My Presentation PowerPoint Keeping Records Do's and Don'ts There are rules about keeping records Don't assume the same rules apply for all laws. There are conflicting rules, and in today's world, there are electronic record keeping rules too!   What do SLP's have in common with their clients? Case Study: Marion Abbott SLP Sample GL PDF Marion Abbott SLP QuickBooks Backup *.QBB v 2013 Marion Abbott SLP  This file is a backup from v 2013 QuickBooks. The only way you can view it is if you have QuickBooks 2013 installed on your computer. Check to see if there's a 30 day free sample here, www.quickbooks.ca CRA resources for small business RC4070 Guide for Canadian Small Business RC4022 General Info for GST/HST Registrants T4002 Business & Professional Income Do's and Don'ts Rules for self-employed professionals Don't rely on what you overheard in a bar, over the back fence, or even at church. Refer to a trusted source, and double check with CRA. Accrual method of accounting is mandatory Don't use the cash method during the year and adjust at year end. Your dates for GST/HST reporting won't be correct. Adjusting your sales figures at year end to record WIP isn't enough if you're serious about being a successful business person. Not only is your GST/HST reporting not correct, but it's impossible to remember if someone paid you or not if you don't record sales until you receive the money. Any savvy business person will tell you that tracking your receivables to make sure you got paid, and tracking your payables to make sure you didn't pay something twice is just good business sense. Don't assume you only need an income statement because you aren't incorporated. Keeping records of all transactions for current and capital assets, current and long term liabilities, plus proprietor draws that transfer to your personal accounts can be critical to have in an audit. Without these records, auditors could make wild assumptions you must disprove. In a tax audit, you are guilty until proven innocent. SLP's must record WIP (Work in Progress) SLP's aren't on the list of those who can elect out of reporting their WIP. All unbilled work at year end must be accrued. This means adding unbilled income even though costs and time aren't yet billed out to clients. Costs can be included in expenses to offset the accrued revenue. Barter is reportable income The Globe and Mail - Tim Cestnick updated Sep 6 2012 GST/HST Notice 172 sets out how and when a barter exchange service can opt out of GST/HST (This is something that is not at the discretion of the participants. It would be a formal process that must be approved) Home office rules are not the same for everyone Don't be fooled, there are completely different rules for home offices depending on whether you are an employee, self-employed, or a corporate tenant. There's a difference between capital and repair Don't assume you know which class your assets fall under. Over time, the rules change, and if you don't believe me, click on this link above to see all the different classes that computers have fallen into over the past few years.  Payroll isn't optional Don't assume someone is self-employed, if not sure, go for a Ruling, use CPT1. Until you receive the ruling, treat them as an employee. I know it sounds cruel, but look at how much you could be penalized for not doing this. HST is about to return to GST and PST is back  April 1, 2013 BC will be transitioning back to PST. The regulations aren't written yet. GST/HST applies: payments inside medical practices Click above to access rules that all transactions between practitioners in a practice must be considered for GST/HST found in CRA's publication P-238 Application of the GST/HST to Payments Made between Parties within a Medical Practice Organization:  What are good reasons for incorporating? Don't assume that the company assets are yours. They aren't and if you do use them, the company has to T4 you for the use of those assets. If it's a vehicle, this is called a standby and operating cost benefit, and it never decreases, even though your vehicle ages.  If you take money from the company without declaring it as payroll, you could be double taxed as the income will be taxable, and the deduction won't be allowed to the company. To add insult to injury, you could also be charged an imputed interest cost for having borrowed from the company for every month your account was in a debit (receivable) position under S. 80.4 of the Income Tax Act. Take WorkSafeBC very seriously Don't ignore the Personal Optional Protection plan for professionals. Let's just say, a client bites you, do you have insurance that will cover you for rehab and lost wages? Consequences of not registering You are required to cover all employees, and that may include someone who works on or about your home office or home property.  You may be required to cover self-employed persons you hire if they meet the requirement that you cover them. Each fact pattern requires a ruling to be sure. Don't ignore WorkSafe BC as not being covered could result in you having to pay for the rest of your life if there's an accident or injury that should have been insured and wasn't.  CRA videos about business Useful tools to assist clients claim tax credits RC4064 Medical and Disability Related Information TD1 forms for 2012, Federal and Prov/Terr T1213 Request to Reduce Tax Deductions at Source  If the tax credits or expenses your client has for the current year aren't included on the TD1, this form allows the client to request that less tax be taken at source in consideration that the client will be entitled to a refund next April and shouldn't have to pay those taxes now. T929 Disability Supports Deduction  Quite a few medical expenses, including attendant care costs can be recorded by the person with the disability if they have income. This form lists the specific expenses that can be claimed as an expense instead of as a credit. This won't help parents with children who don't have income but it may help a person who has income and has a disability, to reduce their taxable income, especially if they pay tax at a higher rate. This claim can be a more favorable claim than claiming these specific costs as a medical expense at the lowest rate available. How much difference? Top rate of tax is over 40%, rate used for medical expenses, after deducting 3% threshold, is about 20%.