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Whether you run a small business, or a garage startup, with time, your company will grow. Then, managing finances and other expenses can get tricky and complicated. You will have more revenue, more clients, and more employees. Keeping track of it all can be time-consuming and burdensome. To make this entire process more manageable, you should hire a reputable accounting firm as they offer several advantages like.
1) They Save You a Lot of Time
First and foremost, if you are the owner or CEO of a company, you have a lot on your plate already. This means that time management is vital for your efficiency, and you cannot waste time. And if you do not have experience in handling expenses and accounts, then you can spend a lot of time on it. Here, accounting firms can help you by taking over the entire financial sector of your business. This not only gives you peace of mind that professionals are handling your accounts but also gives you a lot of leeway with the time that you can spend somewhere else.
2) They Help You with Taxes
Taxes, returns and exemptions can be confusing for a new business owner, and learning every aspect of the same can take a lot of time. Hence, you should instead hire an accounting firm that can handle all your taxes. Since they are professionals, they know the ins-and-outs of the tax system of Edmonton, Alberta, and can help you save a lot of money. Moreover, taxes and tax returns is a long process, and the accounting firm can handle such things in a much-controlled manner without overlooking essential aspects of the same.
3) They Keep the Costs Down
Just like saving you money on taxes, accounting firms can also help you cut the costs of the company efficiently. Since they handle many clients, they are aware of the most common mistakes that can cost your company a lot of money. They help you avoid these mistakes, and they also track all your payments and analyze the ledgers to better advise you on saving money. Also, by keeping a keen eye on the transactions, they avoid any frauds or mistranslations in your company.
4) They Maintain Payment Punctuality
Once your business grows, your company will have to make many payments to various clients and partners. This task can be complicated and can often be delayed, which can damage the reputation of your company. Here, accounting firms can take over such payments and use the most efficient processes to execute them on time, while tracking the payments and avoiding any delays.
5) They Save You from Legal Complications
There are many laws and regulations that you need to abide by while running a business. Overlooking such laws can either cost you money in fines and in the worst scenario, you may also lose your license to operate. Here, an accounting firm can act as an advisor that makes sure you comply with all the financial laws and regulations. Moreover, since they also track all the payments and transactions systematically, they can also back your claims with proof and facts in case of a legal dispute.
6) They Give Top-Notch Financial Advice
These accounting firms also handle many businesses, from small garage startups to multinational corporations. Hence, they know how finances work, and which tactics can be used to boost your company’s growth. By hiring accounting firms, you get the best financial advice that you can apply in your business strategy. They can advise you on several things like cost-cutting and surge growth, and other long-term plans.
7) They can Handle Business Softwares
In the modern world where a lot of the aspects of your business take place online, you must have the right softwares to handle the finances of your business. However, these softwares can be complicated to understand, and they often have a steep learning curve. Instead, you can hire accounting firms that are well-versed with such sophisticated softwares and systems. They can handle all your finances on these software platforms efficiently and make them easier to access for your company.
8) They Assist You Business Loans
In the current market, with the credit crunch, procuring business loans is hard. Here, you can use the help of accounting firms for business financing. The firms have experience with helping other businesses get loans, and they also have all your payment and transaction records stored in a systematic order. They can use their expertise to choose the right strategy for application, and they can provide you with the relevant facts and figures to support your loan application. Some accounting firms can also help you choose the right bank for your needs and budget.
9) They Help You Expand
Last but not least, these accounting firms can help you expand your business. They can use their expertise to guide you with the right procedures and strategies that you can use to either set up franchises by analyzing the strategy and budget. On the other hand, they can also help you acquire other businesses by analyzing their existing accounts to see if they are a worthy investment or not.
Even though such accounting firms offer so many benefits, many business owners still perceive them as an expense. Instead, you should see them as an investment. They can help you make a lot of money by helping you expand your business by only charging you a small sum of money. There is also the aspect of mutual benefit where their gain lies in your profit; hence, they make sure you never go in loss.
A reputable accounting firm will offer many cost-effective services, match your needs, and help you expand your business. They must have tremendous experience and knowledge about handling finances, so you can rest assured that your company’s finances are in the hands of the right firm. Luckily, ATS Accounting offers just that. For more information, click here, or contact us at 587-885-9689.
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When you begin as a small business, the accounts are not that tough to manage. But eventually, you will grow, and the accounts can become difficult to handle. At such times, an accounting firm can come to your rescue. An accounting firm has a lot to deliver and can save you a lot of time. You want to focus on growing your business, and you may get your accountings wrong as you are working on more than one place. So, the accounting firm will reduce your work, and you will be able to focus more on your work. If you are still dicey about why you should hire the firm, then read on the post to know how it can benefit you.
1) Time Availability for You
As you are busy with your business and are working all the time to grow, you may not give enough time to your business’s accounts. With already so much work, you won’t be able to concentrate well on the income and business expenses, and other finance-related processes. As the owner, you are responsible for the whole company, and you can’t practically work with every department. Accounts tell the company if they are in loss or profit, and you don’t want to leave such a thing in the hands of an unprofessional or an under-experienced person. An accounting firm will look at all of these factors, and you won’t have to worry about accounting as you will be updated from time to time. This way, a lot of time is saved for you as all the accounting-related responsibilities are taken away from you. When you know you don’t have to worry about your books of accounts, you can worry less and focus more on the core of your responsibilities.
2) Punctuality in Payments
A business involves a lot of transactions, and you will have to keep an eye on every transaction. As an owner of your business, you can’t be all over the place and remember every transaction amount and date. But if you overlook these things, your business’s financial health will suffer. This work can be handled well by an accounting firm. The accounting firm will ensure that the amounts are paid on time, and nothing is being overpaid. The firm will also help in the collection of payment from clients. This way, you won’t have to keep track of figures and dates. Also, you don’t have to spend time following up with people who don’t pay the bills or respond.
3) Expertise in Taxes
Your business’s tax process involves several things. Right from keeping track of dates to form filling and amount payment, there’s a lot that you have to look after. And with so many responsibilities, it is common to miss out on deadlines and amounts. The professionals at the accounting firm are well-versed with the tax system in various provinces of Canada. The accounting firm will help to save your money from taxes because that is what they are supposed and expected to do. Taxation is a continuous process, and the accounting firm would be able to manage things efficiently. They can save money by filing proper returns, and benefit the business to invest that money elsewhere. This way, you won’t miss out on any tax-related work.
4) Financial Advice
Your core job is to run your business, and that’s your expertise too. So when it comes to managing your business accounts, you may not have proper experience and expertise. With limited knowledge that you have, you may not be able to run your business efficiently. You will require some financial advice to ensure the processes go on smoothly, if you don’t wish to outsource the job to an accounting firm. An accounting firm is not just about hiring someone to manage the bookkeeping process and your business accounts. A good accounting firm like ours will also give you the right financial advice. The financial advice will help your business to grow for the long term. Advice will gain you mutual benefits and help win cost-cutting.
The accounting firm will help your business to grow and help to reach the height of success. You can opt to hire us, as we are one of the trusted accounting firms. We are right here to take away all your accounting-related jobs from you so that your focus isn’t divided.
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Every business and company holds assets and liabilities. Assets are crucial for a company because that is what they rely on for the future of their business. Over the life term of the asset, its value is considered as the expense for the business. To understand more about the asset depreciation, read the post further. Every crucial information that you should know about asset depreciation is stated below.
What is Asset Depreciation?
The depreciation is defined as the reducing value of a fixed asset owned by a company over time. A business doesn’t record the whole deduction cost altogether once in a year, but rather, it is recorded at frequent intervals over time. The written asset depreciation helps to have more control over the finances of a business. Recording business’s asset depreciation is imperative for every business.
What Assets Can Be Depreciated?
A business can depreciate both tangible and intangible types of assets like machinery, vehicles, equipment, computers, furniture, computer software, patents and copyrights. The land is the only kind of fixed asset of a company that cannot be depreciated over time. As time passes, the value of land will only get appreciated.
Example of Depreciation: If the business buys a car worth CA$30,000 and its usage is expected for 10 years, then the value will depreciate the asset with the depreciation expense of CA$3,000 every single year for a time of 10 years.
Methods to Calculate Depreciation
For calculating the asset depreciation, three common methods are generally practised - the straight-line method, units of production method and double-declining balance method.
Three main inputs are required for the calculation:1) Useful Life - This is the period of time in which the company considers the asset to be productive.
2) Salvage Value - When the fixed asset is sold after it’s useful life, the reduced amount at which the company will sell it, would be considered as salvage value.
3) Cost of the Asset - This aspect includes taxes, shipping and preparation or setup expenses.
The three methods used for calculating are explained below:
1) Straight-line Method
This is the simplest and most commonly used method to calculate the expenses of depreciation. The method involves a simple allocating of the same depreciation rate every year over the useful life of the asset. The formula for straight-line depreciation is:
Annual Depreciation Expense = (Asset Cost - Residual Value)/Useful life of the Asset
Example - If a company purchases machinery valued at $10,000, with a residual value of $2,000 and it has a useful life of 10 years. Then:
Annual Depreciation Asset = (10,000 - 2,000)/10 = $800
With this, the company will enter CA$800 under the Depreciation Expense over the machinery’s useful time of 10 years. The depreciation expense is stated under the income statement as the reduction in revenues.
2) Units of Production Method
Unlike the straight-line method, this is a two-step method. Under this method, an equal amount of expense is given to each unit that is produced or service rendered by the asset. This makes the method useful for the production line. The calculation in the method is based on the output capability of the asset instead of the number of years.
The two steps:1) Calculate Per Unit Depreciation:
Per Unit Depreciation = (Asset Cost - Residual Value)/Useful life in Units of Production2) Calculate the total depreciation of actual units produced:
Total Depreciation Expense = Per Unit Depreciation x Units Produced
Example - An XYZ company buys a piece of machinery for CA$4,000 with an expected production of 18,000 units over its useful life, and it has a residual value of CA$400. Its output is 400 units.
Step 1 - Per Unit Depreciation = (4,000 - 400)/18,000 = $0.2
Step 2 - Total Depreciation Expense = 0.2 x 400 = $80
With this the depreciation expense is shown CA$80. The unit depreciation that is found, that same can be applied for future output runs.
3) Double Declining Balance Method
Among the others, this is also one of the common methods that company use to derive the depreciation expense of a fixed asset. This method is a type of acceleration method. It calculates the depreciation expense high in the first year and reduces the expense of depreciation in the following year.
Depreciation = 2 x Straight Line Depreciation Present x Book value at the beginning of the accounting period
Book Value = Cost of the Asset - Accumulated Depreciation
Example - Company XYZ buys machinery on April 1, 2016, at the cost of $10,000. The machinery is predicted to have a useful life of 5 years, and the salvage value is $1,400. The company will consider depreciation for the nearest month. Now, calculate depreciation expenses for years 2016, 2017, 2018 with the declining balance method.
Useful Life = 5
Straight line depreciation percent = ⅕ = 20% per year
Depreciation rate = 20% x 2 = 40% per year
Depreciation for the year 2016 = $10,000 x 40% x 9/12 = $3,000
Depreciation for the year 2017 = ($10,000 - $3,000) x 40% x 12/12 = $2,800
Depreciation for the year 2018 = ($10,000 - $3,000 - $2,800) x 40% x 9/12 = $1,680
The depreciation value for the year 2020 would be CA$112, it will keep the book value same as the salvage value. (CA$1,512 - CA$1,400 = CA$112) after this calculation the depreciation recording should stop.
The asset depreciation is a must for every business because some assets taxes may be deducted immediately, and some have long life term whose taxes are deducted over the years of life. You only stop the depreciation of an asset when it has reached its useful life. To handle the assets and other accounting for your business, you can hire our accountants.
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Almost every firm wishes that 2020 is their year, and they make the most of it. Also, we are sure that many firms made numerous wishes and resolutions last year, too, but failed to fulfil them. There are multiple reasons why they might have failed. Some of them debatable, while the others being obvious blunders. Almost every firm wants to have their accounts on track so that they can understand what mistakes they are making and eventually double up on their profits. But for this to happen, there are multiple things that a business needs to do from an accounting point of view. These things can totally be your new year’s resolutions. So in this article, we are going to discuss just those things that can be your accounting resolutions for the year 2020 with the ways you can actually fulfil them.
1) Conduct a Complete Financial Review
Yes, we are aware that this is not the financial year-end, but performing a quick review of your accounts would not harm. All you need to do is go through your accounts, check for all the sales receipts and sales notices, go through all of yours and your business’ professional expenditure and see whether they add up or not. In case they are not adding up, you may require to call up a chartered accountant from your vicinity. The reason why we suggest that you hire a professional chartered accountant is that they are trained in these things and they can pin down the reasons as to why your accounts are not matching with your expenditure. Therefore, saving your firm from a lot of trouble in the future.
2) Understand Your Tax Expenses
It’s always good to know beforehand what is the amount you will have to pay the government as and when you near the financial year-end. So the next time you get the opportunity, call up your chartered accountant or hire a new accountant for help. What a chartered accountant would do for you is they can go through your details to understand anomalies, if any. Therefore, assisting your business to thrive and you have a hassle-free year-end.
3) Focus on Customer Service
All the firm requires to do in order to thrive is to make their customers happy. This is because they are the reason why your firm is operational in the first place. So when you conduct your next financial meeting, consider whether your sales is falling because of sloppy customer service. If that is the reason for your firm’s near downfall, always consider revamping your customer services section. This goes on to assist your firm to maintain its accounts and keep making profits to have a great year ahead. So this is one of the most important resolutions for your firm to make in 2020.
4) Update Accounting Systems
Your accounting systems are just as important as the sales aspect. This is because if your accounts section is not up-to-the-mark, you will face a major challenge when you are dealing with year-end tax payments. This is because if you don’t have a clear idea of what happened during the year in written format, you will be left alone, spending days and days on end trying to understand how your firm operated over the last year. So yes, do get in touch with an external accountant to look at your systems and give you a bird’s eye view of the challenges faced by your firm. This will just go on to assist your firm in thriving through ages.
5) Be Aware of Tax Laws
Often companies make the accounting mistakes of not being aware of the tax laws. When this happens, the companies are left hanging in the middle. This is because they are not aware of the recently changed tax laws. Eventually what happens is they don’t realize whether the current tax law will affect their operations in a positive or a negative way. So always ensure that you are up to date with the constantly changing tax laws. If in case you are not able to understand any of the laws, do not hesitate to get in touch with an accountant. This is because they are professionals and are aware of the constantly changing tax laws. They will be better able to make you understand how the current law will be affecting your business and how you can avoid getting your firm into trouble.
6) Keep a Track of Your Finances
This is of high importance for a multitude of reasons. Some of these reasons include you having an effortless year-end tax-paying time. A way to keep track of your expenses is making electric copies of your expenses and upload them directly to your accounting software. Doing so saves a lot of time for you when you actually have to start with your year-end tax-paying season. If you have paper receipts, you can always opt to click a picture of those receipts and upload them directly to the software. If in case you find this to be too consuming for you, always opt to get in touch with professional chartered accountants so as to help you in understanding how you can keep track of your finances.
All we suggest is making the right decisions so as to have the right type of 2020. If accounts of your firm still challenge you, always consider getting in touch with a professional chartered accountant in your vicinity so as to help you with the same.
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Accountants and Certified Public Accountants (CPA) are both distinct and important for business functioning. You would have reached a point in your business where you would hire an accountant or a CPA to handle the finance. But if you are confused about choosing between an accountant and a CPA, then you should probably know their key roles and the difference between them. This will help you in choosing the one that is better for the finance of your business. Below we are heading towards knowing the difference between an accountant and a CPA.
Accountants handle the accounting of a business or a firm. The accounting is prepared by collecting data, then analyzing the collected data and finally reporting the data in the financial statement. The accountant performs the day-to-day accounting of the business. Most accountants hold a bachelor’s degree with some training and experience to perform a wide range of accounting work for a business. Accountants handle work like financial reporting, auditing, internal control, risk assessment, costing budgeting and performance management.
CPAs are are accountants too. They have to obtain a license from the state to perform their accounting duties. CPAs are trusted financial accountants who help an individual, organizations and business to plan their finance and reach their financial goals. CPAs can conduct all the tasks that are done by accountants, but an accountant cannot conduct all the tasks of a CPA. The three main components for getting a CPA license are Education, Examination and Experience.
License is only required for CPAs, and the accountants don't need a license. A bachelor’s degree is enough for practicing any accounting work. This is one of the major and significant differences between accountants and CPAs. CPAs would need to take some rigorous tests and strict requirements for practicing their work. There are required institute coursework hours that a person needs to complete with specific hours in accounting, auditing, taxation and business core classes. After accomplishing graduation and completing one year of experience under the supervision of a CPA, there will be another comprehensive test of tax, auditing and general accounting skills that the candidate needs to pass. Even after receiving the license, the CPA will have to continue taking education classes to stay updated with the new information and changes in accounting.
CPAs are certified and hence they are considered to be the most trusted advisors for finance. Many businesses need to conduct a financial statement audit. CPAs can only perform this audit, and only they can issue the required reports. CPAs are the only person who holds the legal duty and power on behalf of their clients. CPAs are in the best interest of the clients. Whereas, the accountants are not considered to behold the fiduciary responsibilities to their clients. Fiduciary responsibilities are only given to CPAs.
Taxes and Regulations
Many accountants can prepare a proper tax return without a CPA certification. But a certified CPA can provide various benefits to the clients that non-CPA accountants cannot provide. CPAs are more knowledgeable because they have given rigorous examinations and are pursuing education continuously. So they are well equipped with the current situations. Another benefit that you get along the CPA is that they are eligible for representing the clients before the CRA. Whereas, a non-CPA accountant is not qualified to do so.
Codes of Ethics
Getting a license is not the only requirement to become a CPA. There is some code of ethics that a CPA needs to follow, and they also have to maintain the standard of the profession. CPAs have to make financial decisions while being in line with the code of ethics. The responsibilities lie in the hands of the CPA to conduct every activity while staying in the code of ethics. The CPA has to take sensitive and moral judgements in every activity. CPAs would have to keep learning through continuous education, and they will have to level up to high ethics throughout their careers. Abiding by the code of ethics and continuous education is not a must for non-CPA accountants.
There are primary functions that accountants and CPAs have to conduct. The primary functions that a CPA has to conduct are carrying out assurance services or public accounting. CPAs attest financial statement in the assurance service category. The accountants have the authority to attest financial statements. CPAs can prepare three types of financial statements that are audited, reviewed and compiled. Whereas, an accountant will only be able to make a compiled financial statement. The key roles of an accountant are to plan the future for clients, audit accounts and maintaining the accounts books. Those CPAs who are working as a consultant can’t operate as an auditor. CPAs are business advisors and they do the taxes and financial planning. Whereas, the accountant will be able to plan these things systematically.
Costs and Expenses
When compared, the costs incurred for pursuing CPA are higher than the accountants. To become an accountant, you just need a bachelor’s degree, but becoming a CPA consists of education, required time of relevant working experience and the Common Final Examinations. The cost of the studies in CPA will eventually increase as you consider a higher level of certification courses or like the CPA Professional Education Program. The more studies a person acquires, the more they would know about the workings of accountings and they could be more trustable.
Both the profession of the accountants and the CPAs are best at their own place. It is now according to your cost and priority you should choose the best option for yourself. Both of them have their pros and cons, choose according to which fits best with your priorities. To choose the best accounting services in Edmonton, you should call us.
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"The word accounting comes from accountability, if you’re going to be rich, you must be accountable for your money"- Robert Kiyosaki
All businesses of any scale require accounting. Accounting is the language of business that develops transparency for the everyday transaction and a properly working system. Every business proprietor must be concerned about his account books. Even if you hire a professional for your business accounting, you must know how accountancy works in order to understand the books that your accountant is creating for you. Accountancy is the process through which the net profit or loss of the organization is determined. It also helps you point out the transactional errors that are causing you to lose money or business. Accountancy is highly proportionate to your financial management. A lot of companies fail in the long run if their books lack clarity or information.
Several business owners restrain themselves from accounting due to incomplete knowledge. Many of them stay away from it just because it includes working with numbers. Accounting is the factor of a business that can never be ignored.
A set of rules used for the documentation of everyday transaction is known as accounting. Accounting gives the analysis of the working conditions of an organization and helps you measure the future opportunities or downfalls so that you can take considerable actions.
Managing your own business accounts can be a tough job if you’re bad with numbers, but at least knowing the skills will help you with the proper rules to begin your bookkeeping.
Economic Entity Assumption
The first thing that you must take care of before beginning to cross-check your books is the economic entity assumption.
Economic entity assumption is a mandatory concept used in business. It requires the business proprietor to separate the data from their business transactions and personal finances. This is legally required by the business standards and must not be ignored. This concept ensures that there is no interface amidst the operations of the business firm and the personal finances of its proprietor. As it would give the proprietor a chance to show expenses and losses that were personal and the law doesn’t allow it due to taxation.
Another factor that economic entity assumption points to is that the bank accounts of the owner and that of the business must be separated into two different accounts. This will keep the personal and business transactions discernible to the accountant. Depending on your business structure, economic entity assumption will be enforced upon you by law if you have a limited liability company. This is to make sure that the transactional data on the ledgers are being created solely by the business which is seen as a separate entity from the proprietor.
Order and organization are what keep the world from spinning into chaos. So one of the essential skills that you must have is organization in your firm. A business makes a tonne of transactions throughout a business accounting cycle, and as a proprietor, you are responsible for being in knowledge of all of them with an eye to discern one transaction from another. There are principles to organization that help you make sure you are in close sync with your transactional info.
The first principle that you must accept to be organized is to avoid cash transactions as much as you can. Cash transactions leave behind very little or no information about the transaction that is required to document the transaction in your books. Business accounting requires categorizing transactions in the books, but the payments made in cash without proper proof or description of the transaction makes it difficult. If you’re gonna have to make immediate transactions, its better you stick to credit or debit cards, bank transfers and checks. This way, you won’t have to rely on your memory or a useless little receipt to define what the transaction was about. You can easily record your transactions from the bank statements you will receive.
The second principle that you must not forget about is to have a timely record of your transactions. Whenever a transaction occurs in your business, make it a habit to record that transaction at the very moment, and on the same day, you must enter the details of the transaction into the proper books of your business. If you’re bringing out the books from 6 months earlier to analyze the current position of your business, the decisions you make would also be bygone. Making perfect decisions for your business requires the transactional data to be regularly updated in your books and the most recent data must be used, which is not more than a month old.
If you want to do your business accounting yourself, bookkeeping is a must. Even a basic idea of bookkeeping is necessary in order to record and store transactions in an orderly manner. Bookkeeping is the process in which all transactional data is documented, categorized and recorded in books for separate transactions.
Every business requires bookkeeping to help it know what the problem is if an issue occurs. It is important that you always record every transaction into proper bookkeeping records so that when the time comes, you have not lost small but crucial data by ignoring bookkeeping.
Bookkeeping begins with the collection of all the transactional documents like bills, receipts or bank statements. These documents then provide for all the initial data that is supposed to be recorded in proper books. The bookkeeping records are then supposed to be turned into analytical data which take the shape of financial statements like balance sheet, profit/loss statement, cash flow statement or income statement.
The basic principles of business accounting may be taken care of by you. Collection of data from every transaction and recording them into different books can be done easily by the business owner who is present during every transaction. But when it gets to the proper analytical statement creation, the technicalities of business accounting may not be easy to get a grasp of. If you wish to have a professional to have a look at your numbers, contact ATS Accounting for queries.
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Many small and midsize businesses get hassled from the time of tax filing season. Many times the business owners are troubled by the amount of taxes they have to pay, along with the expenses that were made for the development of the business and maintenance of machinery in the business. The general thought of any business owner is to save enough from the business transactions that allow them to have financial freedom even after filing the taxes. This is the reason why you should know about the tax deductions that your business is liable to. There are many transactions and purchases that are not supposed to be listed in the tax filings. These expenses are done to run your business with all the machinery and manpower you need. So the business owners must take care that they note down every tax business deduction they can make by law to protect their capital for business operations and development. Such expenses are not considered in the tax reports of a firm. So what are the top business deductions that you can make from your tax filing?
1) Car and Truck Expenses
Almost all businesses have to get raw materials, goods or workers in and out of the workplace or factory. The cost applied in the use of vehicles and gas used for the business as a mode of transport can be deducted from the taxes you pay. Since vehicles used for the transit of raw material or delivery of goods to customers are taken as capital invested in business operations. If you bought a vehicle in a financial year, a percentage of the cost of the vehicle is deducted from the taxes. The amount of gasoline used in the vehicles used by a business can also be deducted from the taxable amount. Apart from this, even if a firm lease a vehicle for certain tasks and deliveries at hand, the cost of transportation can be taken out of the business deductions.
2) Salaries and Wages
When you’re running a business that requires the use of manpower. The salaries and wages that you pay to the employees are not supposed to note in the tax filings. All the payments made to your employees like salaries, incentives, bonuses, commissions and retirement funds can be deducted from the tax. Although the payments that you make to the sole proprietors and business partners are not under the business expenses bracket so you cannot be in your business deductions account.
3) Contractual Labour
Many businesses use freelancers and contractual labour to get some of their work done. The salaries or wages that you pay to the labourers or workers. There has to be some paperwork from the contractor that shows proof of you hiring labour on a contractual basis.
4) Workplace Supplies
The supplies used in operating business every day is a deductible cost. Cleaning supplies, toilet supplies, postage stamps, office stationery, vacuum-cleaning cost, etc. are all deductible from taxes.
This is the most important business deduction from the taxes you pay. Depreciation is an amount deducted from the accounts of machinery, property and other such assets that depreciate in value with time. A piece of machinery in a small factory, for example, is used every day and the parts of the machine go through wear and tear. So when the machine is sold out to attain capital for new machinery, the cost for the machinery won’t be the same as it was bought for. So the depreciation in value of assets and business property can be deducted from taxes as they are business expenses.
6) Rent on Business Property
If your small business uses a place on rent for everyday operations, the rent on the property can be fully deducted from your taxes. Many businesses like boutiques, salons, spas, etc. use the rental property. The yearly rent on the property is paid out of the profit which makes it a business deduction.
The everyday operational activities of a small business or a midsize business require utilities that are charged for by the authorities. Electricity, for example, is fully deductible in the taxes. Another business deduction that can be deducted from the taxes is mobile phone bills used by you or you or your staff for the business. If you have a landline for domestic use you cannot deduct the bill from the tax but in the case of a second line for business use, it can be deducted as business expenses.
8) Other Taxes
Other taxes, like personal taxes that are not income tax or small business taxes, can be deducted from the tax filing list. Licensing and regulatory fees along with taxes on a property in the name of the business are tax-deductible. Your employer taxes and state unemployment taxes are deductible from taxation. Self-employed business owners, however, cannot benefit from tax deduction from half of their self-employment tax. It is a gross deduction on your income tax returns.
Insurances are another important business deduction that you can make from your taxes and save significant amounts from your taxes. All kinds of business insurances like, malpractice coverage, flood insurance, cyber liability insurance, business continuation insurance, and the owners' insurance cover is counted under business deductions. A small business may also claim a deduction of 50% of the health coverages for employees if you provide one.
Common repair jobs in the office building or manufacturing plants are deductible from taxes. Although the depreciation value of the machinery and other assets are accounted for in the business deductions, urgent repairs that might sometimes become fatal accidents can be deducted.
Business owners or staff might require time to time travelling for a meeting with clients or for checking a machinery unit that they have sold. If you or your staff travel out of the state for business, transportation, flight expenses and accommodation are fully deductible from taxes. Although the local commute is non-deductible.
Understanding the rules of tax accounting can be a tough knot, at ATS Accounting we take care of all your tax filing paperwork and tax deduction accounting.
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We all love the numbers that get added to our bank accounts every month or every week. If not the numbers, we love the payroll cheques that we receive regularly. As a worker, the payroll matters a lot. But what happens if you can't pay your employees well or there are some issues with your payroll system? Your employees may end up feeling negative in several ways. They may also be demotivated to work. To avoid these issues, you must ensure that you don't make any mistakes when it comes to your payroll system. Make your payroll system a perfect one by avoiding the following mistakes.
The inconsistencies can be anything, right from improper salary payouts to managing garnishment requirements. Whether your company is new or well established, it’s important to be consistent with your payment schedule. The most common schedules are either weekly or biweekly, but some companies choose to pay their employees semi-monthly or monthly. Based on whatever your organization's policies are, make sure you pay your employees on time, every month. Don't let people ask you or the finance department several times to follow up on their money. If you fail to do this, be ready to face the bitter behaviour and attitude of your employees. And you won't be able to blame then for anything then.
Not Staying Current
Sometimes, the issue may not be with your internal payroll system. You need to stay in line with the latest laws, rules, and regulations around payroll system in your area to ensure that you don't end up in any problems. Payroll laws and regulations are an ever-changing landscape. It’s important to be aware of new laws that are passed to ensure your company is maintaining compliance. When you miss a new law, you stand to lose invaluable time trying to amend any payments you have made using the previous law or rule. You can ensure compliance by creating a calendar that reminds you to check for updates to all relevant laws. And of course, if your employees find this out, they'll be upset with you and may even sue you for the same.
If your employees are working extra for you, make sure you acknowledge them. That's where the overtime incentives come into the picture. Specific guidelines must be followed when determining overtime pay and miscalculations can be costly. Employee litigation has been a rising trend in recent years where employees have claimed to be misclassified and treated as "exempt" employees and therefore not entitled to overtime. When tracking work hours through our time and attendance platform all hours (including overtime) are recorded and collected on organized time sheets that make calculating hours simple. And with this also, respect your payroll system's calendar. Pay your employees for the overtime in the current month at the end of this month and not after a quadrant. Skipping
When your employees work for you, they are eligible for various benefits and incentives. These benefits vary from organization to organization. However, some basic offers are established by the government that every organization and employer needs to respect. If your employees work better than they are expected to, you have to reward them rightly. And when you do, you need to maintain the right records so that the books of accounts look properly managed.
This is one of the biggest mistakes. Confusing two or more names and paying those people inappropriately is nothing but a blunder. This may happen even more when you have two or more people will have the same or similar names. Moreover, if you recently appointed a new person to look after the payroll system, there are higher chances that they may end up making this mistake. No matter what the scenario is, this mistake should be avoided. When a person is paid incorrectly, it sends out a wrong impression to your employees that your payroll system isn't efficient that you end up making such silly yet massive mistakes. Therefore, be very careful with what you do. When you maintain accurate records, this mistake will likely not happen.
Another way to avoid any errors in your payroll system is by outsourcing the job to a reputed company. A company like ATS Accounting can help you manage your work while we take away the hectic tasks of payroll calculation, incentive and other benefits addition, and salary payment. So give us a call today to find out how we can take away your worries.