BMP ACCOUNTING & TAX INC.

Defining "Need to Have"

7/2/2021

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It is a common complaint to hear that one does not make enough money. In most cases, we have found that it is mostly an issue of a lack of a budget and follow-through. A few years back, we were faced with a sudden change in circumstances which led to me combing through all of our monthly expenses and figuring out what was a “nice-to-have” expense and a “need-to-have”.

The process was well worth it. We found out that we had subscriptions that we no longer needed and that we routinely bought too much food that led to food waste. We quickly switched to planning our menu ahead of time and strategically buying our groceries which also reduced the fuel cost to get to the grocery store.

Another quirky saving tool I have been using is ordering groceries online. When I visit the grocery stores, I often add too man “nice-to-have” items that make our monthly grocery bill bloat.

There are many budget apps out there, but the one that we have found made the best sense to us was Mint (https://mint.intuit.com/). It is a free product supported by Intuit (makers of Quickbooks). The app allows you to build a monthly budget and it will send you emails if one of your budget categories has exceeded its capacity.

The app works by linking your bank, credit and investment accounts. For the most part, it is pretty automatic. The app also creates fun graphs for you to understand where your money goes every month. It is a great way for you (and your spouse) to build a collaborative successful financial plan.

After all, take care of the pennies and the dollars will take care of themselves...

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Reaching Your Growth Potential

7/2/2021

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Have you reached a level in your business and do not know what your next step should be? Many small business owners do not have bookkeepers to provide accurate numbers, let alone sophisticated financial reporting and analysis capabilities. A large portion of business owners do not understand the relationship between the cashflow statement to the income statement and balance sheet.

Don’t let this stumbling block be what keeps you from moving forward. Did you know that you can rent a part-time CFO without the costs of having a full-time CFO?

Benefits of hiring a part-time CFO include:

-Help you to ensure the financial accuracy, compliance and liquidity of your business, leaving you free to focus on doing what you do best…working on your business.

-Bring financial expertise to enable you to make data-driven business decisions (not purely gut decisions).

-Optimize your processes, investments and cashflows.

-Develop a comprehensive financial plan to support long-term growth.

-Help you position your company so it is more marketable to buyers in the future.

Want to know more? Contact us for more information.

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Paying Yourself From Your Corporation

7/2/2021

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We know it may seem like we are repeating ourselves…but on average, a person needs to hear a message SEVEN times before they remember it. Let’s face it…owning a business is overwhelming at times and the number of plates you must maintain spinning all at once can be a daunting task. We would like to give you a few pointers to take the guesswork out of how to pay yourself.

1. Have a separate bank account for your business. It will not only make your payroll look a lot cleaner, but it will make all of your income and expenses look very clear.

2. Pay yourself out of your profits, not revenue. An easy way to do this is to look at your business bank account at the end of the month, plan out what you need to keep in your bank account for upcoming expenses and the difference can be paid out to you!

3. Put yourself on payroll! You have figured out what you can afford to pay yourself, but now you should invest in a proper payroll program. It is best to pay your payroll deductions month-to-month rather than having a surprise at tax time. A good payroll program will also allow you to keep track of what you remitted to the government so it protects your business as well.

4. Talk to your tax professional before paying yourself in dividends. Dividends can be a tax efficient strategy…but you need to understand how to use the dividends to your advantage or they can quickly become a disadvantage!

Have more questions? We would be happy to chat!

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Congratulation to the Class of 2021!

6/25/2021

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It’s June and there seems to be a surge of posts from proud parents because their son or daughter is graduating this year. Graduation is such symbolic event in a person’s life. It’s the end of one journey and the beginning of another.

BMP wishes to congratulate 2021 graduates! Well done. Now, here is our gift to you!

1 - Pay yourself first! I know you heard it so many times before, but honestly, if you save $25 every month today it will accumulate and it will become a habit. Starting out is hard and it seems like there are so many sacrifices, but trust me, you will be so grateful that you did start saving young because it doesn’t get any easier. If ever you feel like you will never achieve anything, think small steps…you will get there.

2 - File your taxes – on time and every year. It is so easy to put something off the first time. It’s no big deal. You will do it later…until the next year rolls around and now you are two years behind and the first thing you know it’s been five or more years that you have not filed your taxes. Don’t let this happen to you, but if it does, we still have your back.

3 - Talk to an accounting professional before you start your own business, so that your financial affairs are in order and don’t become overwhelming. Alert CRA and Service Canada if you have experienced a life event (e.g. marriage, divorce, separation, birth of a child). Failing to do so can cause you to owe money back to the government.

Above all, know that no question is a silly question. It is better to ask than for the question to go unanswered. We love answering questions even the ones you are embarrassed to ask. We are always here for you.

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Planning a Profitable Summer?

6/18/2021

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Well people, the moment we have been all waiting for is fast approaching. Summer is at our door step. For many, summer means long days spent with the children, on a patio sipping on a cold beverage, attending concerts (hopefully this will be a reality soon) or just dialing it down for a few months while the sun is shinning. But for some of us, it means that this is the season of opportunity. Summer gives rise to so many great seasonal business ideas from landscaping to wedding planning.

I remember helping out my friend one summer while on summer break from university. The company provided her with a business model and some pricing strategies. She worked so hard this summer – working long hours and learning how to be an entrepreneur. We were well into my favourite season when she approached me and told me that her take home pay was not what she had expected.

It is highly likely that if she had access to a bookkeeping software and some friendly advice that we would have noticed her shrinking profit margins was due to her pricing strategy and we could have righted the ship before the season was nearing its end.

An expert can give you proactive advice so that you do not end up working harder than you have to and can answer many of your questions.

Do I need to charge GST? How much should I charge? What do I need if I want to hire an assistant? Are they an employee or can I pay them as a contractor? What types of tips do you have to keep my financial affairs in order? If you are looking at starting your own business this year, please consider getting expert advice on how your books are doing. After all, you are great at what you do and we are too. Contact us for more information.

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Don't Have Time To Do Your Own Bookkeeping?

6/11/2021

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You are a great plumber…maybe a great electrician or a great hairdresser…but maybe keeping your books in order makes you run for the hills. You forgot your receipt in your car…maybe you forgot them in your wallet or even your toolbox…The BIGGEST favour you can do to save you countless hours (or money if you are paying a third party) is to keep a separate bank and credit card account for all things relating to your business.

For as little as $5 per month, we can set you up with a system that automatically categorizes your invoices. You can snap a picture of every single invoice via your smart phone or email any other invoices from your email address. Just like that, tax time just became easy. No more searching for lost receipts.

Have questions? Contact us for more information.

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Five Ways Outsourced Bookkeeping Saves You Money

6/4/2021

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If you have ever read Stretch: Unlock the Power of Less – and Achieve More Than You Ever Imagined by Scott Sonenshein, you know that buying all the best gadgets does not necessarily lead to more profits. Knowing where to invest your money is synonymous with being a good business person. We would caution, however, that trying to cut costs on bookkeeping may in fact hurt your business in the long run and here is why.

#1 : Not completely understanding your costs:
It is quite easy to nickel and dime yourself to death. We have had a few cases where the client did not understand how much money he was pulling out of their business because they lent their company money and kept mental IOU’s. In turn, they paid personal expenses through the business account. It was a real puzzle to figure out what was what at year end and they never knew why the business was not profitable.

#2: Cash Flow Woes:
Cash Flow issues is more common with seasonal businesses because it is easy to get swept up in the busy season and forget to put money away for the rainy season. However, all types of businesses can experience gaps in cash flow. This is why an experienced accounting provider can help you actively manage your cash flow and implement strategies to bridge the gaps when cash may not be as abundant.

#3: Profit Sabotages:
We have seen many different types of profit sabotages. They can come in the way of expensive or time-vampire clients. Your accounting provider can help you with your price strategies so your services or products remain profitable.

#4: Ignoring Your Accounts Receivables:
Any business person can get wrapped up in the day-to-day tasks and forget to keep an eye on who still owes you from three months ago. Shortening your turn around time on your receivables does improve your cash flow and, in lots of cases, saved a business from going under.

#5: Penalties for Non-Compliance
Last, but certainly not least on our list, are penalties paid for non-compliance. We know tons of businesses who have gotten themselves in trouble because they delayed filing for whatever reason. Delaying and avoiding has a snowball effect. A professional is there to keep you compliant and accountable.

Have more questions? We would love to chat.

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Reducing Turnaround

5/22/2021

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Nothing is more frustrating than hiring someone only to have to start all over again within a short time…In addition to the cost of high turnover rates, your quality of service may be a casualty as well.
Addressing turnover rates can be challenging for many employers, but luckily, we have put a list of things to implement to help you address the issue.

The first step in reducing turnover is to establish a recruiting and hiring process that enables you to identify candidates that have the right temperament for the industry. Ask potential employees about their goals to ensure that their long-term goals fit with the employment being offered to them to ensure this isn’t a temporary stepping stone for them.

Once hired, you may find it useful to have employees sign a code of conduct document to not only set the expectation of appropriate behaviour, but hold them accountable when the need arises.

Providing ongoing training enables your employees to keep sharpening their skills and learn your industry better. Training to new employees is necessary for them to work more effectively and efficiently and most importantly bridge the expectation gap between what is expected of them and what is being delivered. Confident employees generally have more pride in the work they deliver. Training manuals may also provide more legitimacy to your company.

Ongoing training may be useful to develop either soft skills or specific skills necessary to perform the job. In addition to training, incentives for good service provided may also boost employee moral. Intrinsic rewards (rewards of a non-monetary base that provides a positive emotional reaction) are more effective than monetary rewards. Employee of the Month awards may provide employees with a boosted sense of accomplishment. Choosing what type of assignments they work on can make them feel part of the team and foster more loyalty on the long term.

Modern and quality equipment increase the quality of service and increase quality of service expectations among staff. Setting the stage is always important because working with old broken-down equipment sets expectations low. Do your employees come to work and have everything they need to perform their duties? If not, it may foster unnecessary frustrations. Salary packages should be competitive to retain staff and real advancement opportunities should be made available. Being a manager requires a lot of psychology work and may not be suited to everyone. If turnover is one of your issues in your business, I would consider hiring someone who has the necessary skills to help you manage staff.

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Accounting Rescue

5/14/2021

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Today is May 15th and we are exactly 29 days away from filing your sole proprietor tax return. If you are incorporated and your year end is December 31st, you are about a month and a half away from your filing deadline. This might be a stressful time of year for you…trying to find receipts left in your glove compartment…catching up on entering data into your accounting software…maybe you do not know who still owed you money as of December 31st.

Whatever your situation is, it may be a good time to think about whether your system is working for you or against you. A client of ours constantly asks two questions on her social media: what is holding you back in your business and how can I help? Your business’ finances are usually an overlooked piece of the puzzle and we can definitely support you keeping everything in order. But what if you cannot afford a $500 per month bookkeeper you ask? Not all clients need us the same so we offer different accounting support.

1 - Light Involvement: we have some clients that like to do their day-to-day and maybe even their bank reconciliations…but staying current with filing their GST returns and remitting payroll remittances might be where they need support. In this scenario, we would set you up with a cloud-based accounting system so that we can both access your information. There is also an option that is very cost-effective if you do not wish (or need) for a hands-on accounting system where the system automatically compiles the information for you on a daily basis. The initial set up takes some work, but it’s definitely worth it in the end because your year end is ready come tax time.

2 - Getting Deeper: some clients prefer to leave their invoicing and keeping track of payments coming in to us. We have some clients set up on cloud accounting software for those who still wish to see their information at any moment. Other clients are set up on our desktop software and are provided with monthly financial statements. We do all of their GST, payroll support, etc. We also provide our clients with what we call the decoding of financial statements to enable the client to understand their financial position to make good business decisions.

3 - High-Level: we have some clients that require more guidance in making business decisions. Business strategy support is why they came to us on top of bookkeeping support. We can answer questions of where are we and where are we going? They need cashflow projections, growth projections, government grants support, and other business decisions.

If you are struggling to keep everything organized, come have a chat with us. We can work out a plan to let you focus on what you do best.

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Can I Write That Off?

5/7/2021

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Can I write that off? If you have asked this question, you are in good company. Getting to know what is a true business expense can save you bundles at tax time and prevent CRA to disallow your expenses. It can be pretty hairy, as a tax accountant, to figure out what your expenses should look like if you mixed your groceries bills with office supply receipts. The more you ask your accountant to pull out their calculator, the more it will cost you to get your taxes done. Here is what we recommend to make your life easier (and cheaper).

1. Keep your business account for business.

It is tempting to run through the drive through and reach for the business debit card. I would caution you against that. It blends business expenses with personal. At the end of the year, if you have not done anything with your books, it can be hard to remember if you bought that printer paper for personal use or for business use…or maybe that purchase was for the kids’ school supplies…who really knows?

The real bad news in this equation is that if CRA decides three years down the road that your paper purchase was in fact the kids’ school supplies, you will not only owe the taxes on the increase in your income, but the interest on the date that the taxes were due. For example, if CRA is auditing your books on May 15, 2021 for the 2018 year, your interest charges will be calculated using the date of April 30, 2019. That is two years of interest to add to the tax bill.

2. Get an app.

An app is a cheap solution to your accounting problems. We have people with apps that pull data directly from their business bank and credit card accounts automatically. It requires a bit of work initially to set it all up…but once the set up is done, the app gets it done for you. You can take pictures with your phone using the app for it to match it to bank transactions. It even breaks out the GST!

3. Know what you can claim as a business expense.

The big question is: did you use it to earn income? The $40,000 kitchen renovation you just did probably did nothing to help your yard maintenance business. I think the meals and entertainment receipts are one of the most questionable ones you might have. If you meet a client for business, keep the receipt and write the name of the client you met with. It is the surest way to ensure it does not get disallowed by CRA.

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What is important to you is important to us.

Defining "Need to Have"

Reaching Your Growth Potential

Paying Yourself From Your Corporation

Congratulation to the Class of 2021!

Planning a Profitable Summer?

Don't Have Time To Do Your Own Bookkeeping?

Five Ways Outsourced Bookkeeping Saves You Money

Reducing Turnaround

Accounting Rescue

Can I Write That Off?

Mélanie Brochu-Macaulay

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