IPBC Ignite Conference 2016

Back in February, I decided that I would spring for Jessica and I to attend the annual IPBC Ignite Conference held in Richmond this year.  

We've been waiting in anticipation to attend this event which covers four days of professional growth and learning with fellow bookkeepers from across Canada.  

The time is now upon us and this evening, we will leave Powell River to drive down to Vancouver to spend a few days taking in learning and growth sessions so that we can better serve our clients.

Lifelong learning - it's important!

Minimum Wage Increase Effective Sept 15th 2016 in BC!

Just want to throw a reminder out to employers that minimum wage is set to increase on Thursday, September 15th, 2016 in British Columbia.  The details of the increase can be found at the following link:

http://www2.gov.bc.ca/assets/gov/employment-business-and-economic-development/employment-standards-workplace-safety/employment-standards/factsheets-pdfs/pdfs/minimum_wage.pdf

Save yourself a trip to the bank. Pay Source Deductions online through CRA!

PAYING PAYROLL SOURCE DEDUCTIONS ONLINE

To pay your payroll source deductions through your online banking using the CRA’s My Payment feature:

To pay online, go to http://www.cra-arc.gc.ca/mypayment/

Follow these steps:

1. Click on “Start My Payment”

2. Click on Payroll source deductions

3. Click on Regular Remittance

4. Fill in the information they request using the information that I’ve provided for you on the form and then click next

5. Double check that the information you filled out matches what is recorded on the next screen. Then click beside the dot beside the amount and click “Confirm and proceed to pay”.

6. This will then let you choose your bank and walk you through processing your online payment. Please be sure to print off the confirmation once your payment has been processed and provide that to your bookkeeper with your next batch of paperwork.

Yes, there’s an app for that!

Did you know that CRA has an app which you can download and set-up to remind you of your due dates for your business?

You can set it up to remind you when your GST, Source Deductions, Corporate Tax, etc are due and it will push a reminder so that you don’t forget.

http://www.cra-arc.gc.ca/mobileapps/

You can access the download on the CRA website at the address above or search CRA in the app store.  The app is called CRA Business Tax Reminders.

Employee Bonuses

Today’s blog post will be generally short but sweet.  Business is going well, you have a little extra cash flow in the bank and you’d like to reward your employees with a cash bonus.

Great!  They’ll be so excited.  But PLEASE, don’t get excited yourself and pull out your chequebook and start writing cheques.  Cash bonuses (including gift certificates as they are considered the same as cash by CRA) are TAXABLE income to your employees.  This means that the bonuses MUST go through your payroll provider – whether it be your bookkeeper or if you use an outside payroll service.  The best way to handle bonuses is to let your bookkeeper/payroll provider know when you submit payroll the amount of the bonuses to each employee.  The bookkeeper will add the bonuses to the employee’s paycheque, deduct the appropriate amounts and the paycheque will be higher that month because of the bonus.

Gift certificates are a little more tricky as you’d be handing over the gift certificate on top of their paycheque.  However, it should be handled the same way.  Let your bookkeeper know, in advance, that you want to give your employees gift certificates for bonuses.  The bookkeeper will show them going onto the employee’s payroll as a bonus, it will get taxed like a cash bonus but the bookkeeper will also deduct the amount of the gift certificate from the paycheque as you’ll be handing them the gift certificate.  It is also important to note when you purchase the gift certificates that they were purchased as employee bonuses so your bookkeeper knows how to allocate the purchase as it will offset against the amounts being recorded through payroll.

As with anything, when you aren’t 100% sure, please contact your bookkeeper or payroll provider to discuss how things should be done.  Communication is always key and finding out the best way to go in advance makes so much more sense than trying to fix things later.

This is just an explanation for dealing with bonuses.  Employers are also entitled to give their employees tax-free gifts for a few reasons throughout the year (gift meaning a physical item you hand them – not cash/cheque/gift certificate).  If you would like more information on gifts, please feel free to contact us.

What employers need to know about Federal Election Day

A big election rule that many employers don’t seem to be aware of is the rule in which employees are required to be given three consecutive hours free from work in order to cast their vote on Election Day – if the employee requests it.

By law, everyone who is eligible to vote must have three consecutive hours to cast his/her vote. If the employee’s hours of work will not allow three consecutive hours to vote, employers must give them time off – without docking the employee’s pay.

In BC, the polling stations are open from 7 a.m. to 7 p.m.  Employers do have the right to decide WHEN the time will be given.  Obviously, if you run an office where your employees work 9 – 5, it would make the most sense to have them come in at ten a.m. or leave for the day at 4 p.m.  This gives them three consecutive hours to vote and costs the employer the least amount of money.  Obviously, if you choose to let the employee off in the middle of the day then it could cost you two or three hours instead of one.

This rule may not apply to those in the transportation industry.

Here is the link to the information on the Elections Canada website:  http://www.elections.ca/content2.aspx?section=faq&dir=off&document=index&lang=e

I did call Elections Canada this morning for clarification as I’d like to see more information on the ins & outs of this in their FAQs on time off to vote.  There is nothing to indicate if employers need to change their scheduling for everyone for Election Day automatically or if this only applies to those employees who specifically ask for it.  For instance, I voted in the advance polls.  If I was an employee it would be ridiculous for me to ask for time off to vote and it would be more ridiculous for my employer to pay me for time off when I don’t need it.  According to “Candace” at Elections Canada, employees request to be given the time.  It isn’t automatic.  However, if it’s requested, employers must allow for it and not dock pay.  However, the FAQs also don’t indicate when the time off must be requested.

In my opinion, while I highly encourage everyone to get their vote on, I think its ridiculous that employers are expected to basically pay people to vote.  I also find the lack of detailed information on this rule – especially with the threat of a $2000 fine and/or jail time – to also be ridiculous.  Considering the availability of advance polls, I think our citizens should make it their own priority to make sure they get to the polls to have their say in the running of this country.  It shouldn’t be the responsibility of employers to pay people to vote.

However, since this is the law and the penalty for non-compliance can be up to $2000 and/or three months in prison, I encourage employers to speak to their employees today and find out what time off people may need for Monday in order to keep your workplace running smoothly.  I would also suggest that employees who do NEED the time off to let their employers know in advance so that they can make sure they have the workplace covered as they need.  Common courtesy and understanding always goes a long way.

Now, get out there on Monday and get your vote on!

When are you running a business?

In the past few months I’ve had some interesting experiences trying to find someone to provide cleaning services for my offices.  While this post is stemming from those experiences, I want to make sure that people understand that I have nothing but respect for those who are in the cleaning and janitorial industry.  It is hard, dirty work and is often very thankless.  I am just using my recent experiences as an example but there are people confused about this topic in all sorts of business types.

What I’ve run in to lately is the misconception from people about what actually constitutes being a business.  For the record, there are different business types.  The most common we deal with here at BOIB are proprietorships (businesses owned and operated by one person), partnerships (businesses owned and operated by at least two people) and incorporated companies (they act as an entity all their own and the business name is ending with Ltd., Inc., Limited, Incorporated).  I, myself, operate a proprietorship.  This means that I am the business and the business is me.  Any income I make after I deduct valid business expenses in each calendar year is taxable income to me at the current personal income tax rates.  In the case of a partnership, the income after expenses would be split between the partners depending on their agreement when they started it and would also be taxed at the current personal income tax rates each calendar year.   An incorporated company runs much differently, as the shareholders must respect that the company is a separate entity and they must take money from their company in the form of being an employee on payroll or in dividends.

So, you’re thinking to yourself.  Well, I haven’t gone to any government agency and registered a name, I don’t have a business licence and I just collect cash for payment so I’m not running a business.  Guess what?  You are very incorrect.  Generally speaking, if you are offering goods or services for a fee, you are running a business.  You don’t need to have a fancy business name registered to have a business.

Legally, my legal business name is Aaron Reid.  I am actually “doing business as” Banking On It Bookkeeping.  It’s a name I registered for my own use but as I’m not an incorporated company, I am the business and the business is me.   In the City of Powell River, anyone doing business within the city limits is required to have a business licence through the City.  Many, many small businesses in town don’t have one, but again, that doesn’t mean they aren’t running a business.

If, you are in fact, offering goods and/or services in exchange for money or something of value and aren’t reporting the income you earn on your income taxes, you are actually operating in the Underground Economy, or as the courts call it, you are committing fraud and tax evasion.

Why being incorporated is different...

The number one way clients who have incorporated companies (Ltd., Limited, Inc., Incorporated) get themselves into trouble is thinking that the company is “theirs”.

When you incorporate a company you are actually creating something that is it’s own entity.   When you hold the shares of that company you do have the authorization to make the decisions but the assets (including the cash value items like the bank account) do not belong to the shareholders – they belong to the company.

Any company that has been incorporated with have a liability account on the Balance Sheet called a Shareholders Loans account or Due to Shareholder or some other such name variation.  This account is used to account for funds that the shareholder (s) have loaned the company.  This account is also used to keep track of money the company has “loaned” the shareholder.  At the end of the fiscal year (the company year end) this account can NOT be in a negative balance – meaning that the shareholder (s) can NOT owe the company money.  The two main ways that shareholders can take funds from the company are either through payroll or via dividends.

So where do people go wrong?  They think to themselves – this is my company.  I started it and if there’s money in the bank account its mine to do with as I please.  WRONG.  The money belongs to the company.  If you use the company debit card to buy your groceries at the store, then you should be depositing that money back into the company and making a note for your bookkeeper that the withdrawal was personal and the deposit is reimbursement for it.  If you happen to have put a large amount of money into the company to get it going, keep it a float, etc. then you can pay yourself back some of that money in this way.  But be very careful.  You should be getting financial statements on a regular basis and you should be watching that Shareholder’s Loans account religiously to make sure you don’t get yourself into a situation where you’re owing the company money.

The easiest way I try to help it make sense for people is to consider the company a guy named Bob.  That’s Bob’s debit card, Bob’s credit card and Bob’s cheque book.  If you use Bob’s debit card to pay for your massage, groceries or what have you, you’d better pay Bob back or he’ll an ex-friend who might be calling the police to report a theft.

So if you have started or taken over an incorporated company, be a good friend to “Bob”.  Don’t use his credit card, debit card or cheque book to pay your own personal expenses.  And, if you happen to do so – make sure to pay Bob back in a timely fashion and make clear notes for your bookkeeper.

Info for Employees

We don’t complete personal tax returns here at BOIB but we do provide payroll services.

If you are an employee or will be an employee – this post is for you!

When you hire on as an employee, your employee should be requesting that you fill out and provide them with original copies of your TD1 forms. These forms are used by whomever is doing the payroll to determine what deductions to take from your paycheques for EI, CPP & Income Tax purposes. Employers are required by law to deduct and remit to the government these deductions on a regular basis.

If you do not fill these forms out correctly, the person or company providing payroll services may not deduct enough income tax or may deduct too much. Many different things can affect how much tax you should be paying – one of the most common is holding down more than one part-time job.

Each year the Federal & Provincial goverments release tax exemption amounts – this the amount a person can earn before they are required to pay income tax (this is only about income tax – not EI or CPP). In 2015, the Federal amount is $11327 and the BC amount is $9938. You can only claim this deduction once per calendar year. Therefore, when filling out TD1 forms for the first job, you should fill these amounts in on the forms (there are separate forms which look almost exactly the same but one is Federal & the other Provincial). HOWEVER, if you have a 2nd, 3rd, or 4th job, you should NOT be claiming these deductions again. You should be filling in 0’s for the exemption amount and depending on your earnings you can also opt to fill in the box on page 2 of the Federal form to have extra tax deducted.

Remember that it’s the responsibility of the employee to make sure these forms are filled out correctly. Payroll providers do not know your personal circumstances. We don’t know if you’re married, single, divorced, have one child or six, live with your parents, work 12 jobs, etc. We depend on the information you provide to us to determine the proper deductions. And don’t forget that raises throughout the year or changes in your personal circumstances (think marriage, collecting EI, having a baby, etc) can change your tax situation, as well.

Here is a link to the CRA website where you will find downloadable copies of TD1 forms. They even offer worksheets to help you determine the proper amounts to fill in for your situation.

http://www.cra-arc.gc.ca/formspubs/frms/td1-eng.html

And for heaven’s sake – look at your paystubs! Too many people simply ignore their paystubs each pay period. You should be keeping track of your hours worked and double checking that an error hasn’t occurred in calculating your pay. Mistakes do happen – such is life – and the responsibility is yours to make sure any issues with your pay are caught quickly so it can be rectified.