Ask any CPA and they will tell you there is no shortage of small business owners who struggle with the ins and outs of their bookkeeping and accounting chores.
As we start a brand New Year, meeting regularly with your Turner Moore CPA to establish and maintain a good framework in 2022 is just one of the ways to set yourself up for success.
If you’re looking to get your business’ finances in shape, here is some expert advice from CPAs in the know.
1) Consider incorporating
Your first conversation should be with us, as incorporating can play a significant role in access to tax incentives and deductions. Your Turner Moore CPA can tell you whether becoming a legal entity is the right choice in terms of managing liability, risk and tax planning.
2) Make tax planning a year-round task
COVID has definitely muddied the waters for many Ontario business owners and made it more challenging to understand and access the right opportunities for your business. The list of incentives and conditions is a complicated one, so if you’re not asking us questions, you may be missing out on valuable incentives that are time-sensitive and tailor-made to benefit you and your business.
Expenses, as one example, should always be tracked in real time. Trying to backfill is always an uphill (and stressful) battle. CRA insists on real/complete invoices or receipts, so showing a bill from Staples that isn’t itemized won’t cut it. You’re also not likely to remember the details of a dinner in February at year end.
3) Don’t mix business with personal
It’s pretty common for small business owners to mix personal and business finances, so if that is happening, your Turner Moore CPA can help you isolate personal and business accounts/facilities. You should be paying yourself dividends or a salary for personal cash needs. That way, while the salary is taxable for the individual, the corporation should be able to deduct it.
A precarious area where small businesses can run into trouble is paying family members for services. While it can be done, it has to be executed properly. If everything is coming out of the same pocket, you have to track what jobs they did, how long it took them, what was paid hourly and if that is a realistic number that you would have paid a third party. Paying family members for serves or goods needs special attention.
4) Keep working with your CPA
Meeting with your CPA two or three times a year for advice allows you to have data on a timely basis and gives you the confidence to know exactly how you/your business is positioned financially.
These stories first appeared on CPA Canada’s online news site.