Need to know how to claim business expenses, when to collect HST, or the quickest way to invoice and get paid? Intuit #FinanceHub at Ryerson University’s DMZ has come to the rescue, providing an on-the-spot expert to answer all your finance questions free of charge.
At the DMZ, Canada’s leading business incubator for emerging tech start-ups, Intuit has established the #FinanceHub, a place for entrepreneurs to get advice from bookkeeper-in-residence Rustin Smith.
“Bookkeeping and accounting can be daunting for many small business owners,” says Rustin, CEO at Scalibility. “So, it’s great to be able to answer questions about how they can get funding, pay suppliers, use accounting apps or stay on top of their finances.”
Here, Rustin answers five common questions regarding bookkeeping and accounting for start-ups.
1 When do I have to collect HST or GST?
If you’re running a small business – supplying goods and services and earning over a certain amount – you have to collect harmonized sales tax (HST). This varies depending on your province, so visit the Canada Revenue Agency (CRA) website. For example, in Ontario, once your revenue is over $30,000, you need to register for an HST number with the CRA and start to collect HST from customers in Ontario (for out-of-province customers, you charge the applicable GST or HST). While collecting taxes for the government may seem a nuisance, it’s essential to avoid being fined. Accurate and up-to-date bookkeeping will ensure you manage sales tax-related cash flow effectively and in many cases are refunded thousands of dollars. Disorganized paperwork and procrastination can be costly. There are some great financial management tools, such as QuickBooks Online, to help you stay on top of your HST obligations.
2 Should I hire an employee or contractor?
There are pros and cons to both. Contractors offer a flexible alternative because you can hire them as you need them. Also, you don’t have to pay them for personal or holiday leave, nor worry about payroll taxes and labor laws. However, contractors usually charge a higher hourly rate and if they have several clients, they may not always be available. When you hire full-time employees, they will generally work a set number of hours, such as a 38-hour week, and they also have a long-term commitment to the business. Paying employees is much easier these days, thanks to financial management software, such as QuickBooks Payroll and Wagepoint which calculates and remits the taxes online, and integrates with your accounting platform to save you time and ensure accuracy.
3 What receipts do I need to keep and how do I keep them organized?
From a tax perspective, the CRA requires small businesses to keep all records that support their business income and expenses. These days, staying on top of this is much easier, thanks to apps such as Receipt Bank and Sensibill, which can capture, track and store your records. Combining it with an accounting platform such as QuickBooks Online provides operational and reporting benefits to your business, and saves you a lot of time when tax time rolls around.
4 What’s the best way to issue invoices and get paid by customers?
You can issue invoices directly from your accounting platform by sending an email with the online payment tools activated. “Pay Now” buttons allow customers to immediately process the payment with their credit or debit card. Remember, the easier you make it for the customer, the sooner you will get paid.
5 How should I pay my suppliers?
Where possible, I recommend paying suppliers by credit card because it’s quick, easy, secure and integrated (meaning your cloud accounting software will import the transactions automatically). Another method is to set up payment with an online payment platform app such as Square or Plooto. It charges a dollar per payment but it’s fast and simple, and it fully integrates with QuickBooks Online.
For more information about finances and on your tax obligations, visit the CRA website, and you can also learn more at Intuit #FinanceHub.
Rustin Smith has been a CPA, CA for more than 15 years. He is the CEO of Scalability, a remote, online back-office services firm that specializes in start-ups, and is the bookkeeper-in-residence at the DMZ’s #FinanceHub in Toronto.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.