22 of the Best Tips for Small Businesses and Individuals

What a See Clearly Accountant Can do for You

Small Businesses

Design a comprehensive chart of accounts

  1. We have a comprehensive chart of accounts for QuickBooks that we can modify so that it is specifically adapted to your business. We can restructure your past transactions so that they are reported using the new chart.

Clearly explain the benefits of the chart

  1. We will cover the benefits of the chart: categories for major activities and natural expense accounts within each category for forecasting and reporting on those expenses so that they provide information capable of assisting management in making decisions.

Set up memorized transactions

  1. We can reduce your bookkeeping and accounting work and improve the accuracy of it by setting up memorized transactions. These are not covered in a separate 22 tips document but they are mentioned in 22 of the Best Tips for Accounting for Prepaids.
  2. We can develop memorized transaction processing templates that you can adapt to your specific requirements, for example, set up memorized transactions to record payments you make or to record recurring invoices you bill.

Create memorized reports

  1. One of the greatest features of QuickBooks is its memorized reports. Based on our discussions with you and on the chart of accounts we design, we will create a list of memorized reports that will report the information that may enable you to be more profitable.
  2. When we create your memorized reports, we follow the procedures outlined in 22 Best Tips for Creating Memorized Reports.

Set default dates for reports

  1. By default, QuickBooks sets the report date to the current month. This means you constantly have to change the date settings if you want to view a report for another period. We can set default dates on reports so that you don’t have to change them. For example, on memorized monthly reports we can set the date at current month or prior month.

Provide safeguards for your reports

  1. When we create memorized reports, we will follow 22 Best Tips for QuickBooks Memorized Reports. To protect you from losing a memorized report, we will create it twice and save it twice in two different groups. If one does not work, you can (1) delete the one that does not work, (2) load the one that does work, (3) rename this one to the name of the report you deleted, and (4) save the renamed report in the group of the one you deleted. The report started with in (2) is still there.

Offer other opportunities

  1. There are two other opportunities we can offer you:
    • exporting reports directly to Excel and adding information to Excel to print your must-see report and
    • using the QuickBooks Statement Writer to add another level of information you can see with your QuickBooks reports (and they can be well formatted).

Online Processing – The Cloud

Processing data online

  1. In late 2011, we started processing practically all of our transactions online, including filing tax documents. It is particularly beneficial when clients process their transactions online because we can provide very fast assistance. And at year end the clients can continue to process transactions and we can do our work at the same time.

Individuals

Investment processing

  1. We can process your investment transactions so that you know how well your investments are performing and how their performance compares to the stock market indexes. To do this we use Quicken, a sister program to QuickBooks, because it is the only inexpensive program that produces a rate of return, which may be the most important factor in measuring your investments.
  2.  If you have rental properties and don’t have a proper set of books to record your rental transactions in, we can set up a set of books for you that will enable you to review reports of revenue per unit, expense per unit or of some other basis, tenants deposits per unit, etc., similar to the memorized reports we created for the small business above.
  3. We can prepare your income tax return and reduce your risk of penalties or interest.

Non-residents

Is CRA unfair to non-residents?

  1. Non-residents at times may believe that CRA is unfair, but the rates for non-residents are pretty much the same as they are for Canadian residents, and a non-resident gets to file two returns when she sells her property: (1) for the capital gain on the sale and (2) for the rental revenue and for the recapture of capital cost allowance claimed. That means they pay the lowest rate of taxes twice; that is much better than adding the two incomes together and paying the top rate on much of their income.
  2. We try to prepare the tax returns early in the year, even though they have until June 30 to file the Canadian return. Most of the time the non-resident has a significant refund because their agent would have withheld 25% of gross (rents and triple net payments received).
  3. Some non-residents in early years do not have the benefit of paying taxes; they have losses on their rental property, mainly caused by interest paid on a mortgage. We have saved many non-residents considerable tax by capitalizing the building portion (not the land portion) of the interest paid. They cannot carry forward the loss, and when the interest gets capitalized, they reduce their profit, and tax, on the disposal.

Plan ahead to save tax on your rental property

  1. Make sure you buy your rental building in your own name.  The Canadian income tax act is well integrated for Canadian residents, but not well integrated for non-residents. On rental revenue, a Canadian controlled company will pay refundable dividend taxes (RDTOH) on its rental income; when it pays dividends, the after tax income to the shareholder is almost the same as if the shareholder received it directly. If the company is owned by a non-resident, the company will not pay RDTOH and the dividend paid to the shareholder will be less and will also be subject to non-resident withholding taxes, often 25%. The company will not pay tax on one-half of the capital gain, whether the company is controlled by a Canadian resident or a non-resident.  When the company pays the capital dividend to the Canadian resident, there are no taxes (assuming the proper forms are completed and filed on time). But when the company pays the capital dividend to a non-resident, the company is obligated to withhold non-resident taxes, usually 25%.

Deceased Taxpayers

Preparing the final return

  1. Deceased taxpayers represent special challenges. One of those challenges is to gather all the information to file the final return. It may be because of the special challenges that CRA allows you to file the tax return the later of April 30 or 6 months after the date of death. Sometimes the final return must be filed late because you can’t get the information.
  2. If you have Rights or Things, you should save tax by reporting these on a separate tax return. Perhaps the biggest deduction is for prior year’s capital losses that have not been deducted because there were no capital gains to deduct them from. In the final return these losses can be deducted against other incomes.

Preparing annual trust or estate returns

  1. These must be filed on the anniversary of the death and must be filed until the estate is wound up. Usually the taxes are less if the estate pays tax on the income than if the beneficiaries pay tax on the income. Usually CRA will give you a year or two to wind up the estate. During this period the estate can pay tax on the income. After that CRA will probably insist that the income be taxed in the hands of the beneficiaries.

Make sure you get a clearance certificate. 

  1. A clearance certificate relieves the Executor of paying any tax that CRA may later assess. Instead the tax is payable by the beneficiaries. Usually on a small estate that will be wound up quickly, we request a Clearance Certificate after the estate is wound up, but on larger estates, we may request one for the final personal tax return and one for the final trust return. The estate may have assets generating revenue after the estate has been wound up. This is income of the beneficiaries and must be reported. Usually the Executor will prepare a letter summarizing the income earned after the estate has been wound up setting out the income and the share payable taxable to each beneficiary.

Perform estate bookkeeping

  1. The work that causes the most problems is the estate bookkeeping and accounting. If the beneficiaries all agree, you can use QuickBooks to prepare a simple set of records that will produce a balance sheet and a statement of income. However if the accounts have to be approved by the courts, you will have to be much more careful in preparing the accounts and the reports you will present.
  2. The first year end of the trust must be within 52 weeks of the death. For example, it could be at December 31; this may make it easier to determine taxable income. But be careful making the first year end of the trust less than 52 weeks. The trust may have losses in its first year that could be carried back to the final tax return and on this return the tax savings may be significant. The losses may not be crystallized until near the end of the first year of the trust; only the first year can be carried back.

New Features Available for Clients

  1. We are working on a new feature to assist our clients: storing and retrieving their documents on-line. In cooperation with eXadox, a paperless office solution for storing and classifying documents in digital format, we plan to give our clients secure and confidential access to documents we prepare for them.
  2. We have most of our documents stored digitally, and we feel the paperless office and secure document transmittal is a trend of the future.