Skip to main content Skip to search

Blog

Common Pitfalls In Your First Year Of Business And How To Avoid Them

Common pitfalls in your first year of business and how to avoid them

Starting a business is no small task, so we don’t treat it like one. It takes tremendous courage to take your magnificent caffeine-fuelled idea and turn it into a legitimate business. It can be both scary and exciting at the same time; scary as you’re investing all your time and energy into an idea without the guarantee that it will work out and be successful. 

We encourage entrepreneurs to begin with the end in mind. Because you’re right. It is a scary journey. But with the right plan in place, it doesn’t have to be quite as anxiety-inducing as a Google search tells us it’s going to be when we’re starting out.  

Here are the top 5 early-day pitfalls we see and how you can avoid them:

  1. The Tangled Personal/business Charlie Foxtrot Of A Bank Account

This is number 1 for a reason. If you decide not to do anything else, please do your future self a favor and open a separate bank account and credit card for your business. All of your expenses and income must run through here and come tax time, you will thank your past seld and first bump them fist bump for their thoughtful consideration.

  1. Trying To Do It All Yourself

Being an entrepreneur is hard work as it is, everyone has their talents and their enjoyments. At some point, you will want to outsource the non-core functions (marketing, accounting, etc.)  of your business. For obvious reasons, it is not viable to outsource everything in the early days, hence you will have to suck it up and work those overtime hours evenings and add that eighth day we wish they would add to the week. Although, having at least one person on your side can be critical to your success. Pick your least favorite thing to do and hire someone else that is good at it to do it.

  1. Getting Distracted By Opportunity

Once you make the jump, the world and opportunities really do open up. There is so much opportunity out there. Staying focused and committed to your task at hand can become quite difficult, especially if you are an ambitious individual. But it is important you stay focused. Setting goals will help steer you away from these distractions that might seem like they are great opportunities. 

  1. Ignoring Your Salary

If your business model does not include paying yourself, you are volunteering and not building a business! This is really important to understand, often you might think you are sacrificing for the greater but in actuality you are not. What do you pay yourself? What you are worth, of course! Even if you can’t afford to pay yourself in the early days, make a plan to do so. It will definitely pay off. 

  1. Not Knowing The End Game

What does success look like to you? Writing this down somewhere and looking at it constantly can help immensely during times of uncertainty, exhaustion, and overwhelm. Having a vision board can help in those tough times of duality.

These pitfalls can be hard to avoid all by yourself, H&T Accounting is here to help you and your business succeed. Call us today and discover how our services from our experienced team can help you take your business to the next level!

Read more

Why Your Profits Might Not Be Increasing As Your Business Grows

business grows

As your small business continues to grow, so do the customers and sales. You feel like all that hard work is paying off until you see your profits. You’re shocked that they do not match the growth of your business. Now, no need to worry this simply just means that you need to examine the following areas to address this issue.

Investing back into your business

It’s an intelligent move to invest a fraction of your profits back into your business to help it grow. The best growth strategies – especially fast ones, require you to spend some money. This consists of marketing materials, ads, branding, and many others. However, it’s still important to track costs and make informed decisions to get a reasonable ‘Return on Investment (ROI).

For the majority of businesses, it is recommended to allot 5% of your revenue to your marketing budget. Although if you are starting out this might not be enough; businesses that are newer usually have to spend more capital toward marketing in order to get themselves off the ground and build a loyal customer base. Many of these costs can include; buying website domains, designing a logo, and buying ad space to target your ideal demographic.

When it comes to accounting, the money spent on marketing and promotion will be counted as an expense that will impact how profitable your business appears. But they are not thought of as a “pure” expense. They’re more an asset as they provide you with an economic benefit and a clientele that will help your business grow. These costs can be thought of as a fundamental investment. Like any investment, you can be carefully tracking your ROI (or return on investment) and making adjustments when you’re not getting your money’s worth. For example, if you’re paying for an ad on Facebook and you’re not getting the clicks and traction you hoped for, it may be time for you to reconsider your strategy and assign that investment money elsewhere.

You are not tracking your fixed costs

Your fixed costs or also known as overheads are the consistent operating expenses of your business, they can be one of the major reasons why your profits might not be matching your growth. Some fixed costs can include:

  • Government Licenses or Permits
  • Utilities
  • Insurance Payments
  • Rent

A great way to know the expense of these fixed costs is to have a clear picture of the company’s financial records. This allows you to work your way through and track your profits, expenses and many more. Knowing this can allow you to come up with a budget and cut down or eliminate unnecessary fixed costs.

Team Growth

It is a great and exciting experience to bring in your employees as they are a great way to grow your business. But, keep in mind as your business grows so does the team and along with this, you are tied to more expenses. This could mean marketing materials and hiring new staff and this can have an impact on your profits hence why your profits might be the same or even less as you grow.

With a growing team it is similar to overhead costs, not only are you paying more salary every month you’re also spending money on the time and equipment it takes to train a new employee.

Here at H&T for hiring, we recommend a similar mindset as expanding overhead costs: growth for the sake of it is expensive. But bringing on new team members to match the load of your work and business size is both a great and wise investment.
If you still have a hard time setting your profit goals or how to cut down on expenses it might be a good idea to consult with H&T Accountants and/or a financial advisor. Doing so can allow you to maximize your profits.

If you are looking for more money advice or how to grow your business or even want to learn the basics of accounting and finance follow our blog and stay in touch!

Read more

Small Business Taxes in Canada – Personal and Corporate Taxes

Small Business Taxes in Canada

As a small business owner, we can often think that the odds are stacked against us when it comes to capital and finances. But it is important for small business owners to be informed that the Canadian tax system is set up to your advantage. You can build wealth within your company and for retirement.  As hard as it might be to believe, there are methods to create wealth right within the tax system that are encouraged by the government.

Firstly, it is important to understand that the Canadian tax system is broken up into two parts: personal and corporate tax. 

 Personal Tax vs. Corporate Tax

Personal tax rates can be quite high. You may pay high personal tax rates and, in a way, this makes sense. The government wants you to pay its money before you go and spend it somewhere else. This is what GST (Goods and Service Tax) and HST (Harmonized Sales Tax) are all about. This tax (consumption tax) is a way of trying to prevent you from overspending.

On the other hand, we have corporate tax, small business tax rates are between 9% and 15% based on which province you live in. Although it might seem arbitrary, the corporate tax rate is much lower than the personal tax rate since the government wants you to contribute towards the economy.

 Income Retention in Corporation

We all love paying the lowest amount possible in taxes which is why some entrepreneurs may potentially keep as much income earned and build a nest egg in your corporation. But, due to recent tax changes by the government, they have discouraged this and are trying to stop this from happening. The government still wants you to save capital for the future but just not this way, instead here are the recommended methods of doing so.

 Method 1 – RRSPS

Instead, the government wants you to payout your salary, and use RRSPs. This method can be used for saving for the future, the government wants you to do so using that salary that you earn. You simply create a RRSP contribution room and retirement fund, and it grows quite quickly as taxes aren’t paid now but down the road in the future. Overall, you have a greater amount of money to start with which further grows and helps a lot as retirement reaches.

 Method 2 – Lifetime Capital Gains Exemption

This method is quite valuable and can change the way you think about your business in a positive manner. This big tax incentive by the government is policy-based, basically what the government wants is for you to create a treasured business that you could potentially sell in the future and obtain tax-free money. The strategy to carry this out is through the lifetime capital gains exemption. This policy is a method and not a loophole, additionally it’s not going away any time soon. It’s very policy-based, simply put the government wants you to create a company that’s not going to croak when you die or retire. In return for this, the government is offering $900,000 of tax-free money for selling the shares of your small business corporation that qualifies.

 This is such a treasured tool for retirement and creating wealth, yet it is often overlooked. The primary reason it is overlooked is that it is a lot of work to achieve this. Many things need to be resolved within the business to ensure that it is sellable. It can be quite complicated but with the help of professionals at H&T Accounting Services, you can achieve this.

 Collectively, there are many ways you can set yourself up for success as a small business owner with the help of the government policies and rules. Understanding how the tax system works is crucial to avail these opportunities and retire with as much capital as you possibly can. It is important to understand that having an accountant or financial advisor that understands your goals can only help you achieve this. Book an appointment with us today to take your small business to the next level whilst setting yourself up for success.

Read more

Home Office Expenses For Employees

personal tax return

Are you someone who is looking to claim personal tax? Have you thought about hiring an accounting service to help you file the claim? If you said yes to both these questions then keep scrolling down because we have got you covered.

Why Should You Claim A Personal Tax Return?

Home office expenses are usually claimed on a personal tax return. The deductions help in reducing the amount of your income that you pay on the tax. This means that your overall liability on income tax also gets reduced.

What Is The Temporary Flat Rate Method? How Is It Calculated Through Accounting Services?

A temporary flat rate method helps in simplifying your claim for a home office expense. This includes the home expenses, the office supply, and the phone expenses all at the same time. So, if you are someone who is still working half the time from home, you can easily claim $2 for every day you worked from home. The period of working from home should at least be four consecutive weeks after the pandemic hit the world. As an individual, you can claim $400 at maximum for working from home under the home office expenses for employees working through COVID-19. Just keep in mind that this method of calculating the claim would only work after 2020.

Here Is How You Can Easily Do Auditing Yourself And Calculate What You Should Add To This Claim:

  • Do not calculate the area of your working space.
  • Do not keep any supporting documents with you.

Here is how your employer can calculate the claim by not doing the following:

  • They do not have to complete the form or sign up at T2200S or T2200 like employees.

Here are a few easy steps to help you find out if you are capable of filing for the claim or not:

  1. Find Out If You Are Eligible

You can easily find out whether or not you are eligible to file for the claim.

  1. Fill Out The Form

When you start filling out the form, you need to calculate the total number of days you worked from home in the year 2020 when the pandemic hit the world and then multiply the total number of days by $2. Remember that you can only go up to $400 for the claim you are seeking in return. So, the maximum number of days you worked from home can only be 200 days.

  1. Determine An Appropriate Number Of Days You Worked From Home

The best way to calculate your total number of days is by using the temporary flat rate method. Just follow the process and then attach the form to your income tax return.

  1. Claim The Deduction On Your Tax Return

In the form, you will see Line 9939, you should add the claim amount over there with your other home office expenses.

Did you find this article useful? Let us know in the comments below.

 

Read more

How Much Can You get in Canada Child Benefits?

How much can you get in Canada Child Benefits?

The Canada Child Benefit (CCB) is administered by the Canada Revenue Agency (CRA). It is a tax-free payment that’s provided on a monthly basis to eligible families who have children that are under 18. In addition, the Canada Child Benefits might also provide a child disability benefit, including other related territorial and provincial programs.

The Canada Child Benefit is paid to eligible families from July until June of the next year. This benefit is based on several factors. In order to qualify to receive this benefit, a family needs to meet these four important conditions:

  1. You have a child who is still under 18.
  2. You are the sole caretaker of this child and responsible for their upbringing.
  3. You live in Canada and are a resident who is required to file tax returns.
  4. You and/or your partner is a citizen of Canada, a protected person, a permanent resident, a temporary person (been in the country for the last eighteen months and has a valid permit for the nineteenth month), or is an indigenous person living under the Indian Act.

You will be considered as the primarily caretaker of the child if you are responsible for supervising the daily activities and other needs of the child, making sure that all of their medical needs are met, including arranging childcare when needed.

How much will a family receive?

The amount of money a family receives is based on a couple of things like:

  • The number and ages of qualified children present in the family.
  • The family’s net income for the last tax year.

Furthermore, you can also use a reliable online calculator in order to get an estimation of the amount of money you might receive. This is also going to calculate whether you qualify for the Child Disability Benefit or not. A lot of the community agencies can help you when it comes to finding information about family and child tax benefits, hence make sure to get in touch with them.

How can you apply for the Canada Child Benefit?

You can apply for the CCB by choosing one of the three different methods. The first method is by using you birth registration. This takes place when you are registering the birth of your child at the hospital. Also, there are certain provinces that allow online registration. You need to give your consent before sharing your Social Insurance Number (SIN) and give permission to the Vital Statistics Agency to share your birth registration number with the Canada Revenue Agency.

The second method involves logging into your CRA account. After you have logged in, go to the ‘Apply For Child Benefits’ section and fill in the required fields like your contact, citizenship, marital status, name of your child, gender, place and date of birth. After you have reviewed your application, submit it. You might have to provide additional documents to the CRA, if asked for it. You can do that by navigating to the ‘Submit Documents’ section in your CRA account.

The third method consists of mailing the application package. You would have to download form RC66 and fill it up. This is the Canada Child Benefits Application, and you have to attach other required documents too. Next, you would need to mail the entire package (make sure it is signed) to your tax centre.

Read more

Registering for a Charity – CRA & COVID 19

Registering for a Charity - CRA & COVID 19

It’s hard times. And you have an idea in which you want to aid communities by providing some sort of pandemic relief programs through a charity. Don’t know where to begin or what information you need? We can help! We have provided some basic information in the discussion below. 

Where to apply with your charity registration application? 

The CRA has encouraged that before you apply for a charity, research and consider if there are other registered charities that are already established, that you donate or offer services to those firstly. However, if you still wish to apply and register, please do so online. Please note, due to the pandemic delays, review of paper and digital based applications have been delayed compared to the normal standards and will hopefully improve with time. 

Applying your T3010

In submitting your  Form T3010, Registered Charity Information Return, please note that the filing deadline has been extended to December 31st, 2020. The form is due between March 18, 2020 and December 31, 2020. The easiest way to submit this form is online through My Business Account for charities 

Staying Compliant 

In understanding the amount of work and support our charities do for our communities, the CRA wants to make sure that they are able to provide support during this difficult time of the pandemic. In resuming all compliance activities to keep the public and employees safe, an education-first approach will be maintained to compliance. 

Auditing 

With respect to auditing, the CRA’s Charities Directorate will be requesting charities to resume ongoing charity audits, initiate the Canada Emergency Wage Subsidy post-payment audits and begin new audits. 

Charity Revocations 

With the many customers H&T Accounting Services work with, we encourage everyone to continue staying compliant with all the requirements of their registered charities. Failure to comply has implications and your registration may be revoked. During this time, the CRA has resumed processing revocations for failure to comply with charity requirements. Please remember revocations will relate to reporting periods that predate the pandemic months. The CRA will be sending out multiple notices that will need to be addressed and if they believe that the registration needs to be revoked for whatever reason, they will send out a letter in the mail stating why, also explaining your rights for objection and appeal.

H&T Accounting Services understand that keeping up with all these changing regulations and procedures can be frustrating at times, however, we are here to assist you every step of the way! Do not hesitate any longer, reach an expert today!

Read more

Filing Income Tax

Tax Time
So it is tax season once more and you are struggling to understand whether you are required to file a return. Below we have answered the basic question of who is considered for income tax purposes.

Who should file income tax

If you fall into any one of these status living or working in Canada, you will be required to file your returns,
– Permanently living in Canada
– Leaving Canada temporarily or permanently
– Temporarily living in Canada

Here, we will discuss a little more in depth each status group,

Permanently living in Canada

Canadian Residents
If you are a resident or citizen living and working in Canada, you will want to file your return so you receive credit and benefit payments you are entitled to. If you are a legal representative of someone that had died in the year 2020, you may have to file a return for that person.

Newcomers to Canada – Immigrants & returning residents
If you are a newcomer leaving another country and settling in Canada, you will want to file your return as you may be eligible for the Canada Child Benefit, GST/HST Credit and other provincial and territorial programs.

Indigenous People
If you fall into the Indigenous People’s category, you are subject to the same tax rules as any other Canadian resident. We encourage you to file as you may be tax exempt under section 87 of the Indian Act based on your income. You are eligible and have access to all the same benefits and credits as all other Canadians.

Leaving Canada temporarily or permanently

Factual Residents & Government Employees
A factual resident of Canada is anyone who has left Canada however, has significant residential ties in Canada while travelling outside of the country whereby, you must file your return. You may be considered as factual in situations where you may be working, teaching, commuting, vacationing etc. outside of Canada and in another country. Government employees are usually considered factual residents

Live part-time in the U.S
If you live, vacation or spend most of the year in our neighboring country, the U.S. you are still obligated to file your return if you are still maintaining residential ties in Canada.

Leaving Canada – Emigrant
If you leave Canada to live in another Canada and sever your ties with Canada, you may be considered an emigrant for income tax purposes.

Temporarily living in Canada

If you are a non-resident of Canada with the following statuses, you will be considered a non-resident for income tax purposes.
– Non-resident of Canada
– Non-resident of Canada with rental income
– Deemed Resident
– International Student
– Seasonal Worker

Regardless of what status you are in, H&T Accounting Services are here to assist you with all your questions and concerns regarding your income taxes. Call today for a consultation!

Read more

COVID-19 Benefits and Taxes

covid 19 finacial recovery benefits and taxes

This past year of 2020 has been a difficult one for all of us. Many of us have been financially affected in ways that were the least expected and we understand this. For many, a simple emergency fund was probably not enough to get through these past months especially if you had lost a job for some period of time or had a significant decrease in your income. Seeking unemployment or some government COVID-19 financial aid may have been the only option for many people experiencing low to no income for a period of time. 

We discuss this because it is very important to stay up to date with tax regulations for tax season coming up. We want to take this opportunity to help inform our customers of what may lie ahead regarding benefits and taxes.

T4A Slips 

With the government providing income support to many families and individuals, it becomes crucial to understand what amounts will be reported during tax time. 

If you received any COVID-19 emergency or recovery benefits from the Canada Recovery Agency (CRA), please note you will get T4A slips for the amounts you received in benefits. These benefit amounts are taxable and must be reported. 

You will get a T4A slip if you received:

  • Canada Emergency Response Benefit (CERB) with the CRA
  • Canada Emergency Student Benefit (CESB)
  • Canada Recovery Benefit (CRB)
  • Canada Recovery Caregiving Benefit (CRCB)
  • Canada Recovery Sickness Benefit (CRSB)
  • Provincial or territorial COVID-19 financial assistance payments

You will receive one T4A slip which includes all your COVID-19 benefit payments from the CRA.

T4E Slips for 2020 tax year

Further, if you received Canada Emergency Response Benefit (CERB) from Service Canada or any Employment Insurance (EI) benefit payment, any benefit amount received before December 31, 2020 is taxable and must be reported. You will receive a T4E tax slip for the amount you received. 

Interest Relief

The government is further providing interest relief to individuals who meet a particular criteria as provided here, 

  • Your total 2020 taxable income was $75,000 or less
  • You received at least one COVID-19 benefit in 2020:
  • Canada Emergency Response Benefit (CERB)
  • Canada Emergency Student Benefit (CESB)
  • Canada Recovery Benefit (CRB)
  • Canada Recovery Caregiving Benefit (CRCB)
  • Canada Recovery Sickness Benefit (CRSB)
  • Employment Insurance (EI) benefits
  • Provincial or territorial emergency benefits
  • You filed your 2020 income tax and benefit return
  • You have a balance owing for your 2020 taxes

If you meet all eligibility criteria and have filed your 2020 tax return, the CRA will automatically apply interest relief on your 2020 taxes owing.You will not have to pay interest on any amount owing from your 2020 taxes until April 30, 2022. Interest relief only applies to your 2020 taxes owing and not on previous or other debts with the CRA.

H&T Accounting Services work around the clock meeting all client needs. We are here to answer all your questions that you may have. Call us TODAY for any financial need you may have!

Read more

COVID-19 Updates – Your Canadian Recovery Benefit

COVID-19 Updates - Your Canadian Recovery Benefit

Here at H&T Accounting Services, we understand the changing times in today’s world and how important it is to stay financially stable with personal and business finances. This is why we would like to inform our customers about the Canadian Recovery Benefit available. 

What is the CRB? 

The Government of Canada is aiding many Canadians with a benefit known as CRB or the Canadian Recovery Benefit. This benefit is designed to provide income support to employed and self-employed individuals who are or have been affected with COVID-19 and do not qualify for Employment Insurance Benefits (EI). 

Eligibility 

To eligible for this benefit, the following criteria must be met, 

  1. You are not employed or self-employed for the period you are applying for due to COVID-19 related reasons or, 
  2. You had a 50% reduction in your average weekly income compared to years prior to the pandemic 
  3. You did not apply or receive any of the following benefits, 
  • Canada Recovery Sickness Benefit (CRSB)
  • Canada Recovery Caregiving Benefit (CRCB)
  • short-term disability benefits
  • Employment Insurance (EI) benefits
  • Québec Parental Insurance Plan (QPIP) benefits
  1. You are not eligible for EI benefits
  2. You reside and were present in Canada
  3. You are at least 15 years of age
  4. You carry a valid Social Insurance Number (SIN)
  5. You earned at least $5,000 in 2019, 2020, or in the 12 months before the date you apply from any of the following sources:
  • employment income (total or gross pay)
  • net self-employment income (after deducting expenses)
  • maternity and parental benefits from EI or similar QPIP benefits
  1. You have not quit your job or reduced your hours voluntarily on or after September 27, 2020, unless it was reasonable to do so
  2. You were seeking work during the period, either as an employee or in self-employment
  3. You have not turned down reasonable work during the 2-week period you’re applying for

Benefit Amount

In receiving this benefit, a bi-weekly gross payment amount of $1,000, before taxes, is provided to those who are eligible. With a 10% withholding applied, the total 2-week payment is 900$. 

The Application Period 

An application must be submitted for every 2-week payment required. The process is not an automatic system which means you must apply every 2 weeks to receive payment regularly. A maximum of 13 periods out of the total 26 periods are available between September 27, 2020 and September 25, 2021 in which the 13 weeks do not need to be collected consecutively. You can apply on the first Monday after the period has ended.

Receiving your Payment

Your benefit can be collected through direct deposit or via mail. Direct deposits can take 3-5 business days whereas mail can arrive between 10-12 business days. 

We encourage all our customers that qualify for this benefit to apply. Understanding these hard times for everyone, every little bit of help goes a long way for those that are in need of it. H&T Accounting Services are here for all inquiries and questions you may have regarding available benefits. We are here to assist with all your accounting and financial needs.

We wish everyone the best of health. Stay safe and healthy!

Read more

That Time…YES…It’s Tax Time!

Many people including huge businesses and corporations truly dread taxes when it comes to their money. These compulsory expenditures make the financial systems of all businesses quite complicated. At H&T Accounting Services, understanding tax laws are the fundamental basis of our expertise. Because we understand how these laws work, we know how to help you save big bucks. We hold strong knowledge in all areas of taxation and we work hard with our customers to save every dollar we can. 

Tax Planning 

One of the most essential areas of understanding taxes in any sort of financial situation is tax planning. This involves productive research into literature so that taxation errors are minimized and the savings is maximized. Special attention is given to large saving plans so we know we are getting you the best service possible. With continuous efforts to analyze plans that our customers can qualify for, we work above and beyond all your expectations. 

Tax Preparation 

We love to prepare and prepare well so that we have your back when you need us the most. We prepare year-round so that our customer, the taxpayer, is at low risk of getting into any auditing circumstances.  Year long, H&T Accounting Services provide exceptional bookkeeping as well that helps us stay on top of our game. With complete bookkeeping, tax preparation is simplified. We work hard to minimize errors so auditing becomes easier for everyone. We take the tax preparation phase seriously, so you are at ease. 

Tax Appeals and Audits 

Defending our customers during an audit or an appeal is also a critical phase of our work. We know our path right up to the Tax Court of Canada, if need be, so that you get the most out of any case. Appeals and audits can be stressful and confusing, but because we know how to take care of you and your finances, we are persistent in lowering any possible penalties and interest charges. 

Saving BIG Bucks!

Savings, savings and savings! Who does not want to hear that when it comes to the complexity everyone deals with over their hard-earned money? Many wonder what they are really able to save when it comes to their taxes. It is a fact that taxes can get quite complicated. This is why knowledge of the tax systems is crucial to the tax savings process. Our experts here at H&T Accounting Services have extensive knowledge of the many savings plans that our customers can qualify for. Everything from business income taxes to employment income taxes is on the table for us and we know how to help our customers!

At H&T Accounting Services, we plan, prepare, defend and yes, most of all, help you save! We have experts in all areas of accounting and bookkeeping services that work year-long to keep your finances in check. Do not wait any longer, let us help you get in control of your money! Call us TODAY….call us NOW!

Read more