Chartered Professional Accountant, Experienced Bookkeepers, Personal and Business Tax Return Specialists - Whitby ON - Call - Toll Free: 1-800-942-5558 or Local: 905-666-5071 admin@kmpc.ca
Seven Life Reasons Why You Need a Good Chartered Professional Accountant (CPA)

Seven Life Reasons Why You Need a Good Chartered Professional Accountant (CPA)

1) To Ensure You Are Obeying the Current Tax Laws

Tax laws change each year.  Some years there can be profound or sweeping changes that can change what and how you report income on your tax return.  If your return is filed incorrectly the lament of “I didn’t know I had to do it that way!!!” will fall on deaf ears with the CRA.  The Canadian Revenue Agency (CRA) doesn’t accept ignorance of tax law for a defense. So, if you aren’t willing to constantly pay attention, you could miss something important. Protecting your interests by hiring a knowledgeable tax accountant is the best way to ensure that you are paying only what you need to by accessing all available tax benefits and submitting a tax return that will be accepted by CRA.

2) You Owe Back Taxes to the CRA

If you owe any back taxes you really should hire a good tax accountant to help you sort things out. Owing back taxes or being audited by the CRA can be a confusing and frightening experience and it could take months to resolve. Having a good accountant in your corner can lessen the trauma and the time it will take you to get things back on track.  Once all is resolved, the accountant can help you to get organized so it doesn’t happen again.  Often if you have been audited, CRA will give your tax return file a closer look for a few years. Having an accountant who is familiar with your situation and can speak for you if CRA has questions on future tax returns will save you stress and sleepless nights.

3) Improve Your Credit Rating and Reduce Debt

Sometimes life just gets a little ahead of us and we can find ourselves in debt.  Being in debt can also lead to getting a bad credit rating.  Just ask anyone who has experienced these situations – they will tell you how much it can impact all areas of your life and how long it really takes to pay off debt or re-establish a good credit rating.  A knowledgeable accountant can show you things like how to consolidate debt to make it more manageable, negotiate with creditors and shorten your path back to good financial health.

4) You Are Starting A New Business or Are Self-Employed

If you are self-employed or own your own business, an accountant can help with that too. Hiring an experienced CPA can help you find ways to lower your taxes that you might otherwise miss. There are some big write-offs for the self-employed. Don’t miss out.

If you’re about to start your own business an accountant can help you prepare. With their help, you’ll be able to ensure that all the necessary tax forms are filed correctly and on time.

5) You Own Real Estate or Rentals

Owning several properties is becoming a popular way to grow wealth here in Canada.  While this is a great idea, you must ensure that you are also properly managing the revenue and tax side too.  You could be losing out on various tax benefits and not maximizing your money. If you own your own home, or own rentals, an accountant can help you manage them. There are some specific tax situations tied to rental properties, and some major benefits. You don’t want to miss out on those.

Your accountant can keep you up-to-date on all new tax laws so that you are submitting all the necessary data and reporting to CRA to ensure that you will not be hit with any penalties come tax time!

6) Saving For Your Kids

If you have kids, you will probably want to contribute money to a RESP (Registered Education Saving Plan) savings account, or even a trust. An accountant can help set all of that up. They have the tools to help you maximize your money as you look toward your family’s future.

7) The Road of Life

Life major events also come with financial issues that will need to be addressed. When you get married, divorced, retire or have children your tax situation changes as well. Your accountant will help you navigate the changes so you are always benefiting and protecting your financial health and security.

So, if you need financial or tax planning advice, accounting, bookkeeping, or tax return services please get in touch.  We’d love to help you out.  Take a moment and meet the team…

Kelly Melanson, CPA

kelly@kmpc.ca

905-666-5071

www.kmpc.ca

Kelly Melanson, CPA, CMA is the founder and owner of Kelly Melanson Professional Corporation. She and her team specialize in helping companies grow via strategic financial management practices. For almost 25 years, Kelly Melanson, Chartered Professional Accountant (CPA, CMA) has been helping businesses in Whitby, Oshawa, Ajax, Durham Region and the Greater Toronto Area (GTA) to reach and surpass their profit goals.

If you would like to speak to us regarding  Business Accounting, financial  retirement or tax planning, tax returns, bookkeeping or any of your other  please contact us anytime – we’d love to chat with you.

Kelly Melanson Professional Corporation – Chartered Professional Accountant, CPA 11 Stanley Ct, #13 Whitby, ON L1N 8P9 – Local: (905) 666-5071 Toll-free: 1-800-942-5558 – Email: admin@kmpc.ca  Web: https://kmpc.ca

The ABC’s Of Why Small Businesses Need an Accountant

The ABC’s Of Why Small Businesses Need an Accountant

When a small business opens its doors the realities of limited budgets often mean trying to do everything in-house.  While that approach may work for some areas of the business it is not advisable to adopt this approach with accounting.  Owners of a new business should not view hiring of an accountant as a luxury – it should be viewed as a requirement for success.  The right accountant can be a wealth of information and experience to assist in structuring processes to ensure that you are getting the most out of every dollar – from day one!

New businesses should consider hiring an experienced and certified accountant as an investment, not an expense. ‘If only I’d come to see you sooner…  I would have saved so much time and money!’ is a lament that we have heard often over the past 25 years working with entrepreneurs. There are several problems that can arise quickly and unexpectedly for new businesses, but these can be avoided through knowledgeable guidance by your accountant such as: missing tax breaks, falling behind with invoicing or getting in trouble with the government for tax issues.

Here are the ABC’s of why small businesses need an experienced accountant…

Always set up your books correctly from the start:

The fiscal restraints of being a start up usually begins with business owners having the best intentions of doing their own bookkeeping when they find some spare time. However the reality of the demands of starting a new business leaves very little spare time, or energy, to sit down and focus on bookkeeping.  Playing catch up is a common state for business owners.  The problem is that the longer it is before capturing the bookkeeping data the more likely there will be data-entry errors, lost documentation (such expense receipts), books that are out of date and a lot of time lost searching for missing items.

An accountant can help you properly set up your books on one of a variety of online accounting software, such as QuickBooks. This software will make it faster for you to send out invoices, record expenses, follow transactions and organize bank statements. Being organized and having all the information at hand will make it much easier to track things like outstanding invoice payment from clients and the taxes your business owes.

Be sure to pay your taxes on time:

Late filing or payment of taxes results in penalties and interest can cost you thousands of dollars! By working with Chartered Professional Accountant (CPA) you will have all your data organized and won’t overlook tax filing deadlines. An experienced accountant will be proactive with your tax files so that your tax filing is smooth and stress-free.

Tax laws are complicated and can change each year.  A knowledgeable accountant can often save you money by understanding how to reduce the amount of taxes you must pay. By working with an accountant at the start of your fiscal year and using them for your tax planning services, you will be able to keep more money in your business so you can keep growing!

Cash flow is everything:

This is especially true for smaller businesses. Your invoicing system is critical to the overall strength of your business. When you don’t bill on time, you won’t get paid on time and that’ll leave you short of money – it’ that simple. Unfortunately, it is this factor that undermines a lot of newer businesses.

Let’s just sketch out how this can happen… You do work for a client and send the invoice for that work at the end of the month. Usually businesses give their clients 30 days to pay the invoice. However, the employees that did the work, the resources they used, and your office space expenses will need to be paid for by the end of that month. It’s a delicate cash flow balancing act and if you fall behind in your invoicing or payments by clients then you can find yourself in a very tight spot!

And that’s where the accountant you have hired to help you can make all the difference in the world. With the invoicing system your accountant set up for you you’ll be able to efficiently send invoices and track which ones have been paid. Your accountant can also advise you on things like invoice payment terms and your own office expenses, to help reduce potential areas for cash flow slow downs.

By hiring a good accountant, you are building a strong foundation for your business upon which it can survive and thrive.  As we like to say to our clients: It’s good to dream but it’s even better the live your dream!

Kelly

Kelly Melanson, CPA, CMA is the founder and owner of Kelly Melanson Professional Corporation. She and her team specialize in helping companies grow via strategic financial management practices. For almost 25 years, Kelly Melanson, Chartered Professional Accountant (CPA, CMA) has been helping businesses in Whitby, Oshawa, Ajax, Durham Region and the Greater Toronto Area (GTA) to reach and surpass their profit goals.

If you would like to speak to us regarding  Business Accounting, financial  retirement or tax planning, tax returns, bookkeeping or any of your other  please contact us anytime – we’d love to chat with you.

Kelly Melanson Professional Corporation – Chartered Professional Accountant, CPA 11 Stanley Ct, #13 Whitby, ON L1N 8P9 – Local: (905) 666-5071 Toll-free: 1-800-942-5558 – Email: admin@kmpc.ca  Web: https://kmpc.ca

Updates on 2017 Proposed Tax Changes for Business

Updates on 2017 Proposed Tax Changes for Business

Hello friends!  Yes, I have an update on the latest rumblings from the government on the proposed changes to the tax rules for businesses released this past fall (2017) . In this video I discuss the latest updates and what they might mean for you and your company. I have also provided links (below) to more in-depth information on each topic that I discuss in this video. So, make some time to watch this video and read up on these proposed changes… because it’s better to be prepared that to be sorry and owe the tax man!

If you have any questions about these changes please contact our office, we’d be pleased to speak with you.

For more information click on the topic 

Thanks for stopping by!

Kelly

Kelly Melanson, CPA, CMA is the founder and owner of Kelly Melanson Professional Corporation. She and her team specialize in helping companies grow via strategic financial management practices. For almost 25 years, Kelly Melanson, Chartered Professional Accountant (CPA, CMA) has been helping businesses in Whitby, Oshawa, Ajax, Durham Region and the Greater Toronto Area (GTA) to reach and surpass their profit goals.

If you would like to speak to us regarding  Business Accounting, financial  retirement or tax planning, tax returns, bookkeeping or any of your other  please contact us anytime – we’d love to chat with you.

Kelly Melanson Professional Corporation – Chartered Professional Accountant, CPA 11 Stanley Ct, #13 Whitby, ON L1N 8P9 – Local: (905) 666-5071 Toll-free: 1-800-942-5558 – Email: admin@kmpc.ca  Web: https://kmpc.ca

Performance Management is Your Key to Success

Performance Management is Your Key to Success

Performance Management is a Critical Success Factor

The past several blogs have focused on business process mapping that involves reviewing all of  your business processes to determine the areas that have risks or gaps and will need improvement. Now that you know how you do things you can begin assessing whether your overall goals, strategies and specific objectives are being met – that is called performance management. Whether you are a small, medium or large company, you should be practicing performance measurement.

Performance metrics give you the ability to know how well your company is hitting  its main targets and goals. In order to do this you need to create performance indicators for all key business processes so you can track performance attainment levels all along the process path to monitor all elements’ performance levels to the summative goal outcome. That way you can ‘diagnose’ issues at source and make proportional adjustments that will more swiftly align the process outcomes to meet your goals.

Create Your Measuring Sticks to Check Your Performance

To measure properly you need to create relational performance indicators. Basically that means defining how each part of the process should be operating in order to make its contribution to the overall goal that it is part of delivery.  These performance indicators are unique to each company.  This may seem like a daunting task but you will see that once you get started the process will begin to flow quite naturally.

Here are a few tips to get you started:

First, make a list of all of your company’s goals i.e.) % market penetration increases, customer satisfaction levels or increases, quality attainment levels (first define what quality is to you) , cost of good sold decreases, new product line launches, expansion levels: employees, geographic markets, online business…

See, it all depends on what you do, how you do it and what goals you have set as a company and don’t forget your target timelines! So, as you can see, there is no such thing as a one size fits all indicator but are are a few rules of thumb…

You need to make sure that the objectives are clear: If your company believes that the key to long term success is customer satisfaction, high employee morale and reputation, then it is important that these performance indicators be tracked to measure these objectives and share the results with your entire company so they are all following the same direction.  When a company clearly articulates its strategic objectives to the entire company, it creates focus and commitment to that initiative.

Focus on the critical success factors: Performance indicators focus a company on critical success factors.  If the key success factor of your company is measured by customer satisfaction, (quality, timely delivery, low cost) then your company’s performance indicator system should measure these results.

Critical success factors are factors that drive success in your company:    Critical Success Factors also change over the life of a company. In the first few years of your company, market penetration may have been the most important factor but after a few years of operation it could change to customer retention, new product development or low cost would be the most important.  It’s important to ensure that your performance indicator systems remain relevant with any changes.

Performance Management Makes You Stronger as an Organization

Performance indicators act as alarms when early signs of potential problems occur, so implementing a performance system is critical if you want to meet your companies overall goals, strategies and objectives. The system does not solve problems, it only flags potential problems or confirms that all is functioning as it should.

After a system is implemented you need to reevaluate your performance evaluation and reward system so it coincides with your new performance indicators. Your employees will not be motivated by the new system if they are still be evaluated and rewarded based on the old system.  Here’s a few ideas to get you started:

  • Environmental indicators – accidents and injuries resulting from products or service,
  • Market/customer indicators – share of market,
  • Competitive indicators – proportion of new products,
  • Internal business process indicators – product-development cycle time,
  • Human resource indicators – employee morale
  • Financial indicators – revenue growth.

Within these categories you can have several different indicators at different levels as well.  When developing new indicators there are some essential questions that can be asked such as; what are the important areas of the business that need to be tracked? Why should they be tracked?  What decisions will be made from these results? How often should we have this system track this information? How should this information be accumulated and reported?  These questions will assist you in the development stages so the tracking system is accumulating relevant data and can be presented to the management involved so it is most useful.  Remember that old saying “garbage in, garbage out” well it applies to this system as well.  You always have to remember to think about what drives the success of the company.  The key indicators should embrace management’s highest priorities including customer satisfaction, productivity and the financial results.  This system should address the issues of hierarchy and processes internally and externally. All the needs of senior managers, process managers and individual operators should be met.

As I mentioned above a lot of the indicators will be at different levels and at specific points along business processes.  An example is, some may be done for each shift or daily and others may be gathered and dispersed biweekly, monthly etc. The higher level of the performance indicator the less frequent it will be dispersed.  Depending on the type of indicator such as competitor information, it may take longer to accumulate the data and therefore it would be less frequent then an indicator that is from an internal operation that can be gathered quickly.

You now have the key building blocks for launching your own Performance Measurement system. It will take some effort to get started but you will reap the benefits of it in your profits, growth, quality of your employees and market share. So what are you waiting for?  Good luck!  And if you need any assistance give me a call as we have assisted many clients with their performance management initiatives and we can help you too!

Regards,

Kelly

Kelly Melanson, CPA, CMA is the founder and owner of Kelly Melanson Professional Corporation. She and her team specialize in helping companies grow via strategic financial management practices. For almost 25 years, Kelly Melanson, Chartered Professional Accountant (CPA, CMA) has been helping businesses in Whitby, Oshawa, Ajax, Durham Region and the Greater Toronto Area (GTA) to reach and surpass their profit goals.

If you would like to speak to us regarding  Business Accounting, financial  retirement or tax planning, tax returns, bookkeeping or any of your other  please contact us anytime – we’d love to chat with you.

Kelly Melanson Professional Corporation – Chartered Professional Accountant, CPA 11 Stanley Ct, #13 Whitby, ON L1N 8P9 – Local: (905) 666-5071 Toll-free: 1-800-942-5558 – Email: admin@kmpc.ca  Web: https://kmpc.ca

How Will the New Income Sprinkling Rules Impact Your Business?

How Will the New Income Sprinkling Rules Impact Your Business?

Proposed New Income Sprinkling Rules Go Too Far

Heads up people, the federal government has proposed some chilling private corporation tax changes that will have a profoundly negative impact if they should pass. They are looking to change some common tax planning practices used by private corporations. Many of these changes have raised the alarm because they are not good news for Canadian entrepreneurs!

How New Rules Impact Canada’s Entrepreneurs?

The government is looking to change the rules for income sprinkling. The practice of income sprinkling typically involves issuing shares and paying dividends to family members with lower or no income to reduce the family’s overall tax burden. Tax on split income currently applies, also known as “kiddie tax”. If an individual under the age of 18 receives a dividend or other specific income, it’s automatically subject to top marginal tax rates.

The proposed changes mean that the Kiddie Rule could now apply to everyone who receives split income from a family business, aside from employment income.

This new scope will apply to adults who receive split income deemed “unreasonable.” A reasonableness test will apply, based on contributions of labour and capital, and on previous returns and remuneration. As a rule of thumb, it is judged that an amount is “unreasonable” if it exceeds what an arm’s-length party would agree to pay to a person for the contribution. In order to be deemed legitimate labour contributions, those aged 18 to 24 must be “actively engaged on a regular, continuous and substantial basis in the activities of the business”. This is an even more rigid test than for those who are  older.

And if this wasn’t enough to shock you, the government is also proposing if business owners earn income through their corporation on which they pay tax at the corporate rate, the additional capital they have left to invest, if it’s not invested back into the business or paid out to them personally, would be viewed as them investing for their own benefit and not that of their corporation. So people that means that the present refundable tax system, in respect to those invested retained earnings, would no longer exist as an option.

Under the current refundable tax system, the option exists to pay a lesser corporate tax rate and have more to invest in the business or capital purchases such as a commercial property.  This practice has allowed business owners to use passive corporate investment portfolios as a very-much-needed nest egg that can act as the entrepreneurial benefits and pension fund.  As business owners are not guaranteed income, and often forego salaries during lean times, this practice can provide a critical financial reserve for business owners to keep operations going during lean times.

The absurd hypocrisy of these proposed changes is staggering. The government is forever touting that Canada is the land where entrepreneurs are encouraged and celebrated. They applaud the moxie of our entrepreneurs because they are courageous enough to strike out on their own and take on the risks of launching and growing a business, without the usual safety nets that come with most regular employment – health benefits, paid vacations, training, pensions… the list goes on! And in their bravery, these entrepreneurs drive the economy by creating jobs, purchasing services and supplies from other businesses and paying their taxes to support the social and economic infrastructure of our country. And yet the government, in a move one can only describe as draconian, creates these misguided changes which completely undermine Canada’s small business community by exponentially increasing their financial vulnerability and threatening their future!  And it is highly doubtful that there will be a line up of eager wannabe entrepreneurs willing to take the place of those businesses that don’t make it in this harsh new reality if this proposal is adopted.

What Proposed ‘Income Sprinkling’ Rules Could Mean to You

The changes contained in the government’s proposal will effectively handcuff entrepreneurs and make it incredibly difficult for many of them to keep their businesses viable. If the government implements these ruthless measures they should do only do so once they have publicly acknowledged that this proposal has the power kill off a good portion of our economy as businesses across this country are forced to lay off their employees and ultimately close their doors forever.

If you would like to share your input on this topic, I urge you to make your voice heard by using the email feedback channel provided by the government. They will be accepting comments until October 2, 2017, at fin.consultation.fin@canada.ca.

It also might be an idea to give your Member of Parliament and Member of Provincial Parliament a call to share your concerns as a business owner.

I will be keeping close tabs on this proposal and consultation process so that I can share updates with you. If you’d like to read the proposal, you can view it online at http://www.fin.gc.ca/activty/consult/tppc-pfsp-eng.pdf. In the interim, if you have any questions or concerns please contact my office.

Regards,

Kelly

Kelly Melanson, CPA, CMA the author of Money Is Not The Root of All Evil: Debt Is! and founder/owner of Kelly Melanson Professional Corporation. She and her team specialize in helping people reach their dreams via strategic financial management practices. For almost 25 years, Kelly Melanson, Chartered Professional Accountant (CPA, CMA) has been helping people and businesses in Whitby, Oshawa, Ajax, Durham Region and the Greater Toronto Area (GTA) to reach and surpass their financial goals.

 If you would like to speak to Kelly regarding your retirement or tax planning, tax returns, bookkeeping or any of your other accounting or financial planning needs, please contact the office anytime – we’d love to chat with you.

Kelly Melanson Professional Corporation – Chartered Professional Accountant, CPA

11 Stanley Ct, #13 Whitby, ON L1N 8P9 – Local: (905) 666-5071 Toll-free: 1-800-942-5558 – Email: admin@kmpc.ca  Web: https://kmpc.ca 

Business Process Mapping

Business Process Mapping

Business Process Mapping – Getting the Big Picture

Business Process Mapping (BPM) is a tool used to provide a company with a clear picture of how it does what is does.  BPM is applicable no matter what type of company, its product or service.  Every company is comprised of business processes.  These processes address every area and function that exist within an organization.  A business process is defined as a series of activities that occur to deliver a specific business value or goal.  While this sounds simple enough, the act of mapping out these processes requires a skilled and systematic approach; if the results are to have any real management value.

Understanding how you do what you do is a key component of strategic management. Too often as an organization grows, delineation occurs between departments and these business areas begin functioning as separate business entities. Often a by-product of this occurrence is that growth and development occur in a silo fashion. Departmental team members are very knowledgeable about their own business areas but have only a limited understanding of the processes that occur in others and how these processes relate to and impact on theirs.

BPM maps out all of the business processes and clearly identifies the activities that are required to carry out these processes and the resources required to complete these activities, thereby providing a detailed and accurate ‘as-is’ organization-wide snapshot of all the business processes that occur within a company. It is very often the first time that management is able to obtain a crisp awareness of the processes that occur in all areas of the organization.  This holistic view facilitates the identification of gaps and overlaps that exist within these processes, both within and between departments.

This information can then be used to optimize and streamline existing business processes; which should always be the first step in any growth initiative.  Before introducing the added volume and strains of growth, a company should ensure that it does a complete ‘tune up’ to ensure that the existing infrastructure can support these increased demands.

Another benefit of BPM is the knowledge that is obtained by detailing business processes component by component.  The crisp identification of activities and resources can also be used for strategic financial management.  BPM creates a framework that supports the implementation of Activity-Based Costing (ABC).  By utilizing the strategic management tool of ABC, it is possible to attribute exact costs to each activity and required resource.  These costs can then be rolled up to the related business processes to ascertain the total costs of providing these business processes.  This information can be used in a variety of ways such as budget setting, quoting and efficiencies targeting.

By knowing the components of how you do what you do, it is possible to begin practicing meaningful performance measurement.  Strategic managers are now able to define and create clear, consistent and measurable performance metrics for each resource, activity and business processes.  With clearly defined performance metrics defined and communicated to stakeholders within the organization, these metrics can be tracked to ensure that each component is functioning at desired criteria levels.  This information can be used in a variety of managerial functions from efficiency tracking and reporting to employee performance reviews.  The practice of measuring organizational functions provides meaningful feedback to stakeholders to assist in determining required adjustments and how these can be conducted in a timely manner.

BPM can also assist in the strategic assessment of information systems.  The ability to view an organization component by component allows management to determine which information is required by which resource, activity and process, as well as the directional flows of that information to facilitate and manage business processes.  By mapping out this information, management can conduct meaningful information systems assessments of legacy systems, and strategically identify the functionally requirements of future systems.

While Business Process Mapping may seem like an obvious approach, it is surprising how many organizations do not have a true and detailed understanding of their own ‘big picture’.  It is the strategic manager who fully understands that breaking things down to their most basic components is the best way to see the whole picture.

 Regards,

Kelly

Kelly Melanson, CPA, CMA is the founder and owner of Kelly Melanson Professional Corporation. She and her team specialize in helping companies grow via strategic financial management practices. For almost 25 years, Kelly Melanson, Chartered Professional Accountant (CPA, CMA) has been helping businesses in Whitby, Oshawa, Ajax, Durham Region and the Greater Toronto Area (GTA) to reach and surpass their profit goals.

If you would like to speak to us regarding your retirement or tax planning, tax returns, bookkeeping or any of your other accounting or financial planning needs, please contact us anytime – we’d love to chat with you.

Kelly Melanson Professional Corporation – Chartered Professional Accountant, CPA 11 Stanley Ct, #13 Whitby, ON L1N 8P9 – Local: (905) 666-5071 Toll-free: 1-800-942-5558 – Email: admin@kmpc.ca  Web: https://kmpc.ca

 

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