account

Are you still using your personal checking account to manage your business finances? Regardless of whether you own a home-based business or are building a multi-million dollar enterprise, there are several benefits to differentiating between your personal and business finances. In this article, we will discuss the following: The numerous reasons you should have a business bank account and how to open up a business bank account.

The reasons you should have a business account

Having a business account will ensure that you keep your business funds separate from your personal funds.

Here are some of the worthwhile reasons:

1. Having a business bank account gives your new business credibility and professionalism. This is particularly important if you have customers that pay with cheques. It definitely looks more professional when you ask your clients to write a cheque to  “XYZ Enterprise” as opposed to  “Bob Smith.” It also looks more business-like and credible when you use separate business cheques and a separate business credit card to pay suppliers and other companies for their services.

2. Having a business bank account is advantageous for tax purposes. Maintaining a separate business bank account will help you keep track of all your business-related transactions and will make it easier to pay your taxes when tax season rolls around. It will also provide you with a clear trail of your business revenue and expenses in case the CRA decides to audit you.

3. Although having a separate business bank account is advisable for businesses that are sole proprietorships or partnerships, it is especially recommended for corporations (more about these business structures later in this article).  A corporation refers to a business that is a separate and distinct entity from its owners and as such the personal assets of the owners are sheltered from potential liability.  However,  sometimes courts will hold the corporation’s owners, members, and shareholders personally liable for business debts. When this occurs, it’s called “piercing the corporate veil.” For instance, if the corporation has been utilized as an instrument of fraud and improper conduct, or was incorporated for no valid business purposes, then the court may deem the shareholders personally liable. One of the criteria which may be used to decide whether the court should “pierce the corporate veil” is the degree of separation between the financial activities of the business and those of the owners of the business. As such, it is vital that an incorporated company have a separate business bank account.

4. The most obvious reason to have a business bank account is that you will be able to keep track of your cash flow and to see if your business is profiting.  A business checking account ensures that all your business transactions are separate from your personal financial transactions. This helps you monitor your business’s profitability.  If you were to combine your personal financial transactions with your business financial transactions into one account, you might have a difficulty determining your profit margin because to determine your profitability, you must remember which expenses were personal and omit them.

How to open up a business bank account

There are three main steps to opening a business bank account: 1. choose a business structure, 2. decide on who will be the primary business representatives and 3. provide the bank with several critical documents.

1. Choose a business structure

Prior to setting up a business account, it is imperative to decide which type of business structure you will be running. Is it a sole proprietorship? partnership? or corporation?

In a nutshell, here are the differences between the three business structures:

  1. A sole-proprietorship refers to a business in which you are the sole owner and fully responsible for all debts and responsibilities related to your business. One of the advantages of this business structure is that all profits go directly to you. However, one of the disadvantages is that you are subject to unlimited liability which means that a creditor can make claims against your personal assets to pay off your business debts.
  2. A partnership refers to a business in which you and another individual or multiple individuals have a legal relationship to operate a business as co-owners. In a partnership, you and your business partner(s) combine your financial resources into the business. You and your partner(s) share the management, profits, and assets of the business as outlined by the legal agreement you have formulated. One of the benefits of this business structure is that there is a tax advantage. For instance, if income from the partnership is low or loses money, you and your partner(s) include your shares of the partnership in your individual tax returns. One of the disadvantages is that there is no legal difference between you and your business so similar to owning a sole-proprietorship,  you have unlimited liability.
  3. A corporation refers to a business entity that is separate from its owners. The majority of corporations have shareholders, and the shares are held only by a few individuals, or they may be available for sale to the public (publicly held). One advantage of this business structure is that as a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation.  One of the disadvantages of owning a corporation is that it is more expensive and time-consuming to set up than other business forms. We advise that you seek legal advice if you plan on incorporating.

If you’d like to read some of the advantages and disadvantages of having a sole-praetorship, partnership, and corporation, check out this article from Canada Business Network.

2.  Decide who will be your primary business representatives

Next, after you decide on a business structure, determine who will be the primary representative for your business. In other words, who will have the authority to sign on contracts, cheques as well as perform certain functions such as withdrawals, transfers, and payments on behalf of the company?

3.   Provide the bank with several critical documents

Typically, banks require that all owners and signing officers provide two pieces of approved personal identification.

Also, depending on your business’ legal structure, you will be required to provide additional documents to the business bank specialist. For instance, for each of the following business structures, you will need to provide the following documents:

Sole Proprietorship

– Certificate of Registration of Business Name

Partnership

– Certificate of Registration of Partnership. Partnership Agreement (if available)

Corporation

– Articles of Incorporation. Certificate of Registration of Business Name (if available).

-Most current filing with your incorporating jurisdiction listing your directors

-Trade Name Registration (if applicable)

An important note:  Please contact the bank that will be managing your business bank account to determine if you require additional documentation and what their exact procedures are for opening a business account.


If you require additional consultation or want to learn more about our professional accounting services, please do not hesitate to contact S & P Accounting Services.

Polina Presman, CPA, CA

T- 416-371-6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Disclaimer: We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

Are you looking for a tax accountant in Toronto to help you with your tax return?

You may be eligible for free tax services

If you are looking for a tax accountant in the Toronto or North York area, yet have a simple tax situation and modest income, you may be eligible for free tax services.

In fact, there are many community organizations throughout Canada that have volunteers completing tax returns for eligible individuals. These tax clinics are made feasible through the Community Volunteer Income Tax Program (CVITP).

You might qualify for theses services if you have a modest income and a simple tax situation.

1. What is a modest income?

Modest income means that your family income is less than the amount shown in the chart below. Verify with the community organization in your vicinity to see if you are eligible as some organizations have different eligibility requirements. 

Family size Total family income
One person $30,000
One person with one dependant $35,000 (add $2,500 for each additional dependant)
Couple $40,000 (add $2,500 for each dependant)

2. Do you have a simple tax situation?

In general, your tax situation is simple if you have no income or if your income comes from these sources:

  • employment
  • pension
  • benefits such as CPP, disability, CCB, EI, social assistance
  • RRSP
  • support payments
  • scholarships, fellowships, bursaries or grants
  • interest (under $1,000)

Your tax situation is not simple if you:

  • are self-employed or have employment expenses
  • have business or rental income and expenses
  • have capital gains or losses
  • file for bankruptcy
  • are completing a tax return for a deceased person

In such circumstances, you may wish to seek advice and assistance from a tax accountant.

3. When are these free tax services offered?

Volunteer tax preparation clinics are generally offered each year between February and April but many are operating all year at various locations across Canada.

4. Where are the tax preparation clinics located?

Here is a list of free tax preparation clinics in:

5. What to bring to the tax preparation clinic?

 In order for volunteers to complete your income tax and benefit return for you, make sure to bring your:

  • Tax information slips
  • Receipts
  • Social Insurance Number
  • Identification

Volunteers need the above items to prepare your income tax and benefit return.

7. How do you get your slips?

You can visit Service Canada‘s secure site to get access to your current year and prior year old age security (OAS), employment insurance (EI) and Canada pension plan (CPP) tax slips electronically. 

For more information, see Information slips – T4 and other slips.

8. What if I require assistance with my taxes and don’t qualify for assistance from one of the free tax clinics?

If you require assistance with your taxes and are not eligible for assistance from one of the free tax clinics, you may contact S & P Accounting Services. We are a full-service accounting firm handling taxation, bookkeeping, payroll and accounting. We happily serve clients in North York, Toronto, Vaughan, Mississauga, Richmond Hill and other cities situated in the GTA. If you require consultation or a have any accounting inquiries, please do not hesitate to contact us.

Polina Presman, CPA, CA

T- 416-371-6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Disclaimer:

We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

 

 

We offer bookkeeping services in the GTA

We offer bookkeeping services in the GTA

Whether you have a start-up business or a well-established business, S&P Accounting could provide you with professional bookkeeping to meet your business needs. We offer bookkeeping services to clients in the GTA which includes Toronto, North York, Thornhill, Vaughan and Richmond Hill.

We provide a full range of bookkeeping services 

Our bookkeeping services include:

  1. Books set-up,
  2. Data entry, banking, and reporting,
  3. Payroll setup, processing, monthly remittances and yearly tax reporting,
  4. HST, WSIB and Employer health tax filings….and more.

Our bookkeeping services are highly professional

In Canada, bookkeeping, unlike the accounting profession, is completely unregulated. This means that when it comes to bookkeeping, there are no criteria for educational credentials or for professional conduct. Virtually anybody with little to no education or training could call themselves a bookkeeper. Unfortunately, using the service of an unqualified bookkeeper, has had detrimental consequences for businesses. For instance, according to Edward Nagel, a forensic accountant,  unethical bookkeepers could create “large-scale misappropriation — from fictitious vendors and ghost employees to cheque fraud, and everything in between. And, since many bookkeepers and their employees often have no formal fraud-prevention training, this increases the likelihood of a fraud going undetected for months, if not years. ” Mr. Nagel proceeds to say that it’s important to stay clear of bookkeepers that profess to be knowledgeable in the profession, yet refuse to answer straight-forward accounting questions. That’s definitely a red flag!

At S & P Accounting Services, our Chartered Accountants perform the bookkeeping services.  This means that our high level of educational, professional and ethical standards ensures that our clients receive top level bookkeeping services. As our client, you could feel confident knowing that our Chartered Accountants will ensure that your books are properly maintained. We will accurately and proficiently perform all your bookkeeping services, as well as give you advice and answer any questions that you may have about your business’ finances. Our qualified bookkeepers are able to customize a bookkeeping solution around your financial and business needs.

We offer bookkeeping services in both QuickBooks and Simply Accounting, and we offer these services at your office or ours, whatever you prefer. Our office is conveniently located in the the GTA.

Our bookkeeping services are affordable and efficient

Our bookkeeping services are an affordable and efficient way to get small and large sized businesses up-to-date with their bookkeeping records. We regularly look over your file and help ensure that your books are properly and accurately maintained. By providing you with professional bookkeeping services, you will have more time to focus on what’s really important -running your business.

If you require additional consultation or a have any bookkeeping inquires, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

What does bookkeeping mean?

My clients often ask me ‘what does bookkeeping mean?

They wonder if bookkeeping is something that they could perform while running their business.

If you are amid the start up phase of your business, you might wonder if bookkeeping is something that you could perform yourself while running your business.  Whether or not you choose to employ a bookkeeper or are comfortable to bookkeep yourself, keeping your books in order is crucial to running any business. In fact, good bookkeeping practices will give you an excellent measure of how well your business is doing.

In the following article, I will explain what bookkeeping means, what are the different ways to bookkeep, as well as why it’s important to bookkeep.

What does bookkeeping mean?

Bookkeeping is a recording of financial transactions, which include purchases, sales, receipts, and payments by an individual or cooperation. Bookkeepers are responsible for accurately recording all the financial transactions of the business, whether it is a cash transaction or credit transaction. You would need certain skills and talents to perform a bookkeepers crucial job.

Bookkeepers must be detail oriented, be meticulous about accurately recording numbers in the books and it is to their advantage if they enjoy working with numbers. Bookkeepers must vigilantly maintain a paper or electronic trail, as well as filling and storing all essential backup data about the financial transactions recorded in the books.

What are the different ways to bookkeep?

A useful bookkeeping system is one that is easy to understand, simple to use, reliable, accurate, consistent and can provide you with the information you need in a timely manner.

The two different bookkeeping styles are: single entry and double entry bookkeeping
Single entry bookkeeping means that every dollar transaction is recorded only once, either as income or expense, an asset or a liability. All entries are recorded on a one page synoptic journal, also called a revenue and expense journal.

On the other hand, double entry bookkeeping means that each transaction is recorded twice, one account is credited with the given dollar amount and a second account is debited by an equal dollar amount.

You may use a one-write system or a computerized system to record your bookkeeping.
One-Write Systems are copyrighted systems are set up using carbon-backed cheques. As you write the information on a cheque, it also transfers the data to a record system.

Computerized Systems are programs that are advantageous because they usually have the ability to produce daily updated financial statements quickly and in versatile ways. Many of these systems are scalable, so you can add on as your business expands.

Why is it important to bookkeep?

It might seem tedious to record every financial transaction in your books, yet financial records can save you a great deal of effort and time in long run.

Good records will keep you up to date with your business’ past and present standing. They will assist you in making good business decisions. Good records will also help you meet different government agency requirements, which include: Canada Revenue  Agency, Canada Pension Plan, Employment Insurance, Department of Finance, Goods and Services Tax and Workers’ Compensation. Additionally, good records will help you make accurate and timely remittances. Finally, good records will increase the probability that your business will survive, stay in business and earn profit.

If you require additional consultation or a tax planning strategy, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

The benefits of good business accounting services

Good Business Accounting Will Help You Focus on What’s Important…Your Business

Professional business accounting services can save you money and time, but that is not all. A good accountant can also help you make more money, grow your business and avoid bad business decisions. Here is how:

Good business accounting services help save on taxes

If you are in any way similar to the typical business owner, you may be paying more tax than you should. A good accountant will make sure that you are reporting all the right business expenses without missing any opportunity to lower your tax bill. A good accountant will also find ways to structure your return, in compliance with the regulations, in a way that will minimize your taxes. The time invested in finding a good accountant can save you thousands in taxes. Note that tax laws are changing all the time and what worked for you last year may not be effective or even allowed this year. A good accountant will be up to date with the latest changes.

You won’t pay unnecessary fees and penalties

Once you’ve found a reliable business accounting service, you can relax knowing that your accountant keeps a watchful eye and won’t let you fall behind on your payment to government agencies and regulatory bodies. This will not only save you from unnecessary payments, but also from the unpleasant and restrictive effects of penalties for late payment.

You’ll save time on bureaucratic stuff

As a business owner you are probably less familiar with the accounting world than you are with your own business. This can become a time consuming issue in situations when you need to fill out specific forms, apply government programs or just deal effectively with CRA. Your accountant can save you precious time by helping you with these issues.

Your business will grow faster and safer

An experienced accountant may have already seen businesses in situations that are somewhat similar to yours. Your accountant has intimate knowledge of the financial aspects of your business and can help you evaluate new opportunities probably better than other advisors can. A good accountant should have the ability to analyze those opportunities from a cold, financial perspective that you may not have as someone who is deeply involved. Your accountant can help you identify opportunities for growth as well as those that need to be avoided.

If you require additional consultation or a tax planning strategy, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

The role of a good small business CPA

A good small business CPA will provide its clients with advice beyond the areas of tax preparation and auditing

Many of our clients are small business owners. Even those who own big companies started a few years ago as small business owners. Small business is the backbone of our Canadian economy and should be treated as such. Therefore, A good small business CPA will provide its clients with advice beyond the areas of tax preparation and auditing, and will also help its clients capture the many business opportunities that are available to them in order for the maximize their profitability and reduce their liabilities.

Good small business CPA provide clients with advice in areas that are beyond tax preparation and auditing

In our role as a small business CPA, we meet many clients who can benefit from advice in areas that are beyond tax preparation and auditing. Many business owners can increase their profitability through a better understanding of how cash flows in their business, the true value of different business opportunities and the true value of assets and liabilities. For instance, the type of business structure you choose to have, whether it is a proprietorship, partnership, or corporation  will impact how you report your business income, the type of returns you have to complete, and many other aspects of your business. A good CPA will advise you on which business structure is most suitable for your business and the benefits that you are eligible for and how to increase your profitability.

Good small business CPA help clients capture business opportunities

A small business CPA should also help business owners capture opportunities for increasing profits that are not always so obvious to the untrained eye. An accountant has the advantage of having the full perspective of the financial situation of the business as well as the experience of dealing and improving different business situations for its clients. For instance, the following is one example of how a small business CPA could help clients improve their business situation. The Federal Budget 2017 has made changes to the way business professionals will report work in progress (WIP) on their income. This policy could mean that professionals such as lawyers, doctors, accountants, veterinarians, and chiropractors will have to pay more taxes upfront and stain their cash flow.  In order minimize this strain on business professionals income,  a good CPA will advise such professionals on the different options that are available to them.  Such recommendations  could include how they could change the way their WIP is calculated, the benefits of incorporating their practice, the advantage of creating a holding company for excess cash, as well as the value of splitting income with family members.  A good small business CPA will be well versed in the federal policies in place and will know which options are best for its clients in order to maximize opportunities and minimize any strain on their income so that the could carry on business as usual.

We believe that as a small business owner you can expect your CPA to give you this level of consulting.

If you require additional consultation or a tax planning strategy, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

A Tax Accountant shares the nitty gritty of being tax audited

As a Tax Accountant, I believe that it is my responsibility to reduce the chances of my clients being audited.

In fact, being audited can be overwhelming and it is definitely something you’d want to avoid. In this article, I explain, Why CRA audits? and What a tax audit is?

Why does CRA audit?

Canada Revenue Agency (CRA) is responsible for administering tax and benefit programs for all Canadians.  In order to ensure that the tax system is fair for everyone and that all Canadians receive the benefits and amounts that they are eligible for, the CRA audits businesses that may not have calculated their taxes correctly. In fact, the Canadian tax system relies on self-assessment. This means individuals register their business as applicable and at the end of the year or at the end of the reporting period, individuals calculate their own taxes and submit a tax return to the CRA along with any payments required. So the auditing is one way to ensure that businesses fulfill their obligations and receive any amounts and benefits that they are eligible for.

What is a tax audit?

When CRA receives a tax return it typically goes through an initial processing that checks basic information and calculates the information. From this initial processing, you receive a notice of assessment

A tax audit, on the other hand is a more detailed examination of your books and records. Records are financial documents that sum up your transactions and include documents to support these transactions. A tax audit is conducted after you’ve received your notice of assessment to find out if you’ve calculated your taxes correctly.

While undergoing a tax audit, the CRA first reviews the income and expenses you’ve reported. GST registrants might be more familiar with the terms supplies and input tax credits.

Next, the CRA may compare the income and expenses you’ve reported with other sources they have on file in order to affirm that you’ve followed the tax laws and that your calculations are accurate.

During this time, CRA also checks to see that you’ve reported revenues from all sources and that the expenses you claimed are deductible and supported by receipts. For GST/HST audits, CRA ensures that GST/HST is collected and reported on all taxable supplies, that you are entitled to the input tax credits you’ve claimed and that you have receipts to support your claims.

Finally, at the end of the audit, CRA will send you a letter and affirm one of three things.

1) that the previous Notice of Assessment was correct and nothing more needs to be done, or 2) that an adjustment needs to be made in more tax (reassessment) and you will have to pay the balance owing or 3) that an adjustment needs to be made, resulting in less tax (reassessment) and you will qualify for a refund. In most cases, audits result in a reassessment with mores taxes being owed to the Government of Canada.

If the adjustment results in more taxes being owed, the auditor can provide you with an approximation of the balance owing before the CRA issues a notice of assessment or notice of reassessment. This will give you the chance to prevent more interest charges from accruing by paying all or part of what you owe immediately. For more information, go to Make a payment to the Canada Revenue Agency.

I believe that a good Tax Accountant reminds clients of their responsibilities and requirements as tax-paying citizens. Businesses are obligated to to meet registration, reporting, filing and payment responsibilities which are written under the CRA laws.

Specifically, this means that you must keep your books and records up to date and generally for six years from the day that you file your tax return. You must also keep your books and records in an accessible and readable format either on paper or electronically.  Lastly, you must also provide your books and records and supporting documents to the auditor upon request.  All these steps will help reduce the chances that you will be audited and help ensure that you report your taxes correctly.  

If you require additional consultation or a tax planning strategy, please do not hesitate to contact us.

Polina Presman, CPA, CA

T- 416-371-6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Source:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/dt/menu-eng.html