Accounting Q&A for Small Business Owners
Guest Blog Post from Jenn Sims of Keeping the Books
Recently, a favourite IG account of mine, Jenn Sims of @keepingthebooks, posted a Q&A in her stories opening herself up for a slew of small business accounting questions and I jumped at the opportunity. I quickly realized, this would be an amazing blog post as so many of us have ALL THE QUESTIONS.
I asked her if she would be interested in collaborating and she was all in. So here we are.
Here are the 4 most common questions she was asked and her answers.
1. WHAT ACCOUNTING SOFTWARE DO YOU RECOMMEND?
There are quite a few great options available for software however, my firm had to choose only one for in house use. After researching all options, we have opted for Quickbooks Online. The opportunities with this software are above any others I have tried. You can invoice and receive payments from anywhere. Mobile accounting at its finest. There is a handy downloadable app as well. This allows you to see your numbers in real time from anywhere. You can capture receipts electronically, effectively eliminating paper. You can invite your Accountant/Bookkeeper to access and both can work on the file and collaborate.
If you have an internet connection, you can look at your books anywhere, anytime.
2. HOW MUCH SHOULD I SAVE FOR TAXES?
This depends on how much you make per calendar year but I typically suggest trying for about 30%. I advise to open a savings account and attach it to your business bank account. As soon as you get paid transfer this amount into savings. 13% of this amount is in relation to HST if applicable (once you hit $30k in sales in a calendar year, you must collect HST) The remainder of savings should typically cover any personal taxes owing. This amount can be adjusted annually based on sales growth etc.
3. HOW DO I KNOW THE PERSON(S) CONTACTING ME ARE THE CANADA REVENUE AGENCY?
This is a continuously growing issue every year with scammers getting better at their attempts. My best advice pertaining to this is – CRA will never contact you by email or text message. They will never send you links to click on and never ask for or send money in this way. If you receive phone calls and are ever in doubt (never give personal or credit card info over the phone) You can call CRA helpline anytime at 1.800.959.8281
4. HOW DOES CPP WORK FOR THE SELF EMPLOYED – AM I REMITTING FOR MY FUTURE?
For 2019, maximum pensionable earnings are $57,400. The self-employed contribution rate is 10.2%. This means that if you make $57,400 (minus $3500 exemption) or more in a calendar year, you will have to pay $5497.80 in CPP at tax time. All self-employed people will owe taxes end of year (unless you make early installment payments in the year) CPP is part of what is owing when filing.
Need more help? Get in touch with her here!
Jenn Sims, CB
