About accountrainTestimonialsServicesTools & TrainingContact UsWhat's NewHome

e-ccounting
October 2009

in this issue

Business Scenario
- GST

Answer - Two Parts

Accounting Tip

Did You Know ?

Definition

Sandy's Recommendations

Next Issue - Year-End(s)

Upping Coming Issues


 

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.

about accountrain

accountrain simplifies the client / accountant relationship.

accountrain offers a unique combination of knowledge and people-skills to solve all your accounting needs.

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

Is accountrain the right accounting team for you? Find out more....


Pass It On !

Please forward this to anyone you feel may benefit from some free accounting tips. They'll be glad you did.



Sandy's Question Corner

Do you have an accounting question? Send it to us at accountrain


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

If you would like to see your ad here contact accountrain for more information about advertising in e-ccounting.

You may qualify to have you first ad for free.

 


  • Business Scenario
    - GST

  • I can't believe how many new businesses just start charging GST (to their clients) without knowing more about it, let alone actually having an actual GST number.

    Questions concerning GST remains to be one of the questions we are asked about the most.

    Therefore: (1) who needs a GST number, and (2) how does one go about getting one?

     
  • Answer

  • PART 1

    You must register for a GST number as soon as your sales exceed $30,000 in any given year. (if you're a new company and you don't expect to have sales of $30,000, you don't need a GST number).

    But, as soon as the business reaches $30,000, even if it's close to the end of the year, you must register. Once you've registered you have a GST number from then on (even if the next year's sales are less than $30,000).

    There are advantages and disadvantages to signing up. An advantage to signing up sooner than when you actually reach the $30,00 threshold, is people won't necesarily know you are a small business, otherwise, aren't you basically telling the world, hey I have less than $30,000 in sales!

    That said, a disadvantage is the bookkeeping now has a new element to it and must be understood to maintain properly.

    PART 2

    You MUST have a GST number in order to charge anyone the extra 5% for Goods and Services rendered.

    You must also know that there are many rules, and with rules, come exceptions to the rules, concerning what is and isn't charged GST.

    But, most importantly, you must register for GST with the government, Canada Revenue Agency, before you can start charging and collecting GST.

    If you don't have an account, DON'T CHARGE the cleint the extra 5%! Not only is it not necessary, it's not allowed!

     
  • Accounting Tip
  • You can register by phone. It takes 5 minutes, the number is 1-800-959-5525.

    For bookkeeping purposes, you will create, at least one additional account.

    • If you are using QuickBooks, there will be one account, a liability account, called GST Payable (if the business is making more that it's spending, you should owe GST .
    • If you are using Simply Accounting, there are usually two GST accounts, GST on Sales and GST on Purchases, which will net into a Due to / from account.
    • If you are a not for profit, you may have no GST on your sales, only on your purchases, therefore your GST account will be an asset, GST Receivable. As well the GST you are eligible to collect may only be 1/2 or 2.5% (you should review this with a professional).

    Depending on the size and activity of the business, the GST will be due: Monthly, Quarterly, or Annually.

     
  • Did You Know ?
  • When you register your business, you are provided with a 9-digit business number, for example:

    12345 6789 RC0001

    The two additional letters at the end help distinguish what account it is for. You may only have the RC account, and no need for RP or RT, which are:

    (the RC distinguishes this account as your tax account, the

    • RC - for income taxes
    • RT - for GST
    • RP - for payroll

    The four numbers at the end represent how many accounts you have. For example, most companies will just have one payroll account therefore RP0001, but it you have a second account, for the same business, it will be RP0002

    For more Did You Knows?
  • Definition
  • GST (Goods and Services tax)

    Is a Federal tax on Services and Products. As a business we are responsible to collect, and later submit the 5% GST to CRA. As a business you are eligible to get back any GST paid on expenses. Therefore this amount is deducted against any GST collected, and it is the Net amount that is paid to CRA.


    For more definitions ...
  • Sandy's Recommendations
  • When preparing the GST form / return / claim, whatever you want to call it, don't get bogged down by all the lines.

    Once you've ensured it's your company name and correct business number (they are pre-printed in the top left hand corner), ensure you know your reporting period. In the top right corner, there will be a from when to when date, as well as the due date.

    An example of this would be, if you owe quarterly. Reporting from Jan 1, 2009 to March 31, 2009, with the due date being April 30, 2009.

    As mentioned, the form has many lines, most likely you only have to fill out the following:

    • Line 101 - Revenue (for reported period)
    • Line 105 - GST on Sales (the GST the business collected for sales and services).
    • Line 108 - GST on Purchases (the GST the business paid on all purchases).

    You can retrieve this information from reports available on your accounting software system. You should print these reports and attach them as back-up and keep them with the working copy of the GST form.

    Of course, you won't have the proper information if your bookkeeping is not current. If this is the case, you can call CRA, explain your situation and request an extension (you'd be surprised on how flexible they are) OR you can send an instalment payment (line 110), as long as you send the necessary information when you have it. (If you don't have a bookkeeper on staff, ensure you get proper assistance with this the first time you do it).

    Another thing to note is timing. Using our example above, with the period between January and March. The GST on the form must represent the GST on your outgoing invoices dated Jan to Mar and the GST on your incoming bills dated Jan - Mar), regardless of when you actually received payment from the customer or paid for the expenses.

     
  • Next Issue - Year-End(s)
  • Learn:

    • Review 3 types of businesses and their different year-ends

    • How to minimize the year-end "mad rush".

    • What are the deadlines.

    • Who to work with to reach year-end deadlines.
     
  • Upcoming Issues
  • Here's a glimpse at some topics for upcoming issues, if you have any suggestions, send them to us at accountrain accountrain@magma.ca:

    Learn:

    • Reports
    • Payroll
    • Capital (Fixed) Assets
    • Inventory
     
    613-789-2623



    accountrain | 160 George Street | Suite #1102 | Ottawa | ON | K1N 9M2 | Canada