Blog Archives - BMP ACCOUNTING & TAX INC.

Homebased Businesses and Taxes

2/26/2021

Do you have a homebased business? Are you aware of the eligible expenses at your disposal to reduce your taxes owing? To start, a portion of your property taxes, your mortgage interest, maintenance, electricity, heating, internet and phone expenses can be used to lower your profit and therefore your tax owing if you use a home office. We generally discourage people to depreciate their primary residence for tax purposes because it could generate a sizeable taxable gain when you sell your house.

If you drive your vehicle to meet clients or travel to jobs (e.g. a plumber driving to a job), your vehicle financing interest, fuel, oil, insurance, registration, lease payments, depreciation of your vehicle, parking and maintenance can be used to lower your taxable income. It is important to note that proper record keeping is necessary in case CRA audits or disallows some or all of your expenses.

For each business-related trip, you must keep a record of the following items:

Date Destination Purpose Number of kilometers you drove At the beginning of the year, you should record the odometer reading and also at the end of the fiscal year. If you change motor vehicles mid-year, you must record the date of the change as well as the odometer reading at the time of the switch.

A simplified logbook can be used as well after establishing one complete year’s business use of a vehicle. After the complete year, you should keep a complete three-months records to use to prove that the use of the vehicle used is still typical. In some situations, we have opted to use a per kilometer rate to simplify the client’s record keeping.

There are so many different types of homebased businesses and each type comes with its unique eligible expenses. We would be happy to discuss them with you! Contact Us.

Should You Get Techy With It?

2/19/2021

Many of our clients come to us excited to gush over the details of their new business and ask us a great question – how should I keep track of my receipts? Out of all the questions that one could ask when getting into business, this is most likely the most important element in preserving the very survival of your business. With so many apps on the market, it can make it hard for a person to decide what to do. That is why we put together this list together for you!

Shoebox Method: We have tons of clients who either keep their receipts in a shoebox or in proper folders in a banker’s box. If you are keeping physical receipts instead of using fancy apps, the key is to file according to expense type. For example, all of your gas receipts should be in one folder while your supplies receipts should be in another folder. Folks seem to be tempted to file according to month, but filing receipts by type leads to more efficiency when compiling your financials at year end. Time efficiency on our end means savings on your bookkeeping bill for you.

If you keeping physical receipts, it will be important for you to come up with a system that does not result in your receipts falling on the floor of your car. You could keep a plastic envelope in your glove box or in your purse if you carry one. You may also want to have a reminder in your phone to bring in your receipts on a regular basis. Another money saver is to recap all of your expenses by type in an Excel spreadsheet for your tax accountant – if this step is too time consuming for you, don’t sweat it. We love what we do as much as you love what you do!

Getting Technical: The neat thing about apps is that you can download them onto your phone, hook them up to your bank account and let technology guide your financial reporting. If you are semi-tech savvy and your finances aren’t too complex, an app is for you. As soon as your receipts are uploaded to the app, there is no need to retain the physical receipts so it removes the danger of losing your receipts. It also spits out a financial statement at year end that your accountant can use to file your taxes. This is a game changer!

Wave (www.waveapps.com): The Wave app can be completely free to use – it is only if you chose to accept payments through Wave or if you require payroll that this software will cost you money. The one downside I see is that you have to download two separate app to manage your invoicing and your expenses. You can scan up to 10 receipts at once which can be handy. If you wish, you can invite your favourite bookkeeper/accountant to help you with your bookkeeping. Another bonus is that this is a Toronto based business.

App reviews :
Google Play: 4.5
Apple Store: 4.0

Foreceipt (www.foreceipt.com): Foreceipt can also be free to utilize with some restrictions most notably that if you would like to have access to other methods of uploading your receipts than through your phone, the ability to add more than 10 receipts per month, bulk bank information imports, recurring entries, year-end reporting and customer support. However, the cost for this software, at the time of the publishing of this article, starts at $3.25 USD per month. The app boasts that it grabs the information off of your receipt and posts it automatically, but we would caution you not to rely on this automation because we have found that the app can make mistakes.

App reviews :
Google Play: 4.2
Apple Store: 4.6

Quickbooks (quickbooks.intuit.com/ca/): This software has evolved so much since its inception. There are so many integration possibilities with other point of sales, the ability to turn PDF into useable data in Quickbooks format and many more features. Businesses that have plans to grow will require a more robust portable system such as Quickbooks should consider this option. The app itself is easy to use though you can only import one receipt at a time. The disadvantage is quick to prove useful when your uploaded receipts are more accurate than bulk uploads curated by automation by other apps. There is no free option to Quickbooks, but options are available as low as $5 per month. I would recommend speaking with us prior to taking the plunge because we may have options that may work better for you than the sole proprietor plan.

App reviews :
Google Play: 3.5
Apple Store: 4.7

Of course, if you do not want to do any of this yourself, but would love for us to keep track of things for you, we have other solutions that may work best for you. Do you have more questions? Please feel free to contact us for more information on how to get your financials organized!

2020 T4 Updated Information

2/5/2021

With deadlines looming near for T4 submissions due the last day of February, we felt it was a good time to review a few changes that have transpired during the most unique year most of us have experienced.

T4s have new reporting requirement where employment income and retroactive payments have to recorded according to the following time periods:

Code 57: Employment income – March 15 to May 9
Code 58: Employment income – May 10 to July 4
Code 59: Employment income – July 5 to August 29
Code 60: Employment income – August 30 to September 26

These periods align with COVID-19 benefit eligibility periods. A sidenote is that the day that the employee was paid may not necessarily be the same period in which the work was performed. For example, if an employee was paid on May 15th for work done during the period covering April 25th to May 9th, the income should be reported in period 58.

Do you have more questions regarding T4s? Contact Us.