“Though no one can go back and make a brand-new start, anyone can start from now and make a brand-new ending.”

Carl Bard

“Nothing is impossible, the word itself says 'I'm possible'! ”

Audrey Hepburn

“It's better to look ahead and prepare than to look back and regret”

Jackie Joyner-Kersee

Business Advisory, Personal and Corporate Taxes, Business Start-Up, Bookkeeping

News You Need to Know

Are Your Accounting Bills Too High?

Posted April 17, 2018

You might find a really good deal on an accountant, but it would probably be a good idea to keep in mind the old saying: “You get what you pay for.”

As with most industries, there are a range of fees that accountants normally charge; someone falling outside of this range is likely to be outside of this range for a reason. If they charge more than the average, this might be great—they might offer services that other accountants don’t offer, or they might be extremely experienced and well-qualified. 

On the other end of the scale, if they are charging significantly less than the average, that could raise a number of questions before hiring them.

Extra fees can add up quickly and turn a low fee into a huge one. A quality accountant might charge a bit more up front, but won’t typically add other hidden costs. If you want to avoid a “bait and switch” situation on pricing, look to the higher priced firm.

At Shaw & Associates Chartered Accountants, you have the option of signing up for one of our accounting packages. These packages vary in price and include all accounting services that will help your business grow and meet the targets you have set. The best part is the fees are paid monthly and include everything—unlimited phone calls and emails, in addition to the work, and there are never hidden costs. You will know what you are paying month by month in order to budget.

A good accountant will also do their best to work in as efficient and cost-effective a manner as possibly for you, saving you money in the long run.

Along the lines of “you get what you pay for,” a more expensive accountant will usually be more experienced and qualified. They will be more knowledgeable about their field of expertise, and that is why they are charging more than the competition. They will make every effort to keep up to date, which is critical for accounting since legislation changes every year. They will go above and beyond to ensure they have met and exceeded the requirements to retain their accreditations.

A good accountant will catch things that might otherwise end up costing you money. Ensuring that you claim all eligible deductions, meet deadlines, and receive good advice will save you money in the long run. This quality work will also help you avoid owing extra taxes, penalties, and interest to the Canada Revenue Agency (CRA). It could also help you avoid being audited, spending your time and money on the audit instead of running your business.

A good accountant is concerned with their reputation and yours—they will never advise you to do illegal things. Having received bad advice from your accountant is not an excuse with CRA—business owners are still responsible for the returns that they file, regardless of who prepared them.

Per the Financial Post, CRA has been known to impose punitive gross negligence fines on business owners found guilty of not being as knowledgeable about their tax returns as they should have been: “… [If] you fail to disclose income on your return, not only will you be liable for the tax owing on this undisclosed income, plus arrears interest, but you could be hit with a “gross negligence” penalty.” 

As the 2017 winners of the Lethbridge Chamber of Commerce Award for Business Ethics, you can rest assured that Shaw & Associates Chartered Accountants will never steer you in the wrong direction.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with them will put you and your business on a more profitable and positive path.


The Top 5 Questions You MUST Ask Before You Hire an Accountant

Posted March 30, 2018

When looking for an accountant for your business, there are a few important questions to ask of the company you are thinking of using. Here are the top five topics to ask of a prospective accounting firm, and some follow-up questions to give you good detail you can use to make your decision:

1. General questions about the accounting company.

  • How long have you been in business?
  • How many on your staff, and what licenses do they have?
  • What services do you provide?
  • Do you have some references I can contact?
  • What is your fee structure, and how do you bill clients?

2. Communication with clients.

  • How do you communicate with clients? Do you use email?
  • How long does it typically take to respond to a client question?
  • How accessible are you?
  • What is the complaint resolution process?

3. The exact form of how my work will be handled within the company.

  • Who will be doing the work for my account?
  • How often should we meet to discuss my business?
  • What happens if my assigned worker is not available?

4. Tax questions.

  • How do you handle taxes and deductions?
  • Can you represent me if I get audited?
  • What are your tax philosophies and tax planning priorities?
  • How does your company keep track of what I need to file and when, so I don’t miss any deadlines?
  • How does your taxation staff keep current with tax law changes? 

5. Why should I hire you?

  • How will you add value to my business?
  • How will you improve my company’s bottom line?
  • What value will you add to my business beyond compliance?
  • How can you help me grow my business?
  • How do I recognize a good accountant?

If you can get this information prior to deciding on an accountant, you should have everything you need to make a good choice.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with them will put you and your business on a more profitable and positive path.


Business Expenses: The Tricky Ones!

Posted March 21, 2018

Some expenses that businesses can claim are straightforward and easy to calculate and claim; some are not, and are best left to a professional accountant to calculate. Here are a few examples of expenses that you can claim, but might leave you scratching your head about how much you can claim and thinking that it might be time to give Shaw & Associates Chartered Accountants a call: 

Meal expenses

There are a few conditions and restrictions. In general, the maximum you can claim for food, beverage, and entertainment expenses is 50%. Meals when travelling or at a convention are also usually claimed at 50%, but other conditions may apply. As always, there must be receipts to back up any expense claims.

The 50% limit does not apply in all cases; for example, if you bill your client for the meal or entertainment expense, or if the expenses are for a special event or party and all employees from a particular location are invited, or the expenses are incurred for fundraising for a charitable event, you may be able to claim 100%. Also, truck drivers may claim meals while on the road at 80%.  

Convention expenses

Convention expenses may be claimed, with conditions. Food, beverages, and entertainment may be included in the convention costs, in which case you would claim them separately, with the usual 50% allowed restrictions. If they are not separately listed on your convention receipts, you would claim $50 per day, with the 50% allowable meals and entertainment claim again.

You may claim up to two conventions per year—they must be related to your business, and they should be located near where you normally conduct business. For example, if you are a dentist in Alberta, the annual Dentistry Conference in Calgary would be a reasonable convention to attend, but you would have a harder time convincing Revenue Canada that you needed to travel to Disneyland to attend a dentistry conference (especially if your husband and kids went with you!).

For more information on general rules for claiming conventions as an expense, here’s a good article from FBC.com.

Don’t forget: Everything you are claiming on your taxes should be backed up with the proper receipts and documentation. If you don’t have proof of the deduction, it will not be accepted by the CRA.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Self-Employed People Challenged by New Rules for Qualifying for Mortgages

Posted March 3, 2018

There have been changes made in Canada’s mortgage approval system that can make it harder for self-employed people to qualify for a mortgage. Self-employed people are in a Catch-22 situation when they try to apply for a mortgage—they take deductions to reduce their income and reduce the amount of taxes they owe, but this makes it appear to the mortgage lender that their incomes are artificially low. This is an excellent discussion to have with your accounting professionals—what are your best options if you are thinking about taking on a mortgage and you are self-employed?

In 2012, the Office of the Superintendent of Financial Institutions introduced Guideline B-20, which required federally regulated banks to tighten processes for approving mortgages and Home Equity Lines of Credit (HELOCs). Credit unions were exempt from these changes—credit unions still allow borrowing up to 80% of the purchase price without requiring default insurance. These rules are now implemented across the mortgage industry.

Self-employed people used to qualify for mortgages by using “stated income” applications (which needed proof of self-employment and a signed income declaration). Self-employed people can still apply for a mortgage using a stated income application, but at some banks they now require default insurance from Canada Mortgage Housing Corp., Genworth Canada or Canada Guaranty if they borrow 65% of the purchase value. Self-employed people were previously allowed to borrow up to 75% of the purchase price before requiring default insurance.

Per the Globe and Mail, Marg Green, director and broker at Concierge Mortgage Group, explains, "If you have less than 35-per-cent down payment, your mortgage now has to be insured, and insurers have specific guidelines that you need to meet… For example, CMHC will allow a stated income application as long as you have been self-employed for less than three years. More than three years and you have to qualify according to your net taxable income.”

To help self-employed people qualify for a mortgage, they may be asked to supply their latest notice of assessment from the Canada Revenue Agency, their most recent two years of financial statements, and bank statements for proof of income being deposited to their bank account.

Self-employed people will also need to be up-to-date with income taxes, sales taxes, and not have any taxes owing when applying for a mortgage. A self-employed person should also be ready to explain what is going on with their business financially—income, expenses, projected timelines, plans for expansion, break-even points, etc.

Another thing to think about: incorporating can help you qualify for a mortgage. Banks prefer salaries, and you can pay yourself a salary if you are incorporated. If you are in a place where you are already thinking about incorporating, this might be the right time to go ahead with that. This is a good discussion to have with both your accountant and your lawyer.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with them will put you and your business on a more profitable and positive path.


Income Tax Deductions for Self-Employed People

Posted February 26, 2018

Tax season is bearing down on us once again, and now is a good time to start working on getting your paperwork and receipts in order to make tax time as low stress as possible (we aren’t going to aim for stress-free, because this is taxes we’re talking about). For self-employed people, this is the time to get on top of things, rather than waiting until the last minute.

The first step is knowing what you can claim as a deduction. Actually, this step should have been taken months ago, so you could have kept all the receipts that you will need to calculate your expenses and therefore your deductions, but we’ll assume that you have every business-related piece of paper that came into your house somewhere.

  • Home Office Expense: If you use part of your home/apartment for business use, you can claim a number of expenses associated with it (mortgage interest, home insurance, home repairs, utilities, etc.). There are conditions, however—you will only be able to claim a percentage of the expenses based on the percentage of your house that is used for business use and the amount of time you spend doing business-related things in that space. We recently went into detail on this very subject.
  • Rented Office/Business Space Expense: If you rent a space to conduct your business, all of these expenses can be used as deductions.
  • Business Use of Car Expense: If you use your personal vehicle to generate income, you can claim a percentage of the costs associated with your car. This will be based on mileage—mileage used for business versus mileage used for personal, so keeping a mileage log will be required.
  • Meals and Entertainment Expense: You can claim 50 percent of business-related meals and entertainment.
  • Capital Cost Allowance (CCA) Expense: If you would like to claim a Capital Cost Allowance on items like purchased computers, vehicles, or office furniture, this is probably something to discuss with your accountant. There are rules governing what can (or must) be claimed on a CCA, and also rules on how to claim the diminishing value each year, as well as rules about how to claim a profit if you sell an asset that you have claimed as a CCA.

There are many other expenses that can be used as deductions to counter income when calculating your taxes owing—cellphone, internet, conventions, annual dues and fees, legal and accounting fees, office expenses, etc. This list is not meant to be exhaustive; talking to your accounting professional is the best way to find out all the things you can and should be keeping track of and claiming as expense deductions.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with them will put you and your business on a more profitable and positive path.


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