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

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Tax Avoidance Versus Tax Evasion

Posted April 23, 2019

Taxes—A Love/Hate Relationship

Canadians (like most of the world) have a love/hate relationship with taxes. On the one hand, we like the services that our pooled taxes provide, but on the other hand, we hate sending our hard-earned money to the government. Avoiding paying more taxes than your share is a smart financial move; evading taxes is a crime.

Reduce Your Tax Bill Legitimately

Reducing your tax bill legitimately means working within the tax laws and regulations and figuring out ways to take the deductions you can legally take, and report what you need to report. It might take the form of figuring out what to do and when, with one choice having a better tax implication than another, which requires tax expertise on the part of your tax preparer.

Tax Evasion Is Illegal

Tax evasion is going outside the law, and it is not a good idea. As noted by canadianaccountant.com, “It’s critical to understand the difference between tax avoidance and tax evasion. Tax evasion involves either not following or breaking the rules of Canada’s Income Tax Act to avoid or minimize taxes, thus making it an illegal activity.

“Examples of tax evasion would be failing to report, or under-reporting income, or taking excess deductions for expenses that may not have been incurred while earning income. The Canada Revenue Agency (CRA) takes this very seriously.” 

For a little more explanation on the difference between tax avoidance and tax evasion, check out this video.

Hire a Good Tax Preparer

A good tax preparer will help you figure out how much you owe and how to legitimately reduce your tax bill. They WON’T help you break the law by slipping over the line from reducing taxes to evading taxes. 

Shaw & Associates Is on Your Side

Taxes are complicated and changing every year. It’s a good idea to have your taxes prepared by someone who is familiar with the current Canadian tax laws, and is also available to defend your taxes if you happen to get audited. The tax team at Shaw & Associates Chartered Accountants are tax experts; it’s our business to know the current tax laws, and we’ll be in your corner if you need us.

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.


Protecting Our Customers from Fraud

Posted March 29, 2019

An unfortunate reality of owning a business is that you could be dealing with fraud at some point. As per Xero.com

“According to the world's largest anti-fraud organisation, the Association of Certified Fraud Examiners (ACFE), small and mid-sized businesses are the most common victims of organisational fraud. And the effects can be more damaging.

Small businesses report 31.8 percent of all instances of fraud—a higher rate than for larger businesses—and suffer greater losses in relation to their size. And more than half of all small businesses that suffer fraud don’t recover any losses.”

How Well Do You Know Your Employees?

Small- and medium-sized businesses are shockingly vulnerable to fraud and theft from employees. Small business owners can have long-term staff that they think of as friends or even family, and their employees can take advantage of this by engaging in fraud and theft from the business.

The First Step Is Knowledge

An important function that Shaw & Associates Chartered Accountants can offer our clients is information on how to avoid becoming a victim of employee fraud. Being knowledgeable about how fraud and theft happens within a business, and how to prevent it, can be extremely useful to our clients.

Policies Can Help Reduce Fraud and Theft

We can examine the procedures our clients have in place already, and work with them to institute new policies and procedures to limit the risk of fraud and theft. Shaw & Associates can also act as the “bad guy” if necessary — “our accountants say we can’t do this, so we have to separate these duties,” — if business owners aren’t comfortable with putting new limits on long-term employees.

Divide Your Duties!

Small businesses can often have very few people doing all the duties, some of which should be separated as a check on fraud. Having Shaw & Associates divide duties involving cash, cheques, and accounting by acting as a virtual Chief Financial Officer (CFO) can prevent in-house fraud. For example, your accounting clerk can input all the accounting data, but the cheques are run by Shaw & Associates.

Fraud is common, unfortunately, but Shaw & Associates can help you figure out where your vulnerabilities are, and fix them before a crime occurs.

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.


The Importance of Bookkeeping for Your Business

Posted March 11, 2019

Stay On Top of Your Business Transactions

Businesses of all sizes generate financial transactions. Staying organized and up-to-date on these transactions is critical for business success—all the decisions you make for your business are better decisions when they are based on current information.

Day-To-Day Financial Records

Small businesses tend to have an accountant that looks after their taxes, and may do quarterly reviews of the business. These are a great idea for small businesses, but a bookkeeper that enters your daily transactions regularly is also a very good idea.

Order Out of Chaos

As noted by Xero.com:

“Bookkeepers create order out of chaos. They take all the numbers, receipts, bills and other accounts data that flows through your business. They funnel it all into your accounting software—into the right reports and the right account.

They turn all this data into meaningful financial information. It will all be in the correct place, properly filed and organized. This can be used to give you an immediate view of the health of your business.

A good bookkeeping partner will be with you every step of the way as your business grows. So it pays to take your time and make sure you hire the right one.”

Want to know more about the value of using a bookkeeper? Check out this video from Allan Madan.

Custom-Built Bookkeeping Plan

Shaw & Associates Chartered Accountants can do all the bookkeeping that your company requires. We will work with you to create a bookkeeping plan that is custom-built for your business, looking after your books as frequently as you require. If you use accounting software, we can work with it, either online or in-house. We will also generate reports for you, to see exactly how your business finances are doing.

Don’t Miss Important Dates!

Shaw & Associates can also keep track of your important accounting dates (GST return due, income tax due, quarterly accountant meetings, etc.), and make sure that up-to-date information for these deadlines is provided.

You’re busy running your business; it will help with your workload and your stress to know that Shaw & Associates is looking after your bookkeeping and your important accounting deadlines.

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.


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.


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