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President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.

Wait I Thought That Gift Cards did not Expire!

By Randall Orser | holiday season , Personal Finances

It may be a big surprise to you, but did you know that gift cards you receive for charitable or promotional purposes are allowed to expire? The rules and laws around gift cards can get a little confusing. Here are some examples where your gift card can expire.

  1. PRIZE – if a gift card is issued as a prize and used for promotional purposes the card is allowed to expire according to the Prepaid Purchase Card Regulation.  The business donating it must indicate either on the card or its receipt when and how the card can be used, and they can then set their own policies for the card when it is sold or issued for a promotional purpose.
  2. CHARITY – If you enter a draw for charity and win a gift card and there is an expiry date either on the card or its receipt it must be used by then.  Because the card was bought for charity it is allowed to expire as long as the donating business indicates on the card or its receipt how gift card can be used, they can set their own policies for use.
  3.  Cards issued for a specific good or service can expire.
  4. Cards that were sold at a discount for example a discount on services during a promotion are allowed to expire.
  5. If the gift card was bought before 2009 it is allowed to expire.

Cards That Don’t Have an Expiry Date

  1. MALL and RETAIL Cards: In BC, most retail gift cards, known as prepaid purchase cards, can’t have an expiry date or fees, however there are some exceptions and Mall Cards that can be used to purchase at multiple stores in a shopping centre are an exception.  Information as to extra fees, must be either told to you in person at the time of purchase or must be included in a folded-up document given to you with the card.
  1. PREPAID CARDS – such as prepaid Visa cards do not fall under BC gift card laws but are regulated by Canada’s Payment Products Regulations.  These cards which also include ones that you can buy at a grocery store checkout and are issued for a general dollar amount are not allowed to expire.  

From Consumer Protection Article Dec 14, 2016

 

Are you Planning to Give Gifts to Your Employees this Holiday Season? Do You Know What is Taxable?

By Randall Orser | Business Income Taxes , holiday season , Payroll , Personal Income Tax , Small Business

At this time of year many employers give a Christmas or annual bonus – did you know that this is a taxable benefit if paid in cash or a cash equivalent such as gift cards?

You might think about giving your employees gifts instead of cash bonuses so that both of you will benefit on your Canadian income tax.  Employers can use the total cost of the gift as a tax deduction and employees do not need to declare the cost of the gift as part of their taxable income.

Under CRA rules all gifts to employees are considered to be taxable income except for the following exemptions:

1.   It is non-cash and less than $500 in fair market value per year and only given for the following reasons:

  • A Religious or other special event
  • Birth of a child
  • Wedding
  • Birthday

2.   It is a non-cash long standing service award valued at less than $500, this can be given once every five years.

3.   An Award for an employment related accomplishment.  These are allowed when:

  • It has clearly defined criteria
  • A nomination and evaluation process
  • Limited number of recipients

4.   Employer provided parties or social events where the cost is $100 per person or less.

5.   Meals or other hospitality services at work-related functions such as meetings or training sessions.

6.   Valueless items such as tea/coffee, snacks, t-shirts, hats etc.

There is no limit to the number of gifts an employee can receive in a given year as long as the total value is not more than $500.  Small gifts such as mugs or chocolates etc. are not included in the $500 limit.

If you want to give your employees gifts that are tax deductible for your company, you need to be careful what you give.  Items that can easily be converted into cash such as gift cards or stocks will be considered to be taxable employee benefits as will some performance related awards and bonuses.  Included under this rule are:

  • Gift Cards
  • Rewards that include employer-provided meals or accommodations such as trips
  • Cash or non-cash awards from manufacturers that are given to employers then passed onto employees
  • Points for travel, accommodations or other rewards
  • Gifts given by manufacturers to employees of dealerships

If you want to give Cash Bonuses or near-cash bonuses such as gift cards to your employees, it must be through payroll and must have taxes deducted.

For full list of taxable or non-taxable benefits and allowances visit the link below:
CRA's Benefits and allowances chart


Controlling Your Cash Flow Over the Holiday Season

By Randall Orser | holiday season , Small Business

The holiday season is almost here, and your small business is ramping up to sell more than it has all year.  Your orders are piling up and your staff is working hard to get shipments out to customers. 

At this time of year, many small businesses want to celebrate their achievements with staff and customers by giving bonuses and gifts and holding parties.  However, there might be a problem, where do you find the money to support all of this? You have a good balance of accounts receivable arriving in the New Year, but you need a better cash flow now.  Here are a few tips  to ensure that your cash flow runs smoothly over the holiday season.

  1. Make sure that your bookkeeping is taken care of and accurate.  This will provide an analysis of your profit and loss and cash flow and your current debt position.  Maybe it is time to hire a bookkeeper to keep you on top of these tasks and reduce the headaches?
  2. Develop and implement good collection plans and make sure your staff is trained to collect payments on time while still maintaining a good relationship with your customers.  Offer easy payment options to your customers giving them the ability to pay on-line or over the telephone. Giving a discount for early payment can encourage your customers to pay their bills quicker. 
  3. Take advantage of short-term lending – Waiting for late paying customers to settle their bills, buying new inventory, paying your employees or throwing that holiday celebration can strain your cash flow so you need to find short term funding that allows you to access cash immediately.  You could use your savings, credit cards, or line of credit.  Another option is obtaining short term invoice financing for instant capital until you receive payments.
  4. Delay Payments – work with your suppliers to extend your payment terms. The later you pay them, the more cash you will have on hand.  Another option is to delay your holiday party until the new year when you can still celebrate your achievements and the support of your staff and clients.
  5. Use your previous holiday season experience to gauge how much you are going to sell of a product this year and even when to run a sale.  Use a business analytics program to give you important information about your business to help you to increase profitability.
  6. Ensure that your team is well-equipped and prepared for the busy season ahead.  If you need to improve your customer service and nurture more sales hire a few part-time or temporary staff to help you.

Making these preparations to face the holiday season will help to make your busiest time of the year run a lot smoother and be more profitable.

Are You Liable for Charges on a Lost or Stolen Credit Card?

By Randall Orser | Personal Finances

If your credit card has been lost, stolen or used without your authorization it is important to tell your credit card company right away.

Informing your credit card company that you no longer have the card or do not have control over its use immediately ends your liability if it is improperly used in the future, so you need to do this quickly! See the relevant section of the Business Practices and Consumer Protection Act that applies.  

You can inform the credit card company by telephone, but it is also a good idea to follow up with a written statement.  Keep a copy of all communications and the way that they were delivered so that you can prove that you informed them of the loss. 

Once they have been informed, the credit card company becomes responsible to ensure that it no longer approves any charges on your account. 

If your card was used before you informed your credit card company,  you may not be responsible for any charges, if your card was used:

  • With your PIN and not at an ATM, you are responsible for a maximum of $50.
  • Without your PIN and not at an ATM, you are responsible for a maximum of $50.
  • With your PIN and at an ATM, you are responsible for the entire amount.

So, to protect yourself from someone else fraudulently using your credit card,

  • Always keep your PIN 100% secret and difficult to guess.
  • Regularly check your credit card statement for unauthorized charges.
  • Immediately notify your credit card company if your card goes missing or is used without your authority.

If you would like more information here are some links:

Using your credit card for online shopping? Get these tips
How to request a refund from your credit card provider


 

 


How and When to File a Record of Employment

By Randall Orser | Payroll , Small Business

A Record of Employment (ROE) must be completed by an employer when a worker suffers a break in insurable earnings (from which EI payments are deducted) for seven consecutive days.  Reasons for the break in earnings can include being laid off, dismissal, illness or when the worker resigns.  The ROE must be submitted to Service Canada for the Employment Insurance (EI) program whether or not the worker intends to apply for EI.

There are also special situations when ROEs must be issued.  These can include a change in pay period, (even though the employees are not experiencing an interruption of earnings) or a change in ownership, unless there has been no actual break in employees’ earnings during the change-over, and the new employer agrees to issue a single ROE that covers both periods of employment should it be required in the future. A more comprehensive list of situations when a ROE must be issued can be found on ROE Guide on the Service Canada website.

There are two ways in which an employer can submit a ROE to Service Canada, each of which has it's own filing deadline.

  1. ROE in Paper Form - Part 1 of this must be given to the employee. Part 2 must be sent to Service Canada within 5 calendar days of the first day of the interruption of earnings.  The employer must retain Part 3 as well as the employee's payroll records for six years after the ROE is issued.
  2. ROE Submitted Electronically - the information is transmitted directly to the Service Canada database where it is used to process EI claims.  In this case the ROE must be issued five calendar days after the biweekly period, five calendar days after the end of a monthly pay period, or fifteen days after the first day of the interruption of earnings.

Should the ROE be incorrect, or it needs to be updated the employer can submit the amended ROE either in a paper copy or electronically.

Employers should refer to Service Canada’s website for more information. 

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Accounting Terms Every Businessperson Should Know

By Randall Orser | Small Business

This glossary of accounting terms will get you up to speed if you’re new to business. A big part of understanding the financial side of your business consists of nothing more than learning the language of accounting. Once you’re familiar with basic terms, you’ll be better prepared to make sense of basic written reports and better able to communicate with others about important financial information.

ACCOUNTING is a general term that refers to the overall process of tracking your business’s income and expenses, and then using these numbers in various calculations and formulas to answer specific questions about the financial and tax status of the business.

BOOKKEEPING refers to the task of recording the amount, date, and source of all business revenues and expenses. Bookkeeping is essentially the starting point of the accounting process. Only with accurate bookkeeping numbers can meaningful accounting be done.

An INVOICE is a written record of a transaction, often submitted to a customer or client when requesting payment. Invoices are sometimes called bills or statements, though the latter term has a separate meaning, as explained below.

A LEDGER is a physical collection of related financial information, such as revenues, expenditures, accounts receivable, and accounts payable. Ledgers used to be kept in books preprinted with lined ledger paper -- which explains why a business’s financial info is often referred to as the “books” -- but are now commonly kept in computer files that can be printed out.

An ACCOUNT is a collection of financial information grouped according to customer or purpose. For example, if you have a regular customer, the collection of information regarding that customer’s purchases, payments, and debts would be called his or her “account.” A written record of an account is called a statement, as explained below.

A STATEMENT is a formal written summary of unpaid, and sometimes paid, invoices. Unlike an invoice, a statement is not generally used as a formal request for payment, but may be more of a reminder to a customer or client that payment is due or that payment has been made.

A RECEIPT is a written record of a transaction. A buyer receives a receipt to show that he paid for an item. The seller keeps a copy of the receipt to show she received payment for the item. Receipts are sometimes called sales slips.

A BALANCE SHEET is a statement listing a business’s assets, liabilities, and net worth, or equity (the difference between the value of the assets and the liabilities).

ACCOUNTS PAYABLE are amounts that your business owes. For example, unpaid utility bills and purchases your business made on credit would be included in your accounts payable.

ACCOUNTS RECEIVABLE are amounts owed to your business that you expect to receive. Accounts receivable include sales your business made on credit.

BAD DEBT is money owed for a business debt that cannot be collected; it can be deducted as an operating expense.

NET INCOME is gross income less expenses; it represents a business’s profit for a given year.

The ACCRUAL METHOD of accounting accounts for income and expenses that are earned or incurred within the 12-month period, which is not necessarily when it is received or paid. (For more information, see Cash vs. Accrual Accounting.)

The CASH METHOD of accounting accounts for income and expenses when actually received or paid. (For more information, see Cash vs. Accrual Accounting.)

DOUBLE-ENTRY ACCOUNTING is a system of accounting that records each business transaction twice (once as a debit and once as a credit).

What Should I do if I am a Victim of Identity Theft?

By Randall Orser | Personal Finances

If you are victim of identity theft or identity fraud, you should immediately take action to prevent further crimes from happening and to restore your credit and good name. Here are some important steps you need to take:

  • Stay calm! Think about all the identification information that you have that may have been lost or stolen.  Check filing cabinets for records of all your credit card number, bank account information, and government identification.  Create a spreadsheet and enter all this information. Use it to track all the steps you take to recover or correct each item and all the information that you obtain.
  • Track all communications with financial institutions, law enforcement and government or other agencies.  You can enter this information on your spreadsheet for future reference.
  • Contact both credit bureaus and let them know that you have been a victim of identity fraud.

    Equifax Canada http://www.consumer.equifax.ca/home/en_ca   1-800-465-7166    TransUnion Canada http://www.transunion.ca  1-877-525-3823    

    Request  a copy of your credit bureau report – this report may be free of charge. Request that a "Fraud Warning" be placed on your credit file instructing creditors to contact you personally before opening new accounts in your name - these warnings remain on file for 6 years. Remember to contact and file fraud warnings with both bureaus 
  • Review your credit reports – look for new credit accounts that you did not open, creditors who have made enquires on your credit report when you have not asked for credit.  Contact all of these creditors and describe your identity theft case and ask them to close any accounts you did not open, and to decline any requests for new accounts.

  • Contact your local police – Report the theft of your identity information and ensure that you are given a report number and record it for future reference.  Banks and creditors may require proof of the crime in order to erase debts created by identity theft.  Any suspicious information on your credit bureau reports should be disclosed to the police.  

  • Contact the Canadian Anti-Fraud Centre (CAFC) – The CAFC is the central agency in Canada that collects all information and criminal intelligence on all forms of identity theft and fraud.  They do not investigate but they provide assistance to law enforcement.  Visit their website at Canadian Anti-Fraud Center or call them at 1-888-495-8501.

  • Review all of your bank and credit card statements – If you see any suspicious transactions on your account contact the creditor or you bank and file an Identity Theft Statement.  This will help you notify all financial institutions and creditors of your identity theft.  It tells them that you did not create the debt or charges and gives them the information to start an investigation.  The Identity Theft Statement can be obtained from the CAFC website.

  • Notify credit card companies, banks and other financial institution and change all of your passwords – contact all credit card companies and banks where you have accounts that might have been affected. You then need to do the following:                                                    1. Close every account that might have been compromised. Request that it be processed as "closed at the consumer's request".
    2. Obtain replacement bank or credit card with a new account number and a new Personal Identification Number (PIN)
    3. Put a "stop payment" on any stolen cheques.
    4. Ask to have a password added to your account.

  • Notify Canada Post and utility and service providers - If you suspect that someone had your mail re-directed, notify Canada Post. Notify your service provider (telephone, cell phone, electricity, water, gas, etc.) of the identity fraud.  Ask that any new requests for service first be confirmed with you.   

  • Immigration Documents - If your immigration documents have been lost or stolen, or if you suspect that someone is fraudulently using your immigration documents, contact the department of Citizenship and Immigration Canada http://www.cic.gc.ca or 1-888-242-2100

  • Passport -If your passport is lost or stolen contact any Passport Canada office or Canadian government office abroad to report it and get a replacement.

  • Social Insurance Card If you suspect someone is using your Social Insurance Number (SIN) you should visit a Service Canada Centre and bring all necessary documents with you to prove fraud or misuse of your SIN. Also, bring an original identity document (your birth certificate or citizenship document). An official will review your information and provide you with assistance and guidance.

  • Notify Provincial agencies who may have issued your identity documents including birth certificate, driver’s license, health card etc.

For more information regarding identity theft visit the following websites:                          http://www.rcmp-grc.gc.ca/scams-fraudes/victims-guide-victimes-eng.htm            http://www.antifraudcentre-centreantifraude.ca/fraud-escroquerie/types/identity-identite/index-eng.htm

What is Identity Theft and How Would it Affect Me?

By Randall Orser | Personal Finances

Identity theft occurs when your personal information is stolen by someone with criminal intent and it is a serious issue in Canada.   It can lead to months of financial and legal struggles and even severe financial loss.  Criminals try to acquire any of the following personal information: 

  •  Full name
  • Social Insurance Number
  • Driver’s license
  • Credit card and banking information
  • Home Address

With a combination of this information they can apply for credit in your name, gain access to your banking and credit card accounts and potentially rack up a large amount of debt in your name.  As we work harder to secure our personal information, criminals also work harder to find newer ways to access it.

Here are some warning signs that your personal information may have been compromised:

  • A creditor that you already have or a new creditor contacts you to say that they have received an application from you
  • A bank or credit card company lets you know that you have been approved or rejected for a loan or product that you did not apply for
  • You stop getting bank statements or important banking information in the mail
  • You notice strange purchases on your credit card bills
  • A debt collector calls you about a debt that is not yours

How to Avoid Identity Theft:

  • Don’t carry around personal information such as your Social Insurance Card, passport, or birth certificate unless you absolutely need it
  • Always inform your bank and any creditors that you have changed your address so that any mail containing personal information reaches you
  • Immediately inform your bank or credit card company if you lose or misplace a card, and check with them if you do not receive a new card before the old one has expired
  • Do not give anyone access to your credit cards or bank account
  • Always take your ATM receipt or say no when asked if you would like one
  • Never leave your purse or wallet alone
  • If you close a chequing account dispose of all paperwork including cheques
  • Always review your bank and credit card statements and make sure there are no strange charges
  • Limit the number of credit card accounts that you have so that you can keep track of them all
  • Never give out any personal information over the phone unless you can verify the caller is who they say they are
  • Do not use your SIN as an identifier for bank or credit card accounts
  • Always check utility and other bills to make sure that they are yours
  • Always memorize your pin, and make sure no one is looking when you are use it
  • Never use numbers with meaning such as your date of birth
  • Always tear up or shred bills before disposing of them
  • Never apply for credit on applications that you receive in the mail, especially if it asks for your SIN
  • Get in the habit of requesting your credit report once a year so that you can catch any unauthorized credit accounts opened in your name

For more ways to protect your identity visit:               http://www.consumerhandbook.ca/en/topics/consumer-protection/identity-theft

Why Your Company Needs a Minute Book

By Randall Orser | Small Business

When you decide to incorporate your company there are many things that you need to do, but one of the most important tasks is setting up a Minute Book.   The business registry does not require you to set one up but as a business owner you are responsible for creating one and updating it annually or if there are changes to the company for example in shareholder information.  With the right amount of information, creating a Minute Book is not such an intimidating task. 

Your Minute Book is comprised of important company documents including:

  • Your articles of incorporation
  • Minutes of shareholder/director meetings
  • Annual filings /Financial Statements
  • By-laws
  • If you are selling your company a potential buyer will want to see your Minute Book
  • If you are transferring ownership, a Minute Book is necessary to prove your ownership of the company.
  • If you want to apply for a bank loan they will want to see your Minute Book
  • If you want to purchase property, you will have to provide your Minute Book before the transaction can be completed.
  • Potential investors will want to see your Minute Book to help them decide if they want to invest in your company.
  • In a partnership the Minute Book will keep a record of how much of the company is owned by each partner and any major decisions that have been made. This protects you if there is ever a dispute between the partners or if one wants to dissolve the partnership.
  • Your accountant will require your Minute Book in order to correctly prepare your Tax Returns.
  • Government agencies will request your Minute Book for information and will inflict penalties if you are unable to produce one.  

It is always best to have your Minute Book already prepared to meet any of these situations.  If you rush to put one together you can miss important information or put inaccurate information into the Minute Book, which could cost your company money.  For more information visit:

https://www.canadianbusinessresources.ca/what-goes-in-a-minute-book/

 

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Registering Your Business for Sales Tax

By Randall Orser | Sales Taxes

In Canada, there are two different kinds of sales taxes, a goods and services tax or GST and a provincial sales tax or PST.

Some provinces (Ontario, New Brunswick, Newfoundland, Nova Scotia, and PEI) have harmonized their PST with the GST and charge HST (Harmonized Sales Tax). British Columbia, Saskatchewan, Manitoba, and Quebec have not harmonized their PST & GST so it’s two separate taxes. 

You do not have to register for the GST/HST until your sales are over $30,000. However, if you are serious about being in business or have to buy lots of equipment or other goods before starting your business, then register as soon as you have your business registered. This also goes if your sales are mostly business to business. Remember that the HST is just the GST with the PST added onto it; it’s the same tax and is remitted along with any GST you charged.

PST is a tough one as every province has different registration requirements, and on what items they charge PST. Definitely check into the province where your business is located and see if you need to be charging the PST. 


British Columbia and Manitoba require anyone selling into those provinces to register for the PST if you sell regularly into that province. Saskatchewan suggests you register, however, doesn’t require it. Quebec only requires you to register if you have an address there, an employee, or operations, such as production or marketing activities. 

To learn more about registering and charging sales tax visit https://canadabusiness.ca/government/taxes-gst-hst/federal-tax-information/overview-of-charging-and-collecting-sales-tax/