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  Tips & Suggestions

Hopefully these tips will help you organize the many pieces of paper that you have to deal with in your business. Using them will save you money, even if it’s only by reducing the amount of time your bookkeeper has to spend looking for information or asking questions that you may no longer be able to answer!

    Keep receipts. Without a receipt an expense cannot be used. If audited, Canada Revenue Agency (CRA) will disallow anything that does not have a receipt showing the details of the purchase or expense.
  Company Startup
    Many companies operate from January to December. Consider having your year-end at the end of June, July or August instead. Accountants aren’t as busy then as they are at the beginning of the year.
  Sales Invoices
    Keep paid invoices separate from unpaid invoices.
    When paid, write on the invoice the customer’s cheque #, the date deposited and amount, if not paid in full. Or, attach the customers cheque stub and write the deposit date.
  Purchase Invoices (bills you have to pay)
    Keep unpaid bills separate from paid bills.
    On paid bills indicate date paid, how paid (chq #, cash – make sure you get a receipt, online confirmation #) and amount paid if not paid in full.
  Expense Receipts
    Always keep receipts (purchase invoice) that shows what you bought.
    Always write on the receipt what it’s for – gas, office supplies, etc. If it’s a meal receipt, indicate clearly who it was for (e.g. “lunch with accountant” or “John from purchasing dept. at abc company”).
    Buying yourself a coffee and/or a breakfast sandwich on your way to your office is NOT a business expense, even if you didn’t have time to make breakfast.
    Keep an envelope in your car. If you buy something business-related, (e.g. gas or supplies), put the receipt in the envelope immediately instead of your pocket, purse, wallet, glove compartment or floor!
    Once a week, spend 15 to 30 minutes going through your expense envelope and file them, making notes on any that you didn’t previously.
  Vehicle Expense
    Consider using a flat mileage rate rather than a percentage of expenses. It’s easier and often pays more. Ask us about it.
  Credit Card Bills
    Treat the same as expenses – mark which are for business and what they are. Always keep the purchase invoice. Neither the credit card receipt, nor the statement, are valid expense receipts... only proof of payment. You must have the original purchase invoice. Attach the original invoice to the credit card receipt.
  Telephone Expense
    If you make business-related long distance calls from your home phone, mark them on your statement with a highlighter and indicate what they are. Although you're home phone cannot be claimed for business, any business-related long-distance charges are valid business expenses.
    To make bank reconciliations easier when you make ATM deposits, attach the ATM receipt to a list that summarizes who paid what amount. It will save your bookkeeper a lot of time in trying to match deposits with customer payments.
    If your bank statement doesn’t run from the 1st to the last day of the month, talk to your bank about having it changed.
    Have your bank statement WITH returned cheques available for your bookkeeper so he/she can properly do your bank reconciliation.
  Meals & Entertainment
    You can claim a portion of your meals and entertainment if you are with someone related to your business (employees, clients, suppliers — or potential ones). Make sure you write down the names of the people you entertained and WHY. Don’t forget to include the tip.
    If you want to be a "nice guy" and buy lunch for your staff every month or once a week, unless there are extenuating circumstances, this is not a valid expense. In fact, CRA could claim that you have provided a taxable benefit to your employees and expect them to pay taxes on the annual total.
    If you pay for meals and entertainment with a credit card, neither the credit card receipt nor the credit card statement alone are valid expense receipts. You must have the original bills. If it's not given to you, always ask for it.
  Travel Expense
    If you travel on business, don’t put your meals on your room bill. Always keep meals and accommodations as separate receipts.
    Be prepared to prove that the travel was for business. Keep a log of what you did and who you visted, along with phone numbers.
  Home Office Expenses
    A percentage of expenses from the home can be claimed if you have a home office: hydro, gas, rent, mortgage interest, house cleaning and simple maintenance are allowable expenses.
    Do not include major or capital upgrades to the home. By doing so, any profit you make when you sell your home becomes eligible for Capital Gains Tax in the company.
  Final Word
    Always keep receipts. Have we mentioned this before? It can’t be stressed enough!

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