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e-ccounting
December 2009

in this issue

Business Scenario
- Government Paperwork & Requirements

Answer

Accounting Tip

Did You Know ?

Definition

Sandy's Recommendations

Next Issue - A new look for e-ccounting!


 

about e-ccounting

e-ccounting is a monthly newsletter focusing on accounting tips and solutions. Our mission is to educate our clients, students and readers by offering these resources in response to your ongoing questions.

It is our objective to gather information and provide easy access for your current and future needs.
Back-issues are available on the accountrain website.

These tips are not complete answers to complex questions. We therefore recommend, when in doubt, contact the professionals or government agency.

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accountrain specializes in the how's and why's of accounting.

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Workshops:

accountrain accountrain now offers a series of four workshops. The informative and interactive format guarantees a comfortable and fun learning environment. Save when you register for two or more. The 1/2 day workshops include:

1. Understanding How to Read Financial Statements
  • Review the 5 key sections of the Financials
  • Key accounts, definitions, ratios and review of samples.

2. Accounting 101 - for new and small business
  • Review common questions
  • Understand government requirements
  • Shortcuts, tips and organizing all that paper!

3. Year-end Prep & New Year Planning It's never too late to get organized
  • Understand the year-end process
  • Learn to streamline your bookkeeping methods to save time and money

4. Spreadsheet Bookkeeping
It doesn't have to be so complicated!
  • Review the 5 key elements to track
  • Discussion on what to expense and how to record them properly, including home and car usage
  • Learn how it ties into your annual Income Tax return
  • Leave with a working spreadsheet for your business

Next Sessions: 2010 or as requested.

Limited seating, for more information on each workshop, upcoming dates or to register email accountrain

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  • Business Scenario
    - Government Paperwork & Requirements
  • When I ask a client for information concerning a government report, often they will pull out a big disorganized file with all the reports from both the Federal and Provincial governments.

    Then, when I ask for something they can't find it, or worse, they don't know what they've paid for because they get all the government accounts mixed up.

    With that, I'd like to review what the different government requirements are and the best way to organize them.

     
  • Answer
  • The easiest way to distinguish the government paperwork is, to first separate the Federal stuff from the Provincial stuff. This is easy as each report, on the top left corner, has it's distinctive government logo.

    The next step is to understand the different requirements by account number.

    For the Federal government they are:

    • GST
    • Payroll deductions
    • Tax instalments
    Each of these will require regular payments but how often will depend on your revenue, and it will change as your company grows. (See the Did You Know section of this issue.) It is important to be clear on each deadline. If you find it confusing, ask your accountant or call the CRA (Canada Revenue Agency), general information number ~ 1-800-959-5525) to review your file.

    A reminder, with the Federal government, the business number you are given when you register your business is the same 9 digit number for each account, ie 12345 6789. The difference is the initials at the end, as follows:
    • 12345 6789 RT (GST)
    • 12345 6789 RP (Payroll)
    • 12345 6789 RC (Tax)
    There is more on this topic in the May 2009 issue of e- ccounting, archived on the accountrain website (www.accountrain.com).

    For filing purposes, you can have a file for each of the above, or for small businesses, one file may be enough, with dividers separating each account.

    For the Provincial government there are three accounts, they are:
    • PST (Sales tax)
    • EHT (Employer Health Tax)
    • Tax instalments
    Each of these will require regular payments but how often will depend on your revenue. It will change as your business grows.

    It is important to be clear on each deadline, if you find it confusing, ask your accountant or call the Ministry of Finance to review your file. The general information number in Ottawa is 613-746-9200.

    Unfortunately with the Provincial government, the account numbers will vary, but please note in the top right hand corner, there will be large initials, for example:
    • CT (Tax)
    • EHT (Employer Health Tax)
    For filing purposes, you can have a file for each of the above, or for small businesses, one file may be enough, with dividers separating each account.
     
  • Accounting Tip
  • Learn to understand and fill out the paperwork properly, or have a professional do it for you. Don't let it intimidate you. It is likely that you are only required to fill out a few line items. For example, the GST form has over 12 lines, but for most businesses, there are only three numbers you require (total income, GST Collected on Sales and GST Paid on Purchases).

    Another tip, re income tax. Ensure you record tax payments to the proper account. If you are making a payment against taxes owed for the prior year, a liability account / amount (on the Balance Sheet) will be setup and these payments should be applied against it.

    However, if you are making a tax instalment towards this year's current taxes, this is an expense, and should be coded to the Income Statement.

     
  • Did You Know ?
  • When and how often you are requied to pay GST, taxes, etc., will change as your business grows.

    For example, as a small business the GST may only be due annually. As you earn more revenue, this will change to quarterly and perhaps even monthly.

    The decision is not up to you. The government will decide if and when this will occur, usually after a year- end. You will be notified with a letter. Therefore, always read and understand all correspondence from both the Federal and Provincial government.

    For more Did You Knows?
  • Definition
  • Not really a definition, more of a clarification for payments going to the Federal and Provincial governments:

    When issuing a cheque to the Federal government, there are several payee names that are acceptable, including: Receiver General, which then changed to CCRA, and is currently known as CRA (Canada Revenue Agency). When making payments to the Provincial government, refer to the Ministry (or Minister ) of Finance.


    For more definitions ...
  • Sandy's Recommendations
  • Stay current with your payments / instalments. Businesses that get behind find it extremely difficult to catch-up, this is one of the leading reasons companies go out of business.

    If cash flow is an issue, continue to fill out the paperwork and send in as much as you can afford to pay, with intentions of paying the balance as soon as you can. Do not hesitate to contact the government department and suggest a payment plan.

    Note, interest and penalties will apply to late payments.

     
  • Next Issue - A new look for e-ccounting!
  • e-ccounting will be changing it's format for 2010.
    Stay tuned!

     
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