Sole proprietors often feel overwhelmed, confused and nervous about preparing for their yearly tax filing; especially those new entrepreneurs that do not have a business or accounting background.

Your business year ends on December 31^st and steps need to be taken to ensure you are not overpaying or underpaying the tax man. It starts with making sure your bookkeeping is done and up to date. Here is a checklist of task that should be completed every year:

End of Year Bookkeeping Checklist:

• Reconcile Your Bank Account. This will make sure that an expense or deposit (sale) is not missing. Don’t forget about those monthly bank fees.
  
• Catch Up On Invoices. Do you have work or product that you have completed but not invoiced for yet?
  
• Record Transactions. Have you imported or posted into your accounting system all transaction from your bank accounts, PayPal accounts, and credit card accounts. Search your pockets for receipts missed.
  
• Personal Expenses. Are you missing any income or expense transaction related to the business that were deposited or paid from your personal bank account?
  
• Categorize Expenses. Make sure all of your income and expenses have been properly categorized to the correct expense account.
  
• Don’t Forget Mileage. Have you recorded all the time spent in the car? Your daily commute doesn’t count.
  
• Don’t Forget Home Office Expense Allowances. If you are operating your business from your home you may be entitled to expense a portion of your mortgage interest and utilities. Check with your accounting professional.
  
• Pay Your Estimated Taxes. To avoid penalties when taxes are due on April 30th, be sure you’ve paid enough in estimated taxes for the year. If you need to make an additional instalment do it now.
  
• Check your Income Statement. Compared to prior years. Review for posting errors any amounts that have increased or decreased significantly.
  
• Don’t forget to reverse stale dated cheques! 6 months from date of issue.
  
• Record any year end accrual entries and depreciation if applicable.
  
• Check Accounts Receivable and Accounts Payable for accuracy.
  
• Bad debt write offs, if any. (and hopefully there aren’t!)
  
• Prepare A Budget for Next Year. To start creating a new budget take your profit and loss statement in your accounting software from this year and export it to an spreadsheet, and then you can easily add formulas to increase revenue next year by a percentage or reduce some of your expenses.
  

   

Armed with this checklist and the help of your accounting professional your year end will go much smoother. Your business books will be error free and your tax return will be accurate.

Dianne Mueller CPB – Certified Professional Bookkeeper

http://www.simplysoma.com

Employers hiring contractors and sub-contractors need to keep track of payments made for work performed. Section 38(1) of the Act requires that every “employer must … keep at all times … complete and accurate particulars of the employer’s payrolls”. This creates an onus on every employer to identify with sufficient specificity in its payrolls each payment to a subcontractor which the employer asserts should not be included in its assessable payroll.

At a minimum, sufficient specificity includes the subcontractor’s name and WorkSafeBC account number, and an explanation as to why payment to that subcontractor should not be included in the employer’s assessable payroll (e.g., either the named subcontractor was already registered as an employer with the Board, or there are invoices or other records proving that payments made to that subcontractor by the employer were not for labour contractors).

Keeping track of this information will ensure the correct assessment amounts are paid to WorkSafeBC and improve audit efficiency, positively affecting your bottom line.

Dianne Mueller CPB

Soma Small Business Solutions

www.simplysoma.com

As a Sage Simply Accounting Consultant I have been frustrated many times with having to go into each account and individually click on “omit from financial statement if the balance is zero”. A time- consuming task that has been eliminated with the release of 2012 by one click in the financial statement reporting windows.

Print Cheque Log from Previous Year

Having a list of cheques that were processed at the end of your fiscal year can be very helpful in reconciling in your new fiscal year. Before the release of 2012 you were not able to review or print a cheque log for the previous fiscal year. Troubleshooting just got a lot easier.

Calculate Withholding on Payroll Advances
The new Sage Simply Accounting 2012 release calculates the appropriate withholding amounts automatically when you issue an advance to an employee. This was done to be compliant with Canada Revenue Agency requirements to withhold statutory deductions from Advances.

Dianne Mueller
Certified Professional Bookkeeper
Certified Sage Simply Accounting Consultant
Certified Sage Trainer

Dianne Mueller CPB Certified Professional Bookkeeper

www.simplysoma.com

Gold soars but be careful when selling your jewellery, warnsBBB 

As stock markets plunge in the wake of the U.S. credit rating downgrade, gold prices continue to soar, now topping $1,700 an ounce.

This new high and increasing demand for the precious metal makes it very tempting for consumers to trade their unwanted jewellery for cash. Options to sell gold online, at in-home ‘gold parties’, or through local jewelers continue to gain in popularity, but the BBB would like consumers to think before they try to cash in on the gold rush.

“Selling old or unwanted gold is a growing trend for consumers during these uncertain economic times,” says Lynda Pasacreta, BBB President and CEO. “Whether you do it through a gold party, over the Internet, or through a local jeweler, consumers need to get informed before they sell their jewellery.”

BBB suggests consumers consider the following before selling your gold:

Find a trustworthy appraiser. For an appraisal, if possible, go to someone locally whom you know and trust. Check with the Better Business Bureau at www.mbc.bbb.org. The BBB suggests obtaining two or three appraisals to compare prices, prior to any sale.

Dianne Mueller CPB Certified Professional Bookkeeper

www.simplysoma.com

Some small business owners just starting out believe that bookkeeping is a matter of just watching their checkbook. As long as nothing bounces, their business is doing alright! However, more and more small business owners are realizing the importance of understanding the critical role bookkeeping plays in the success of their business. Good books are needed to make successful and profitable decisions. So, whether you want to or not, it is important that you learn some of the basics to help you make those important business decisions.

The more you learn the more you will understand about your business’ finances. Fortunately, once you get the basics down and are comfortable with reading and understanding your financial statements there really isn’t any need to learn in-depth ratios or extremely difficult reports.

Basic Bookkeeping Terms:

Assets are simply what your business owns (i.e. checking account balances, cash, accounts receivables, inventory, furniture, fixtures, equipment, vehicles, buildings, land, goodwill, etc…). They contribute directly or indirectly to future net cash flows.

Liabilities are what your company owes others. Financial obligations represented by transactions that have aleady occurred. Payroll taxes withheld from employees paycheques and HST liabilities are both typical financial obligations to Canada Revenue Agency. Accounts payable (Trades or supplies that have given you terms), loans, credit card balances, etc). Revenues collected in advance ( a deposit) is also a financial obligation your company has until the goods or services have been supplied to your customer.

Equity represent the investment portion and equity from the company’s owners, partners or shareholders. Equity accounts vary depending on the type of legal entity. For example, a corporation’s equity accounts may include common stock, preferred stock, treasury stock, additional paid-in capital, and retained earnings. A partnership’s equity accounts, however, may consist only of partners’ capital.

Income is what the business sells. This could be products, or services. It is generally referred to as revenue.

Cost of Goods Sold is used to track how much a particular product or service costs you to buy or manufacture for re-sale, and what type of margins the business is making.

Expenses are accounts that are used for administrative and overhead costs (i.e. telephone, rent, payroll, travel, etc…).

Net Income, or Net Profit, is not an account, but rather an amount that comes from subtracting your expenses and cost of goods sold from your sales/income. “In the black” means you made some profit or negative “In the red” means your expenses were more than your sales.

The Assets, Liabilities and Equity accounts are found on the Balance Sheet. The Sales and Expenses accounts are found on the Income Statement or sometimes called the Profit and Loss Statement.

Financial Statements are the life blood of any business and should be used to guide your business growth.

Dianne Mueller, CPB