Tax Tip Thursday

Great Savings!

We are having Bookkeeping campaign for the next 6 weeks to get companies set up for the new year!

I am offering a free 1 hour review for any business on Quickbooks.

Why Bookkeeping?

People ask me why they should consider it, so I thought I would go through some reasons today:

• In 40 years, I have NEVER seen a set of books without errors;
  • Every client that has come to us to prepare their taxes or take on their bookkeeping have had hours and hours of bookkeeping required to fix their existing bookkeeping.
  • Fixing errors takes at least 5-10 times as long as making the original entry, so you can see there is a benefit to getting it right in the first place
• If there are errors in your bookkeeping, your tax return & HST are wrong too;
  • In all cases, the changes we had to make affected the client’s financial statements and taxes, both past and present.
  • In many cases this required refiling of previous tax returns (where the errors were in the client’s favour)
• Improperly categorizing asset purchases can cause costly re-assessments;
  • CRA audits repairs and maintenance expenses regularly.
  • If your asset purchases were expensed instead of capitalized, you have overstated your expenses significantly.
  • If the CRA gets a hold of this, it will result in a significant reassessment and a significant tax payable
• Mixing business and personal expenses is a very common & potentially a costly problem;
  • Many businesses use their business as a personal bank account.
  • It does not take a lot of work for the CRA to uncover personal expenses put through the business.
  • This can result in a reassessment and a significant tax payable.
• Not reconciling your bank and credit cards properly could mean missing or duplicated transactions;
  • This is one we see all the time!
  • Either the reconciliations have not been done at all or are incomplete or done incorrectly.
  • In each case there will be a significant impact to your financial statements and therefore your taxes.
• Not addressing Accounts Receivable and Accounts Payable balances are missed cashflow opportunities.
  • This is another frequent occurrence where clients are not paying attention to their receivables and payables.
  • This can result in missing out on cashflow as well as the potential for double counting of either income or expenses.
  • Doubling of income is a very common outcome – meaning you are paying double tax on some of your sales.
  • We uncovered almost $200k of double booking of revenue in a client once. Uncovering these errors saved the client over $24k

Free Stuff

The short story is that poor bookkeeping can have a significant impact on your taxes. In most cases, the owner of the business will never even know.

That is why we are offering a free 1 hour review for any businesses on Quickbooks. After our review, we will provide you a summary report and estimate.

For those businesses that are not using Quickbooks or other accounting, you may want to consider using it. All the things we discussed this morning are even more prevalent if you are not using accounting software.

For those businesses, we are offering to waive the set-up fee to convert you onto Quickbooks!

Get on board before our rates go up in January!!

Book an appointment today to get started.

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.