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The Future of Accounting

Posted February 12, 2019

The Robot Revolution Is Coming!

According to The Verge, “A new report noted predicts that by 2030, as many as 800 million jobs could be lost worldwide to automation.”

You could argue that computers and automation are in the process of taking over the world. What does the future look like for accounting companies? At first glance, it might look like accounting occupations would be one of the easiest jobs to automate—there is a lot of repetitive data entry involved in accounting that could be automated.

Automation Freeing Up Accountants to Become Advisors

On the other hand, the reasons for hiring a professional accounting company like Shaw & Associates Chartered Accountants now are the same reasons that accountants are likely to survive the robot revolution.

Says Canadian Accountant, “[T]he key to our ongoing relevance will be our professional judgment, pointing to our ability to interpret information and provide guidance to employers and clients.”

In a different article, they go on to say, “[W]ith recurring tasks out of the way, accountants will be free to tackle more complex issues, such as the interpretation of data and the implementation of business processes… Even with automation through AI, humans will still be needed to oversee strategy, balance conflicting business priorities, and ensure that ethical guidelines are followed. Plus, there is no machine that can build trusting relationships with clients; that can only be done by living, breathing human beings.”

Shaw & Associates is more than happy to handle your data entry needs, but there is so much more to a business relationship with your accountant. To successfully move a business forward, you need to have an accurate picture of where you are, and where you want to go, and that’s what professional accountants can do for you. This will not change with automation.

More Than Data Crunchers

Canadian Accountant points put that, “More than ever before, we need to position ourselves less as human calculators and more as innovative experts who are trusted advisors. Deliberately downplay the business of crunching data. Emphasize instead your value as an irreplaceable expert source to help your clients maximize revenue and reduce expenses and taxes.”

Accounting professionals are much more than data crunchers; they are invaluable expert financial and business advisors who understand what it takes to keep your business healthy financially. Your accountant builds a relationship with you and your business, going above and beyond to understand what you need even if you don’t. After all, you aren’t in the accounting business; you’re in the business of running your own business. We’re in the business of helping your business.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Multiple Shareholders and Incorporating

Posted February 4, 2019

I’ve Incorporated – Now What?!?

If you decide to incorporate your company, another decision you will be making is regarding shareholders. You might decide to have only one class of shareholder, and everyone holding these shares will have all the same rights, conditions, responsibilities, and privileges.

You might also decide to have more than one class of shareholders, with different conditions for each class (for example, you might make a class of shareholders that includes your children—these shares might receive dividends, but have no voting rights).

As noted on the Government of Canada website: “If there is only one class of shares, those shares must, as a minimum, have:

  • The right to vote.
  • The right to receive dividends (if the board of directors has declared any).
  • The right to receive the remaining property of the corporation after it is dissolved.

If there are more than one class of shares, each of the three rights have to be assigned to at least one class of shares, but one class does not need to have all three. Also, each right can be given to more than one class.”

USA? What The Heck Is a “USA?”

If a person buys shares in your company, they become a shareholder. If you have multiple shareholders, it is probably in their best interest to develop a Unanimous Shareholder Agreement (USA).

BD&P Law explains, “A unanimous shareholder agreement ("USA") is a specific type of shareholder agreement that (i) is signed by all shareholders at the time it is first signed; (ii) binds future shareholders whether or not they sign; and (iii) removes, in whole or in part, the duties and powers from the directors of the corporation to the extent shareholders assume them.”

A unanimous shareholder agreement (USA) protects the interests of all shareholders, and sets out specific terms and conditions for different types of transactions that the shareholders may wish to take in the future. A USA is more likely to be most effective when it is created before any disagreements among shareholders arise, rather than waiting to sort things out after conflict has occurred.

It can also be a cost-saving measure, as noted by BD&P Law: “A USA can be a useful mechanism in preventing disputes between shareholders in the future. If a dispute does arise, a USA may drastically reduce the costs of such dispute.”

A critical point for a USA—it must transfer power from the Board of Directors to shareholders. If this is not a feature of the USA you have created, you will need to add it in.

Help!

Along with shares and USAs, there are annual meetings and minutes, special meetings, quorums, agendas, etc. that go along with incorporating your company and creating shareholders. Your best plan for incorporating your company is to have a company like Shaw & Associates in your corner, guiding you through these decisions every step of the way.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


What Do Millennial Business Owners Want from Their Accounting Company?

Posted January 7, 2019

Millennials (people born between 1981 and 1996 - 22-37 years old in 2018) are making up the largest group in the workforce in Canada as of 2014, according to workforcedev.ca. Millennials share many characteristics with older workers, of course, but Millennial business owners also have a few trends of their own.

More Than Just Taxes

Taxes are still the main focus of what a Millennial business owner wants from their accounting company, but there are some differences from older generations for the other services they are looking for. Per cpapracticeadvisor.com,

  • “54% percent opt for bookkeeping services, compared to 34% for those ages 40-55 and 30% for 56+.
  • 24% include accounting technology recommendations and training in their services, three times as much as those 56 or older (8%) and higher than those 40-55 (16%).
  • 22% request that their firms handle bill payment for their companies, while 14% of business owners 40-55 and 8% of those 56 and older ask for this service.
  • 20% of millennials indicate that they need invoicing from accounting firms, while only 8% of those 40-55 and 4% of those 56 or older do.
  • 31% say they currently have CFO-level consulting services and 52% say that strategic insight and guidance are necessary from accounting firms.”

This can be good news for accounting companies; taxes are more seasonal, while the additional services that Millennial business owners are looking for are year round.

Raised on Technology

As a generation that was raised with computers and the internet, it is no surprise that Millennials prefer technology-based business practices, rather than the traditional “paper in a file in a filing cabinet” approach. Again, per cpapracticeadvisor.com,

“The tech-savvy millennial generation displays a preference for digital accounting, with 82% opting for a paper-free experience.

This digital sophistication impacts other areas of accounting, including:

  • 56% want their accounting firm to work with cloud-based accounting technologies.
  • 33% prefer digital payments.
  • 25% use their mobile devices for accounting.
  • 64% prioritize email as their main form of communication with accountants.”

These are great opportunities for an accounting company to be what a Millennial business owner needs. Shaw & Associates are happy to do business the way our customers prefer.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Canadians and the State of Our Finances

Posted December 24, 2018

Holy Cow, That’s a Large Debt Load!

Canadians are carrying a large amount of debt; 75% of it is mortgages, but 25% of it is credit card debt, auto loans, etc.

As noted by the Bank of Canada, “At the end of last year, Canadian households owed just over $2 trillion. Mortgages make up almost three-quarters of this debt… A common way to measure household debt is to compare it with the amount of disposable income people have. In Canada’s case, household debt is around 170 per cent of disposable income. In other words, the average Canadian owes about $1.70 for every dollar of income he or she earns per year, after taxes.”

We Don’t Understand Money as Much as We Think We Do

The second aspect of the Canadian relationship to money is that Canadians are not as financially literate as we think we are. LowestRates.ca says:

“…Canadians vastly overestimate their financial literacy. In the survey, we defined financial literacy as the ability to understand how money works in the world.

“When we asked if Canadians think they are financially literate, 78% said yes—14% rated their financial literacy as excellent, while 64% rated it as good.

“But then came our 15 questions. They focused on some of the most common financial products Canadians buy and use—mortgages, car insurance, chequing accounts. The results of the survey show that Canadians are confused about how some of these work.”

Regrets; We Have a Few

A distressingly high percentage of Canadians regret their spending habits. Radio Canada International points out that, “An overwhelming majority (93 per cent) of respondents said they felt remorse and admitted they had regrettable spending habits…The investment firm suggested that people should have a financial strategy and, if they enjoy spending money spontaneously, they should plan for it...”

A Financial Strategy Is Your Best Tool for Debt Taming

A financial strategy/budget is your best solution to money troubles. A realistic budget that is designed specifically for you and your habits and personal circumstances can be your most useful tool to get control of your finances. Planning out a good budget not only helps you see your financial picture and gain control of it, but it will most likely reduce the money stress in your life.

Shaw & Associates Chartered Accountants can help you get on top and stay on top of your income, your expenses, and taxes owing. We can also figure out where you are weak, where you are strong, fix what needs fixing, and keep an eye on everything so you always have an accurate picture of what is happening with your money.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Personal Income Taxes for Business Owners and How to Lower Them

Posted December 13, 2018

To Pay or Not To Pay; There Isn’t Really Any Question

Most Canadians have one choice with income taxes—pay what you owe to the Canada Revenue Agency (CRA). Small business owners do have other options, though. A small business owner can work with an accounting company like Shaw & Associates to figure out what works best for your personal income tax picture.

Incorporate? Salary? Dividends? Help!

The first discussion to have is whether or not to incorporate. Incorporated companies can have significantly reduced taxation rates, but there are some trade-offs in complexity. Again, this is a great discussion to have with your accounting company—will your company benefit from incorporating? What will work best if you do incorporate—pay yourself a salary, or pay yourself dividends?

Re-Invest in My Company?

If you have incorporated, you would probably be advised to keep as much money in the company as possible, rather than taking money out in dividends. This reduces the overall income tax rate of the owner, since corporate tax rates are better than personal ones. An additional benefit of putting more money back into your company is that the money can be used for growth and creating an even rosier financial picture for you and your family in the future.

Corporate Donations—Win/Win!

Another option to think about is donations. Maximizing your charitable donations is another discussion to have with your accountant—which makes more financial sense, donating through the company or donating personally? How much donation minimizes your income taxes owed? Which charities qualify as a Canadian charity, and which ones don’t? 

Here’s an article on business versus personal donations in Canada to help you get a better handle on this subject. 

Deferred Income—Earn Now, Pay Later!

Another method of minimizing your tax burden is with a Registered Retirement Savings Plan (RRSP). An RRSP can be used to defer income, ideally from when you are a high-earning individual to when you will be a lower-earning individual. This is another strategy that is best worked out with Shaw & Associates, since how much income you take (in salary or dividends) will affect your RRSP picture, as well as other expenses you might want to claim.

For some more ideas on taxation strategies for small business, have a look at this article from thebalancesmb.com.

And, In Closing, Talk to Your Accountant

You’ve probably noticed a theme here—talk to an accounting professional if you want to keep more money in your own pockets! We are tax experts, and can guide you through the complexities of finding income tax savings for your business, and for you personally.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


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