What are some of the benefits of moving to your firm?
- Personal proactive approach to your accounting and tax needs.
- We work exclusively with small to medium sized business and consequently you are important to us.
- Tailor made personal tax plan.
- Convenience we do free pickup and delivery of your accounting records, leaving more time for you to concentrate on your business.
- We are approachable and accessible when you have questions.
- It is our goal to help your business run smother.
- You get the expertise of a CGA(Certified General Accountant)
What is the difference between a CGA and somebody like Generic Accounting Services etc.
CGA, CA and CMA are the only accountants that have the right to call themselves professional accountants in Canada, this is according to the Canada Business Act.
All three professional designations require extensive training and practical experience, which starts with a four year university degree. The professional requirements after postsecondary education include additional training of approximately 2-3 years of academics and 2-3 years of practical experience, in business.
There is also a difference between accountants with a professional designation who work in industry and those who work in public practice. There are additional requirements to be registered in a public practice. All professional designations require their members to be registered if they operate a public practice. You will find my firm is registered and listed on the CGA website http://www.cga-alberta.org/enrolmentdev/pprefsearch.aspx (search location Calgary) if a firm is not listed on this website then they are not a registered CGA firm.
Professional accounting firms will have the name of the individuals or partners in the name of the firm as this is currently a requirement by all professional organizations. So you know that if your accountant calls himself “Joe’s Accounting Limited” he is likely not a professional accountant as professionals are required to form either a proprietorship, partnership or professional corporation. A professional accountant is always responsible for his work and cannot hide behind the corporation.
All registered CGA’s and CA’s have full practice rights within Canada, this means we can perform audits, reviews or compilations, of financial statements.
If you have a complaint against a professional accountant and they do not respond to it, you may lodge your complaint to the professional association and it will be investigated.
If you take your accounting to an organization that is not registered as a professional accountant you have no assurance as to what training they have, as none is required anyone can call themselves an accountant. If you have a complaint or problem you are on your own.
For more information see the CGA website:
Why do you prefer to do all bookkeeping taxes and year end?
Bookkeeping is an entirely unregulated profession and we find that in many cases we can do the bookkeeping for the entire year easier than fix up the bookkeeping errors. This also allows us to be more proactive in your tax planning. Consequently you get the benefit of having your bookkeeping done by a CGA firm for a net cost of less than that of paying a bookkeeper and accountant seperately. We believe it results in a better end product.
Should I buy a vehicle within my company or personally?
There are a number of considerations.
When you purchase your vehicle within your company it belongs to the company however there is a taxable benefit to you personally whenever it is used for personal use such as running down to Mac’s to pick up some milk or transportation to and from work etc. You must keep a log of vehicle use and any personal portion; there is mileage and standby charge that must be included on your T4 at calendar year end. To calculate this amount see;
Should I lease or purchase my vehicle or equipment?
There are actually two different types of leases, operating lease or capital lease, a capital lease is in effect just another means of financing your purchase and in most cases the interest is much higher than a bank loan. So with today’s low interest rates for lending why would you get a capital lease when you can pay much less with a bank loan, but you really need to check out the details of all options before making a final decision. You should check your options carefully as it can make many thousands of dollars difference in total cash flow. Interest and leasing expenses are both tax deductible expenses as long as they relate to company expenses incurred to earn income.
In an operating lease you do not retain the equipment when the lease expires or you do not use the equipment for more than 75% of its economically useful life. This is not a type of financing and is just an expense on your financial statements and your tax return. It is in effect a rental.
Check out all of your options first and calculate your total cash flow for each option if you still are not sure, give me a call.
Shareholder loans
Whenever a personal transaction is included in your company it is considered a shareholder loan. There are many regulations around shareholder loans, but the one you really need to know is that at year end the shareholder loan cannot be in a receivable position. In plain terms you cannot borrow money from your company except for a very limited number of exceptions. If the shareholder loan is in a debit at year end then usually a dividend will be declared to clear this balance.
Paying yourself and family members
So your company is making money and you need to pay yourself some wages there are four basic ways to get money out they are.
Management fees
Dividends
Wages
Employee profit sharing plan
Of course the pro’s and cons to each need to be considered depending on your needs and projected future income. CRA is now requiring slips for all types of income, mangement fees and wages, you must at least pay the CPP before year end.
Bonuses
Bonuses are a tax deferral method. The company can deduct the wages expense in a given year but the actual funds are not paid out until the following fiscal year. The bonus must be paid out within 180 days of year end or the expense must be included in the prior year, this means resubmitting the taxes return and modifying the financial statements.
Purchasing a company
There are two basic ways, purchase the shares or purchase the assets. If you purchase the shares you get everything that comes with the company including any unknown liabilities such as pending court action or environmental issues etc. For this reason I recommend against share purchase unless you are very comfortable with the company and the risks.
The second method is that of purchasing the assets of the company this can include intangible assets such as goodwill client lists etc. When you choose this method you eliminate the problem of purchasing components of the business you don’t want. You also eliminate the problem of inheriting hidden liabilities.
In both cases you want to purchase the old company with your new company and pay for either the shares or assets out of your new company, these results in substantial tax savings, please see me and let me assist you in the transactions, as things can quickly become complicated.
Should I incorporate?
Two basic reasons to incorporate are tax savings, or liability protection.
Tax savings the current Canadian controlled small business tax rate is about 16% including provincial tax(Alberta) while the minimum personal tax rate in Alberta is 25.5% and goes up to 39% so the corporate rate is significantly less, this allows you to reinvest the money into the development of your business. However the tax savings really only apply if your company is making money and not paying it all out to employees.
Liability protection: A corporation is considered a separate entity from the shareholders and directors; this gives them protection against legal action as they are separate from the company. There are exceptions to this, if there is any evidence of fraud then there is little or no protection.
What materials do I need to bring in to have my year end completed
Bank statements
Cheque stubs or canceled cheques
Cash and Visa receipts
Last 3 yrs personal tax returns
Last 2 yrs corporate tax returns
List of business assets and their cost
Payroll records
Any correspondence from CRA
List of business expenses paid out of personal account;(Cash and Visa receipts)
GST returns for prior and current yr.
